On 23 March 2026, the Corporate Laws (Amendment) Bill, 2026 was introduced in Lok Sabha to revise the corporate laws, with the objective of improving regulatory efficiency, ease of doing business, and compliance culture.
Key Points:
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The Bill seeks to amend two major corporate laws:
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Proposed Amendments to the Limited Liability Partnership Act, 2008:
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The Bill introduces International Financial Services Centre-specific Limited Liability Partnership (LLP) framework by including new definitions in section 2(1) such as:
○ International Financial Services Centre (IFSC)
○ International Financial Services Centres Authority (IFSCA)
○ Permitted foreign currency
○ Specified International Financial Services Centre LLP
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Revised Section 11 limits the requirement of a declaration by an advocate/ Cas/ Cost accountants or CS only to cases where such professionals are engaged, thus, reducing mandatory compliances and lowering incorporation costs, especially for small businesses and start-ups.
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Section 11(2) will require a Specified IFSC LLP to clearly state its objects at the time of incorporation, specifying permitted financial services activities under the IFSCA Act, 2019, along with any incidental or ancillary activities, in compliance with IFSCA regulations.
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A proviso to Section 13(1) is proposed to mandate that a Specified International Financial Services Centre LLP to maintain its registered office within an IFSC.
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Section 15(1) aims to require that every Specified International Financial Services Centre LLP must include the suffix “International Financial Services Centre LLP” in its name, ensuring clear identification and regulatory distinction of IFSC-based LLPs.
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Section 23(2) seeks to relax the requirement of filing changes in the LLP agreement for LLPs regulated by SEBI or IFSCA, by allowing such filings to be made in the manner and frequency as may be prescribed, rather than on an event-based basis.
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Under the revised Section 25(2), LLPs regulated by SEBI or IFSCA would be required to furnish details of changes in partners on an annual basis reducing repetitive compliance filings.
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Section 32(2) seeks to enable Specified IFSC LLPs to account for and disclose partner contributions in permitted foreign currency, allow existing IFSC LLPs to convert contributions from Indian rupees into permitted foreign currency, and restrict acceptance of further monetary contributions.
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A new Section 33–A is sought to be inserted to extend the valuation framework under Section 247 of the Companies Act, 2013 to LLPs on a mutatis mutandis basis for valuation of partner contributions, assets, net worth, or liabilities.
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Under the proposed amendments to section 34(1), Specified IFSC LLPs maintaining contributions in permitted foreign currency would be permitted to prepare and maintain books of account and financial statements in such currency, with an option to maintain them in Indian rupees if permitted by IFSCA, along with consequential rationalisation of penalty provisions.
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The Bill intends to amend Section 38 to decriminalise non-compliance with requisitions issued by the Registrar by substituting criminal consequences with a civil penalty of ₹10,000 for failure to comply with requisitions other than summons.
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A new Section 57–A is proposed to facilitate the conversion of SEBI- or IFSCA-registered specified trusts into LLPs, in accordance with the provisions of the Act and the Fifth Schedule.
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Section 58 is sought to be substituted to introduce a uniform statutory framework governing the conversion of firms, private companies, unlisted public companies, and specified trusts into LLPs, providing for automatic transfer of assets and liabilities and dissolution of the erstwhile entity upon registration.
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Section 68(1) empowers the Central Government, through the proposed amendment, to require Specified IFSC LLPs to file, record or register documents in permitted foreign currency, while continuing to mandate that fees, fines and penalties be paid in Indian rupees.
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A new Section 68–B seeks to provide a statutory appeal mechanism against decisions of the Registrar under Sections 12 and 16, strengthening procedural safeguards and access to remedies.
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The Bill seeks to insert a new Fifth Schedule to specify eligibility conditions, filing requirements, registration process, and legal effects of conversion.
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It also allows conversion subject to consent of three-fourths of investors and ensures automatic transfer and continuity of assets, liabilities, contracts, approvals, and legal proceedings, while retaining trustee liability for pre-conversion obligations as a safeguard.
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Proposed Amendments to the Companies Act, 2013:
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Section 2 seeks to update definitions such as:
○ “Cost Accountants”
○ “Regional Director”
○ “Registered valuer”.
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Section 4(5) seeks to rationalise penalties by prescribing a fixed penalty of ₹50,000 for certain defaults relating to name approval, replacing variable penalty amounts.
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Section 7(1) aims to limit professional certification requirements at incorporation by mandating declaration by professionals only where such professionals are engaged, thereby reducing incorporation-related compliance burden.
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A new Section 12–A seeks to require prescribed classes of companies to maintain a website, email address, and other communication modes, and to intimate such details and changes thereof to the Registrar.
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Section 20(2) seeks to mandate electronic mode of service of prescribed documents for specified classes of companies, while allowing members to request documents through other modes on payment of prescribed fees.
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Section 26(9) seeks to decriminalise defaults relating to issuance of prospectus by substituting criminal punishment with a monetary penalty of ₹2 lakh.
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Section 40 seeks to restrict criminal liability to limited cases and introduces high monetary penalties for non-compliance with provisions other than those relating to deposit of application money.
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Section 42 aims to update “shares” with “securities”, recognising new compensation instruments linked to share value, and rationalising penalty wording.
