Corporate Laws Amendment Bill 2026: Key Changes Explained

Last verified: March 2026

The Corporate Laws Amendment Bill 2026 proposes sweeping changes to both the Companies Act, 2013 and the Limited Liability Partnership Act, 2008 — affecting how companies are governed, how directors are held accountable, and how compliance obligations are structured across India. Introduced in the Lok Sabha on March 23, 2026, and referred to a Joint Parliamentary Committee the same day, this Bill amends over 60 sections of the Companies Act and introduces significant reforms to the LLP framework. If you are a company secretary, chartered accountant, independent director, startup founder, or corporate lawyer, the provisions in this Bill will reshape your daily practice. This post breaks down every major amendment — from decriminalisation of offences and expanded small company thresholds to NFRA’s new enforcement powers and the introduction of IFSC LLPs — so you can prepare before these changes take effect.

Table of Contents

• What Is the Corporate Laws Amendment Bill 2026?
• Key Amendments to the Companies Act 2013
  • Decriminalisation and Penalty Reforms
  • Recovery Officer Mechanism
• Director and Board Governance Changes
  • Fit and Proper Criteria for Directors
  • Director Disqualification Cascading
  • KMP Resignation Rules (New Section 203A)
• Small Companies, CSR, and Compliance Relief
  • Small Company Thresholds
  • CSR Threshold Increase
  • Board Meeting and Compliance Simplification
• Meeting and Digital Governance Changes
  • Virtual and Hybrid AGMs
  • Electronic Document Service
• Capital Structure, Buyback, and Employee Compensation
  • Share Buyback Reforms
  • RSUs and SARs Recognition
• NFRA, IBBI, and Audit Reforms
  • NFRA as Body Corporate
  • IBBI as Valuation Authority
  • Audit Exemption for Small Companies
• LLP Act Amendments
  • IFSC LLP Framework
  • Trust-to-LLP Conversion
• Merger, Amalgamation, and Restructuring
• Frequently Asked Questions

What Is the Corporate Laws Amendment Bill 2026?

The Corporate Laws (Amendment) Bill, 2026 is a legislative proposal introduced by the Ministry of Corporate Affairs in the Lok Sabha on March 23, 2026. The Bill seeks to amend two foundational statutes governing business entities in India — the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. It was referred to a Joint Parliamentary Committee on the same day it was introduced.

The Bill addresses long-standing demands from industry, professional bodies, and regulatory stakeholders to simplify compliance, reduce the criminalisation of procedural defaults, and modernise corporate governance frameworks. It touches over 60 sections of the Companies Act alone and introduces entirely new provisions such as Section 203A (KMP resignation), Section 454B (Recovery Officer), Section 454C (Settlement proceedings), Section 43A (IFSC company share capital in foreign currency), Section 12A (mandatory website and email for prescribed companies), and Section 233A (treasury shares regulation).

The scope of the Bill is broad. On the Companies Act side, it covers decriminalisation of offences, expansion of small company thresholds, changes to CSR applicability, virtual AGM provisions, director governance reforms, NFRA strengthening, IBBI designation as Valuation Authority, share buyback flexibility, and recognition of RSUs and SARs alongside ESOPs. On the LLP Act side, it introduces the concept of IFSC LLPs operating in foreign currency, enables trust-to-LLP conversion for SEBI and IFSCA-registered trusts, and decriminalises select procedural defaults.

For professionals who work with the Companies Act daily — company secretaries filing forms with the MCA, chartered accountants conducting statutory audits, advocates advising boards on governance — this Bill represents the most significant set of amendments since the Companies (Amendment) Act, 2020. Understanding each provision now, while the Bill is before the Joint Parliamentary Committee, gives you time to prepare compliance strategies before notification.

Key Amendments to the Companies Act 2013

The Companies Act, 2013 amendments in this Bill fall into several categories: penalty reform, governance modernisation, compliance simplification, and regulatory strengthening. Each category affects different professional audiences differently, and the practical implications go beyond the text of the amended sections.

Decriminalisation and Penalty Reforms

One of the most discussed features of the Bill is the decriminalisation of over 20 offences under the Companies Act. The Bill converts criminal penalties (imprisonment plus fine, prosecuted through courts) into civil penalties (monetary only, adjudicated by officers appointed by the Central Government). This continues the trajectory started by the Companies (Amendment) Act, 2020, which decriminalised several compoundable offences.

