The Corporate Laws (Amendment) Bill, 2026 (the Bill) proposes significant amendments to the Limited Liability Partnership Act, 2008 (LLP Act) and the Companies Act, 2013 (Companies Act). The Bill was introduced in the Lok Sabha on March 23, 2026, and has been referred to a Joint Parliamentary Committee for further examination. Introduced as part of the Government’s ongoing efforts to improve the regulatory framework governing business entities, the Bill seeks to address evolving commercial realities, particularly the growing importance of International Financial Services Centres (IFSCs), increasing adoption of digital governance mechanisms, and the need for more efficient compliance and enforcement systems.
The proposed amendments aim to reduce procedural burdens, facilitate ease of doing business, enable greater use of technology in corporate administration, and improve regulatory supervision in areas such as financial reporting, auditing, valuation, and investor protection. The Bill also introduces several institutional reforms affecting regulatory authorities and adjudicatory mechanisms. Together, these changes seek to create a more flexible and business-friendly framework while ensuring appropriate safeguards for stakeholders and market integrity. If enacted, the Bill may have significant implications for companies, LLPs, auditors, valuers, IFSC entities, investors and regulated financial sector players.
Amendments to the Limited Liability Partnership Act, 2008
Dedicated Framework for IFSC LLPs
One of the most significant features of the Bill is the introduction of a dedicated framework in Section 2 for LLPs operating within IFSCs. The Bill proposes to insert definitions such as “International Financial Services Centre”, “International Financial Services Centres Authority” (IFSCA), “permitted foreign currency”, and “Specified International Financial Services Centre LLP”.
These amendments recognise IFSC LLPs as a distinct category of business entities operating within a specialised regulatory environment. The proposed framework is intended to facilitate LLPs’ participation in international financial services activities while ensuring consistency with the regulatory requirements administered by the IFSCA.
To support this framework, the Bill would require Specified IFSC LLPs to maintain their registered office within an IFSC and to include the suffix “International Financial Services Centre LLP” in their name. Such LLPs would also require to specify financial-services-related objects in accordance with applicable IFSCA regulations, thereby creating a clear regulatory identity for IFSC-based entities.
Incorporation and Compliance Requirements
The Bill proposed to strengthen incorporation requirements by requiring declarations not only from subscribers but also from professionals involved in the incorporation process, including advocates, chartered accountants, company secretaries and cost accountants.
This proposal is intended to increase accountability at the incorporation stage and improve the reliability of information submitted to the Registrar.
Foreign Currency Operations
A significant reform proposed by the Bill under Sections 32 and 34 permits Specified IFSC LLPs to maintain partner contributions, books of account, financial statements and related records in a permitted foreign currency. Existing LLPs operating within IFSCs may also be permitted to convert partner contributions from Indian Rupees into a permitted foreign currency in accordance with IFSCA regulations. Specified IFSC LLPs may also be required to use permitted foreign currency for filing, recording or registering documents, while fees, fines and penalties would continue to be payable in Indian Rupees.
The proposal is particularly relevant for entities engaged in cross-border financial activities, as it may allow them to maintain capital and accounting records in the currency in which business is conducted, reducing operational complexities associated with currency conversion and reporting.
Compliance Relief for Regulated Entities
The Bill proposes compliance-related flexibility for LLPs regulated by the Securities and Exchange Board of India (SEBI) or the IFSCA, permitting compliance through prescribed periodic filings rather than multiple event-based filings.
This change is expected to reduce administrative burdens and duplication of reporting obligations for entities already subject to extensive regulatory supervision.
Registered Valuer Framework for LLPs
The proposed insertion of Section 33A seeks to extend the applicability of Section 247 of the Companies Act to LLPs for valuation-related matters. As a result, valuations involving partner contributions, assets, liabilities, mergers, conversions and restructuring transactions will be required to follow the registered valuer framework.
This would align LLP valuation requirements more closely with the Companies Act framework and may be particularly relevant for contribution valuation, restructuring, conversion and asset transfer transactions.