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A new Section 43-A seeks to allow companies incorporated in an IFSCA to issue and maintain share capital, accounts, and records in permitted foreign currency, while continuing payment of fees and penalties in Indian rupees.
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Section 62(1) seeks to recognise additional employee compensation schemes linked to share capital value, in addition to employee stock option schemes.
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Section 68 aims to provide greater flexibility in buy-back of shares by allowing prescribed classes of companies to undertake multiple buy-backs within a year, relax buy-back limits, remove affidavit requirements, and replace criminal punishment with civil penalties.
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The Bill seeks to extend the time period for registration of charges from 60 days to 120 days for prescribed classes of companies, providing additional compliance flexibility.
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A new sub-section 88(2A) is proposed to provide that no notice of any trust, whether express, implied, or constructive, shall be entered in the register of members or debenture holders.
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Section 96(3) is proposed to allow companies to hold AGMs physically, virtually, or in hybrid mode, subject to prescribed conditions, while mandating that at least one physical AGM be held once every three years.
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Section 99 seeks to decriminalise defaults relating to AGMs by substituting punishment with monetary penalties.
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A new sub-section 100(7) is proposed to permit companies to hold EGMs physically or through electronic or hybrid modes, subject to members’ requisition rights.
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Section 101 is proposed to allow shorter notice periods for EGMs conducted wholly through electronic means, in the manner and duration as may be prescribed.
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Section 124 seeks to clarify transfer of unpaid or unclaimed dividends along with corresponding shares to the Investor Education and Protection Fund Authority, strengthening investor protection mechanisms.
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Section 125 is proposed to expand the scope of amounts transferable to the IEPF, including unpaid amounts relating to extinguished buy-back shares, and to empower the Authority to delegate its functions.
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Section 132 is proposed to be revised to strengthen the National Financial Reporting Authority (NFRA) by recognising it as a body corporate, extending its jurisdiction to bodies corporate, and enhancing its supervisory and enforcement powers, including stricter penalties for non-compliance.
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Section 141(1) seeks to require that every partner of an audit firm be registered with a recognised statutory professional body in India, strengthening auditor eligibility standards.
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Section 147 seeks to decriminalise specified audit-related defaults by replacing criminal punishment with monetary penalties for companies and officers in default and expanding its scope to cover additional audit-related provisions.
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Section 154 seeks to introduce a comprehensive framework for verification, deactivation, cancellation, surrender, and restoration of DINs, requiring directors to periodically verify particulars and providing consequences such as ineligibility to function as director or vacancy of office where DIN is deactivated or cancelled.
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Section 159 seeks to rationalise penalty provisions by specifying a maximum penalty limit of ₹5 lakh for continuing default, replacing open-ended penalties.
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Section 161 aims to rationalise the tenure of additional, alternate, and casual vacancy directors by limiting their tenure to the next general meeting or three months and restricting re-appointment by the Board without prior member approval where appointment was not approved earlier.
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Section 164 seeks to expand disqualification criteria by including auditors, valuers, insolvency professionals, and persons not assessed as fit and proper, reducing the non-filing disqualification period from three to two financial years, and clarifying vacancy of office upon such disqualification.
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Section 189 seeks to insert sub-section (5A) to provide that any company failing to comply with the provisions relating to related-party contracts and arrangements shall be liable to a monetary penalty of ₹2 lakh, thereby decriminalising the offence.
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A new Section 203-A is proposed to prescribe the procedure for resignation of whole-time key managerial personnel (other than a director), requiring intimation to the Registrar and clarifying that such resignation shall not absolve liability for defaults committed during tenure.
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Section 204 revises “secretarial auditor” to restrict eligibility for appointment as secretarial auditor to company secretaries in practice (or eligible firms), and mandate that firm partners be registered with recognised statutory bodies.
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Amendment to Section 206(7) is proposed to be substituted to replace criminal punishment with graded civil penalties for failure to furnish information, explanations, or documents sought by the Registrar.
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Section 165 seeks to empower the Central Government to prescribe a lower limit on the number of directorships for specified classes of companies or directors, enabling flexible regulation where required.
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A new Section 365-A seeks to provide a statutory right of appeal to the Appellate Tribunal against orders of the Central Government under this Part, to be filed within 45 days, in the prescribed manner.
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A new Section 396-A is proposed to provide a statutory appeal mechanism against decisions of the Registrar under Sections 4 and 7, to an officer not below the rank of Joint Director.
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Section 418-A (3) is proposed to provide a mechanism for resolving differences of opinion among Members of a Bench of the Appellate Tribunal through majority decision, with reference to additional Members where required.
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Section 441 seeks to enhance the monetary threshold for compounding of offences by increasing the limit from ₹25 lakh to ₹1 crore, thereby reducing litigation burden.
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New sections 454-B to 454-D are proposed to introduce a robust recovery mechanism for penalties, enable settlement of specified contraventions, and mandate pre-deposit of a portion of penalty before appeals are entertained.
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A new Section 466–A seeks to empower the Central Government to issue directions, guidelines or circulars to clarify rules or prescribe ancillary procedures, subject to consultation requirements.
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Section 469(3) seeks to replace criminal punishment for rule contraventions with monetary penalties, subject to prescribed limits, reinforcing the decriminalisation framework.
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[Corporate Laws Amendment Bill 2026, published on 23-3-2026]