Under the current regime, defaults such as failure to furnish information required by the Registrar, contravention of rules under various sections, violations related to books of account maintenance, and failure to comply with producer company requirements can attract imprisonment. The Bill replaces these with fixed monetary penalties. For example, Section 26 violations now attract a penalty of Rs 2 lakh instead of criminal prosecution. Section 4(5)(ii) prescribes a fixed Rs 50,000 penalty for wrong incorporation information, rationalised down from the previous Rs 1 lakh ceiling. Section 128(6) imposes Rs 5 lakh for listed companies and Rs 50,000 for others for books of account violations. Section 99 converts criminal fines for AGM-related non-compliance into capped monetary penalties.

The Bill also adjusts the threshold for the lesser fraud provision under Section 447. Under the current framework, fraud involving an amount less than Rs 10 lakh attracts a lesser penalty of up to five years imprisonment. The Bill raises this threshold, meaning that a larger range of lower-value fraud cases will fall under the lesser penalty provision rather than the more severe imprisonment regime. For the most current threshold details, refer to the Bill text on PRS India.

Professional forums — particularly on CA Club India — have raised a legitimate concern: will decriminalisation reduce deterrence for corporate fraud? The answer lies in understanding what has been decriminalised and what has not. The Bill targets procedural and technical defaults — late filings, form errors, non-compliance with registrar requisitions — not substantive fraud. Serious offences involving misrepresentation, fraud, and misappropriation continue to carry criminal liability. The shift is designed to reduce the burden on criminal courts for matters that are better handled through administrative penalties, while retaining the threat of imprisonment where it matters most.

The compounding authority under Section 441 has also been expanded. Regional Directors can now compound offences involving amounts up to Rs 1 crore, increased from the previous lower threshold. This gives companies a faster resolution mechanism without approaching the NCLT for compounding.

Recovery Officer Mechanism

A significant new enforcement mechanism introduced by the Bill is the Recovery Officer under new Section 454B. When a civil penalty imposed under the Companies Act or LLP Act remains unpaid, a Recovery Officer appointed by the Central Government can be deployed to recover the amount. The Recovery Officer has powers to attach and sell both movable and immovable property, attach bank accounts, and enforce recovery in a manner that mirrors the Income Tax recovery provisions.

This provision addresses a genuine gap in the current framework. Under the existing system, civil penalties imposed by adjudicating officers often go unpaid because enforcement mechanisms are weak. The Recovery Officer mechanism gives teeth to the decriminalised penalty regime — while the offence may no longer be criminal, the penalty will now be enforced with powers comparable to tax recovery authorities.

Additionally, the Bill introduces a Settlement Proceedings mechanism under new Section 454C, where a “Specified Authority” can conduct settlement proceedings for penalty contraventions. This provides an alternative dispute resolution pathway before recovery action is initiated. CS and CA professionals advising companies on compliance should factor in that penalties under the new regime, while not criminal, will be aggressively enforced — a point that several practitioners have noted is being underestimated.

Director and Board Governance Changes

The Bill introduces several changes to how directors are appointed, disqualified, and held accountable. These changes affect independent directors, additional directors, and executive KMPs differently.

Fit and Proper Criteria for Directors

The Bill introduces a “fit and proper person” test for directors, with the criteria to be prescribed through rules by the Central Government. While the exact parameters are not yet defined in the Bill itself, the concept borrows from financial sector regulation where SEBI and RBI already apply fit and proper tests for key managerial personnel of regulated entities.

Under the amended Section 164, new grounds for disqualification have been added. Auditors, secretarial auditors, cost auditors, registered valuers, and insolvency professionals who have served a company, its holding company, subsidiary, or associate during the preceding three years or the current financial year cannot be appointed as directors of that company. This creates a clear cooling-off period between professional service roles and board positions.

The period of non-filing that triggers disqualification has been reduced from three consecutive financial years to two. If a company fails to file financial statements or annual returns for two consecutive financial years, its directors become liable for disqualification. Independent director requirements have also been tightened — the cooling-off period now extends to include “or during the current financial year,” and the transaction threshold with legal or consulting firms has been changed from “10% or more” to “10% or such lower percentage as may be prescribed.”

CS professional forums have raised a practical concern about the fit and proper criteria: until the rules prescribing specific parameters are notified, there is ambiguity about what exactly qualifies or disqualifies a person under this test. Professionals advising boards should monitor the rule-making process closely and prepare board evaluation frameworks that anticipate these criteria.

Director Disqualification Cascading

Perhaps the most consequential change for directors who sit on multiple boards is the cascading disqualification provision. Under the amended framework, when a director is disqualified, the disqualification creates a vacancy in all companies where that person serves as director — not just the company that triggered the disqualification. The vacancy takes effect after six months from the date of disqualification or at the end of the director’s tenure, whichever is earlier.