Conversion of Trusts into LLPs
The Bill proposes a comprehensive framework for the conversion of specified trusts into LLPs by inserting Section 57A and substituting Section 58. The proposed framework would apply to certain trusts registered under the Indian Trusts Act, 1882, or under other Central or State laws, and regulated by SEBI or IFSCA. Upon conversion, assets, liabilities, rights, obligations, licences, approvals and pending proceedings would vest in the LLP by operation of law.
To facilitate this process, the Bill introduces a new Fifth Schedule setting out detailed procedural requirements, eligibility conditions, filing obligations, treatment of contracts and approvals, continuation of employment arrangements and post-conversion liabilities. The proposed Fifth Schedule also requires, among other things, consent of 3/4th of the investors of the trust for conversion. “These provisions are particularly relevant for investment and financial sector structures seeking the operational flexibility of an LLP while preserving continuity of business and legal relationships.
Registrar Appeals and Adjudication Mechanism
The Bill proposes to insert a new Section 68B, establishing an appellate mechanism against specified decisions of the Registrar.
Further, amendments to Section 76A expand the adjudication framework by allowing LLPs and partners to seek adjudication of penalties and facilitating the resolution of contraventions through administrative processes rather than prosecution.
These amendments reflect the broader policy objective of promoting a penalty-based compliance regime. They may also reduce the need for parties to approach courts for every Registrar-related grievance.
Overall, the LLP-related amendments appear to focus on IFSC flexibility, professional accountability, valuation discipline, trust-to-LLP conversion and administrative efficiency.
Amendments to the Companies Act, 2013
Definitional Changes and Compliance Relief
The Bill proposes to introduce several new definitions, including “Regional Director” and “registered valuer”. It also proposes changes to the small company framework by increasing the statutory upper limits for prescribed thresholds. The paid-up capital threshold for small companies is proposed to be increased from INR 10 crore to INR 20 crore, and the turnover threshold from INR 100 crore to INR 200 crore. As a result, more companies would become eligible for the simplified compliance requirements available to small companies.
Financial Year Alignment
The Bill proposes to simplify the provisions relating to companies seeking a financial year different from the standard April-March cycle.
The amendment is particularly relevant for Indian subsidiaries that are subsidiaries, associates or holding companies of foreign entities and need to align their financial reporting cycle with overseas parent or group entities.
Incorporation and Professional Accountability
Similar to the proposed LLP reforms, amendments to Section 7 seek to require declarations from professionals involved in the incorporation process. This is intended to increase accountability for information submitted at the time of incorporation.
Digital Governance and Electronic Communication
The Bill proposes to insert Section 12A, which requires prescribed classes of companies to maintain websites, email addresses, and other electronic communication mechanisms and to report such details to the Registrar.
Correspondingly, amendments to Section 20 seek to permit specified classes of companies to serve documents exclusively through electronic means. However, the Bill also contemplates that a member may request delivery of documents through a particular mode, subject to payment of fee determined by the company in general meeting.
These changes would formalise the increasing reliance on digital communication and reduce dependence on paper-based corporate administration, thereby improving efficiency and accessibility.
IFSC Companies and Foreign Currency Framework
The proposed Section 43A seeks to create a dedicated framework for companies incorporated within IFSCs. Such companies may be permitted to issue and maintain share capital, prepare financial statements, maintain books of account and undertake prescribed filings in permitted foreign currencies. Existing IFSC companies may also be permitted to transition from Indian Rupees to foreign currency in accordance with IFSCA regulations. The proposal recognises the unique operational requirements of entities that serve international markets and undertake cross-border financial transactions.
Hybrid and Virtual Shareholder Meetings
The Bill proposes amendments to Sections 96 and 100 to permit annual general meetings (AGMs) and extraordinary general meetings (EGMs) to be conducted in person, virtually, or in a hybrid format.
Importantly, the amendments also provide that every company must hold at least one physical AGM every three years, thereby balancing flexibility with opportunities for in-person shareholder engagement.
The amendments would provide statutory recognition to virtual and hybrid shareholder participation mechanisms that gained prominence during the pandemic and have since become widely accepted.
Share Capital and Buy-back Reforms
The Bill proposes to recognise employee compensation schemes linked to the value of a company’s share capital, in addition to traditional employee stock option plans. This may be relevant for structures such as restricted stock units and stock appreciation rights.