This six-month grace period is a critical safeguard, particularly for startup founders and independent directors who serve on multiple boards. Without it, a disqualification triggered by one company’s non-compliance could immediately create governance crises across every other company where that director holds office. The six-month window gives companies time to find replacement directors and ensure continuity.

Startup founders have raised this as a significant concern in investor and founder forums. A founder who sits on the boards of three or four group entities faces the risk that a compliance failure in one entity — even a procedural default like non-filing of annual returns — can cascade across all entities. The practical advice for multi-board directors is to implement independent compliance monitoring for each entity and ensure that annual return and financial statement filings are never delayed.

KMP Resignation Rules (New Section 203A)

The Bill introduces Section 203A, which creates a formal framework for KMP (Key Managerial Personnel) resignations for the first time. Under this provision, a Chief Financial Officer or Company Secretary may resign by giving written notice to the company. The Board is required to notify the Registrar of Companies about the resignation. If the Board fails to do so, the KMP can directly notify the RoC and include the reasons for resignation.

The resignation becomes effective from the date of receipt by the company or the date specified in the resignation notice, whichever is later. Importantly, the KMP remains liable for any defaults or actions that occurred during their tenure, even after resignation takes effect.

This provision addresses a practical gap that company secretaries and CFOs have long faced. Under the current framework, there is no statutory mechanism for a KMP to ensure their resignation is formally recorded with the RoC if the company’s Board does not act. The direct notification right under Section 203A gives KMPs a self-help remedy that protects their professional standing and limits ongoing liability exposure.

Small Companies, CSR, and Compliance Relief

The Bill significantly expands the definition of small companies and reduces compliance obligations for smaller entities, while also raising the CSR applicability threshold.

Small Company Thresholds

Under the amended Section 2(85), the definition of a small company is expanded by doubling both thresholds. The paid-up share capital upper limit increases from Rs 10 crore to Rs 20 crore, and the turnover upper limit increases from Rs 100 crore to Rs 200 crore. Companies that fall within these limits qualify as small companies and benefit from reduced compliance obligations, including fewer board meeting requirements, extended charge registration timelines, and potential audit exemptions.

The expansion means that a significantly larger number of companies in India will qualify for small company status. For CS professionals managing compliance calendars, this means reclassifying clients that previously fell outside the small company definition and adjusting their compliance requirements accordingly.

CSR Threshold Increase

The CSR applicability threshold under Section 135 has been doubled from Rs 5 crore net profit to Rs 10 crore net profit, or such other sum as may be prescribed. Companies with a net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, remain covered regardless of profit levels.

Additionally, the time period for transferring unspent CSR amounts to the Unspent CSR Account has been extended from 30 days to 90 days (through June 29 of the relevant financial year) for ongoing projects. Companies where the CSR spend obligation is a minimum of Rs 1 crore, or such higher amount as may be prescribed, are no longer required to constitute a separate CSR Committee — the Board can discharge CSR functions directly.

Tax professionals have noted a concern: the raised threshold means fewer companies will be subject to mandatory CSR, potentially reducing the flow of CSR funds to social sector projects. Others argue that the previous Rs 5 crore threshold was catching too many smaller companies for whom CSR compliance was disproportionately burdensome relative to the amounts involved.

Board Meeting and Compliance Simplification

Small companies, one-person companies (OPCs), and dormant companies are now required to hold only one board meeting per calendar year instead of one per half-year. This reduces the procedural burden on entities that have limited board activity.

The charge registration timeline has been extended from 60 days to 120 days for prescribed classes of companies, including small companies. This provides additional time for companies to complete the charge registration process with the RoC without incurring penalties for delayed filing.

Meeting and Digital Governance Changes

The Bill introduces a digital-first approach to corporate meetings and communications, reflecting the post-pandemic shift in how companies operate.

Virtual and Hybrid AGMs

Under the amended Section 96, companies can now hold Annual General Meetings in physical, virtual, or hybrid mode as prescribed by rules. The key safeguard is that at least one physical AGM must be held every three years. This means companies can hold virtual-only AGMs for two consecutive years before a mandatory physical meeting in the third year.

For Extraordinary General Meetings (EGMs), Sections 100 and 101 have been amended to permit virtual and hybrid modes. The notice period for virtual EGMs has been reduced from 21 clear days to 7 clear days (or such period as may be prescribed). Members can also requisition a hybrid mode EGM, ensuring that virtual meetings do not exclude shareholders who prefer in-person participation.

This provision has broad practical implications. Companies will need to invest in virtual meeting infrastructure that supports voting, real-time questioning, and quorum verification. The hybrid model — where some shareholders attend physically while others join virtually — adds technical complexity but preserves shareholder access.

Electronic Document Service

Under the amended Section 20 and the new Section 12A, prescribed classes of companies (likely including listed and unlisted public companies meeting certain thresholds) must maintain official websites and email addresses, and may serve specified documents to members exclusively through electronic mode. Electronic delivery will constitute valid legal compliance.

Members who wish to receive physical copies can request them under procedures to be prescribed by rules. The shift to electronic-only default service reduces printing and postage costs for companies while also creating a verifiable record of document delivery through digital channels.

Capital Structure, Buyback, and Employee Compensation

The Bill introduces flexibility in capital structure management, particularly around share buyback rules and employee compensation frameworks.

Share Buyback Reforms

Under the amended Section 68, the Bill introduces several changes to the buyback framework. While the general cap of 25% of aggregate paid-up capital and free reserves remains, the Central Government can now prescribe different maximum buyback percentages for different classes of companies. This opens the door for larger buyback limits for specific company categories.

Debt-free companies receive additional flexibility: they may now conduct up to two buyback offers in a single financial year, provided there is a minimum six-month gap between offers. Under the current regime, the minimum gap is one year. The requirement for directors to file a solvency affidavit has been eliminated, reducing procedural steps.

Unpaid or unclaimed amounts from bought-back and extinguished shares that remain unclaimed for seven or more years will be credited to the Investor Education and Protection Fund (IEPF). This extends the IEPF framework to cover buyback-related amounts alongside dividends.

RSUs and SARs Recognition

The Bill amends Section 62 to expand employee compensation beyond stock options (ESOPs) to include Restricted Stock Units (RSUs), Stock Appreciation Rights (SARs), and other schemes linked to the value of share capital. This recognition brings the Companies Act in line with contemporary employee compensation practices that are already widely used by Indian startups and listed companies.

The recognition extends across several sections. RSUs and SARs are now covered under employee share issuance preferences in Section 62(1)(b), excluded from private placement allottee calculations under Section 42(2), and included in buyback eligibility calculations under Section 68(5)(c). For companies that have been issuing RSUs and SARs under contractual arrangements without explicit statutory backing, this formal recognition provides legal certainty.

NFRA, IBBI, and Audit Reforms

The Bill significantly strengthens institutional frameworks for audit regulation and valuation, with NFRA receiving the most substantial upgrade.

NFRA as Body Corporate

The National Financial Reporting Authority (NFRA) is reconstituted as a body corporate under the amended Section 132 and new Sections 132A through 132K. This is a fundamental structural change — NFRA moves from being a body established under the Companies Act to being an independent statutory body corporate with its own legal personality.

The Chairperson of NFRA now has general superintendence and direction of NFRA affairs, with the power to delegate functions to members or officers through general or special orders. NFRA can issue advisory notices, censure, or warnings to auditors and audit firms. It can impose penalties, debar members and firms, and refer matters to the Central Government for further action. Non-compliance with NFRA orders can result in imprisonment, fines, and extended debarment.

NFRA also gains regulation-making powers and the authority to appoint its own secretary and staff. A dedicated NFRA Fund is established under Section 132B, with funding from Central Government grants, audit fees, and other receipts.

Auditors must now intimate their ICAI registration details to NFRA within a prescribed timeframe under Section 132A, and file documents, returns, and information as specified by NFRA regulations. Penalties for non-compliance range from Rs 25,000 to Rs 5 lakh per day (maximum Rs 25 lakh), and for filing false information, from Rs 50,000 to Rs 10 lakh per day (maximum Rs 50 lakh).

The practical impact for audit firms is substantial. NFRA’s expanded powers mean that audit quality oversight will intensify, and firms will need to invest in compliance systems to meet NFRA’s registration and reporting requirements. For chartered accountants, this represents a shift toward a more regulated audit environment comparable to the PCAOB framework in the United States.

IBBI as Valuation Authority

The Bill designates the Insolvency and Bankruptcy Board of India (IBBI) as the Valuation Authority responsible for granting certificates of registration and recognition to registered valuers and valuer organisations. IBBI will make recommendations to the Central Government on valuation standards and ensure compliance. Valuer appointments now require an audit committee resolution.