Further, amendments to Section 68 provide greater flexibility regarding buy-backs Prescribed classes of companies may be permitted to undertake buy-backs beyond existing limits and may also make up to 2 offers of buy-back within 1 year, subject to conditions including a minimum 6-month gap from the closure of the preceding buy-back offer
These changes provide companies with additional flexibility in capital management and shareholder return strategies. However, the extent of this flexibility would depend on the prescribed classes of companies and conditions that may be notified.
Registration of Charges
The Bill proposes amendments to Section 77 to allow prescribed classes of companies’ additional time for registration of charges. The extension would reduce the risk of security interests being adversely affected due to procedural delays and provides greater flexibility in financing transactions.
Investor Protection and IEPF Reforms
The Bill proposes changes to Sections 124 and 125 concerning the Investor Education and Protection Fund (IEPF). Among other things, unclaimed amounts relating to extinguished buy-back shares may be transferred to the IEPF framework, and procedural changes are introduced for refund applications. The amendments would also expand the powers of the IEPF Authority, including delegation powers. These proposals may strengthen the framework for dealing with unclaimed investor assets and make the refund process more structured for claimants.
Corporate Governance and Board Accountability
The Bill proposes to strengthen disclosure obligations under Section 134 by requiring boards to explain adverse auditor observations and to disclose instances in which the Audit Committee’s recommendations have not been accepted, along with the reasons for those decisions. The amendments would enhance transparency in board decision-making and provide shareholders with greater visibility into financial reporting concerns and governance processes.
Corporate Social Responsibility
The CSR framework is proposed to be revised by increasing the net profit threshold for applicability from INR 5 crore to INR10 crore, extending timelines for the transfer of unspent CSR amounts, and enabling exemptions for prescribed classes of companies. The Bill also proposes to increase the threshold for not constituting a CSR Committee from INR 50 lakh to INR 1 crore.
These changes reduce compliance obligations for smaller entities while retaining CSR requirements for larger businesses.
Decriminalisation of Certain Offences
The Bill also proposes to decriminalise certain offences under the Companies Act and the LLP Act by replacing imprisonment or fine with civil penalties in specified cases. These include procedural and compliance-related defaults, such as failure to furnish information, contravention of rules, failure to provide required documents to the Registrar, and certain defaults relating to books of account. This bolsters the policy objective of shifting certain compliance defaults from a criminal enforcement framework to a civil penalty-based regime. If enacted, this may reduce the criminalisation of technical or procedural non-compliance while preserving regulatory oversight through monetary penalties and adjudication.
Fast-Track Merger and Amalgamation Reforms
The Bill proposes changes to approval thresholds for fast-track mergers or amalgamations under Section 233 of the Companies Act. Under the existing framework, specified schemes require approval from shareholders holding at least 90% of the total shares. The Bill proposes to replace this with approval by a majority of members present and voting, representing at least 75% of the shares held by members present and voting. The Bill also proposes that a copy of the scheme need not be filed with the Official Liquidator where the scheme relates to transfer or division/demerger of an undertaking.
The Bill also proposes to reduce the creditor approval threshold from 90% to 75%. These changes may make certain restructuring transactions more workable, although the final impact would depend on the categories of companies covered and the safeguards retained in the final law.
The Bill also proposes a new Section 233A dealing with certain shares held by a transferee company in its own name or in the name of a trust pursuant to a compromise or arrangement prior to the commencement of the Companies Act, 2013. Such shares would be required to be dealt with or disposed of within the prescribed period, failing which they may be cancelled and extinguished.
Audit, Financial Reporting and Valuation Reforms
Expanded Role of the National Financial Reporting Authority
A major set of proposed reforms under the Bill relates to the National Financial Reporting Authority (NFRA). The Bill proposes to restructure NFRA by establishing it as a statutory body corporate with enhanced operational autonomy and significantly expanded powers. Amendments to Section 132 and the insertion of Sections 132A to 132K create a comprehensive regulatory framework governing auditors and audit firms.
Among other things, the amendments:
- require prescribed auditors and audit firms to register and file information with NFRA;
- empower NFRA to issue directions in the public interest and in the interests of investors and creditors;
- strengthen NFRA’s inquiry, investigation and penalty powers establish an appellate mechanism against NFRA orders;
- create a dedicated NFRA Fund;
- permit NFRA to levy fees and charges;
- confer regulation-making powers on NFRA; and
- require public consultation before issuing regulations, subject to limited exceptions.
Collectively, these provisions strengthen NFRA from a supervisory authority into a more comprehensive regulator with investigative, enforcement and rule-making functions.
Auditor Independence
The Bill further seeks to reinforce auditor independence by amending Section 144.
In addition to existing restrictions on non-audit services, prescribed classes of auditors and audit firms would continue to be subject to certain restrictions for a period of three years after completion of their audit tenure.
The proposed cooling-off period is intended to minimise conflicts of interest after completion of the audit tenure and preserve auditor objectivity. The Bill also proposes that prescribed classes of companies satisfying prescribed conditions may not be required to appoint auditors under Chapter X of the Companies Act. This is intended to reduce compliance obligations for smaller or specified classes of companies.
Auditor Eligibility and Accountability
The Bill proposes additional eligibility requirements for audit firms by requiring partners to be registered with a statutory professional body established under Indian law.
It also proposes to revise penalty provisions and expand compliance obligations relating to auditor appointments, qualifications and reporting responsibilities. Audit firms may need to monitor partner eligibility and internal compliance more closely if these provisions are enacted.
Cost Audit and Cost Accounting Standards
Amendments to Section 148 seek to empower the Central Government to prescribe cost accounting standards after considering recommendations from the Institute of Cost Accountants of India. The Bill also proposes changes relating to the appointment of cost auditors, qualifications of partners and penalties for non-compliance. These changes may bring greater clarity to cost audit standards and cost auditor appointment requirements.
Registered Valuers and Valuation Governance
The introduction of a statutory definition of “registered valuer”, together with the proposed extension of the valuation framework to LLPs, reflects a broader effort to create greater consistency and accountability in valuation practices. The Bill also proposes to designate the Insolvency and Bankruptcy Board of India as the Valuation Authority. The Valuation Authority would be responsible for registration and recognition of valuers, making recommendations on valuation standards, monitoring compliance with valuation standards and overseeing valuers and valuer organisations.
Given the increasing importance of valuation exercises in mergers, restructurings, insolvency proceedings, and capital transactions, the proposed reforms are expected to enhance confidence in valuation outcomes and reduce disputes over valuation methodologies.
Institutional and Administrative Reforms
Beyond substantive compliance reforms, the Bill also proposes several institutional changes. These include statutory recognition of Regional Directors within the Companies Act framework, the introduction of appellate mechanisms against Registrar decisions under the LLP Act, and provisions relating to specialised adjudicatory structures. These proposals appear intended to improve administrative efficiency and reduce procedural bottlenecks.
The Bill also proposes changes relating to Producer Companies, including the first annual general meeting, adoption of articles, appointment of directors, quorum requirements, internal audit and replacement of certain fines or imprisonment-based consequences with penalties. These proposed amendments reflect a broader effort to update governance and compliance frameworks across specialised corporate structures.
Conclusion
The Corporate Laws (Amendment) Bill, 2026, represents one of the most significant updates to India’s corporate law framework in recent years. Rather than focusing on a single area of reform, the Bill introduces a broad set of measures affecting corporate governance, digital administration, financial reporting, auditing, valuation, investor protection, IFSC operations and regulatory enforcement.
While many amendments aim to reduce procedural burdens and provide greater operational flexibility for companies and LLPs, the Bill also introduces a more comprehensive oversight framework in areas with direct implications for market confidence and stakeholder protection, particularly in auditing and financial reporting.
The proposed reforms are likely to be particularly significant for IFSC entities, multinational corporate groups, auditors, regulated financial sector participants, investors and businesses undertaking restructuring or capital management transactions. If enacted in its present form, the Bill will have a substantial impact on corporate compliance and governance practices and will further shape the evolving landscape of corporate regulation in India.
Authors: Manisha Singh and Kratika Patel