This centralises valuation regulation under IBBI, which already oversees registered valuers under the Insolvency and Bankruptcy Code. The consolidation reduces regulatory overlap and creates a single point of accountability for valuation standards across the corporate framework.

Audit Exemption for Small Companies

The Bill introduces provisions that allow prescribed classes of companies — likely small companies meeting certain thresholds — to be exempted from mandatory auditor appointment requirements under Chapter X. Additionally, prescribed classes of audit firms may be prohibited from providing non-audit services to companies, their holding companies, or subsidiaries, with the restriction extending three years beyond the completion of the audit term.

The audit exemption for small companies has generated concern among tax professionals about potential misuse. Without a mandatory audit requirement, there is a risk that some entities could operate as shell companies with minimal financial oversight. The rules prescribing which company classes qualify for the exemption will need to balance compliance relief with anti-abuse safeguards.

LLP Act Amendments

The Bill introduces important changes to the LLP Act, 2008, with the most significant being the IFSC LLP framework and trust-to-LLP conversion.

IFSC LLP Framework

The Bill creates a new category of “specified IFSC LLPs” — Limited Liability Partnerships incorporated within International Financial Services Centres and regulated by IFSCA. These LLPs can operate entirely in foreign currency, with partner contributions, books of account, and financial statements all maintained in a permitted foreign currency.

New definitions are added to Section 2 of the LLP Act covering IFSC, IFSCA, permitted foreign currency, and specified IFSC LLPs. IFSC LLPs must include their designation in the entity name (Section 15), maintain their registered office within IFSC zones (Section 13), and account for partner contributions in foreign currency (Section 32). Their books of account must be maintained in foreign currency under Section 34, with IFSCA having discretion to permit maintenance in Indian rupees.

LLPs already operating in IFSCs must convert existing partner contributions from INR to foreign currency within a prescribed timeline, and no new INR contributions are permitted after the amendment takes effect. This framework positions India’s IFSCs to compete with international financial centres like Dubai and Singapore for fund management, financial services, and fintech operations.

Investor forums have raised questions about the practical mechanics — particularly around exchange rate treatment during the conversion period and how cross-border profit distributions will interact with FEMA provisions. These operational details will be clarified through rules and IFSCA circulars.

Trust-to-LLP Conversion

The Bill enables the conversion of specified trusts into LLPs through new Section 57A and amended Section 58 of the LLP Act. The trusts eligible for conversion are those established under the Indian Trusts Act, 1882 or any other central or state Act, registered with SEBI or the IFSC Authority, and engaged in prescribed activities.

Upon conversion, all assets, liabilities, rights, and obligations of the trust automatically vest in the new LLP, with the original entity dissolved. Legal proceedings that were pending at the time of conversion continue without disruption — the LLP steps into the shoes of the trust for all legal purposes.

This provision is particularly relevant for Alternative Investment Funds (AIFs) structured as trusts. The conversion pathway gives fund managers the option to restructure into an LLP format, which may offer advantages in terms of governance flexibility, limited liability protection, and regulatory treatment. The consent threshold for conversion and the specific activities that qualify will be prescribed through rules.

Merger, Amalgamation, and Restructuring

The Bill makes significant changes to the merger and amalgamation framework under Sections 230 to 233, aimed at simplifying the approval process and reducing the involvement of multiple tribunals.

Under the amended fast-track merger provisions in Section 233, the approval thresholds have been reduced. Shareholder approval now requires a majority in number representing 75% in value of shares among members present and voting, down from the previous 90% threshold. Creditor approval similarly requires a 75% majority in value, reduced from 90%. This makes fast-track mergers more achievable for companies where securing 90% approval was practically difficult due to dispersed shareholding.

For schemes involving companies under different NCLT jurisdictions, the Bill eliminates the requirement for adjudication by multiple NCLTs. The transferee or resultant company’s NCLT jurisdiction is now sufficient. This removes a major procedural bottleneck that delayed cross-jurisdiction mergers.

The requirement for an Official Liquidator (OL) report in demerger cases has been eliminated, and the Regional Director’s findings on fast-track mergers are filed with the transferee company’s Tribunal only. These changes streamline the regulatory process without compromising substantive oversight.

The Bill also introduces Section 233A governing treasury shares, creating a three-year sunset period for existing treasury shares after which they lose voting rights. Non-compliance leads to automatic cancellation and extinguishment of treasury shares as a capital reduction, with a daily penalty of Rs 10,000 for the company and its officers.

Disclaimer: This article is for informational and educational purposes only and does not constitute legal advice. Laws, rules, and procedures are subject to change. For advice specific to your situation, consult a qualified legal professional. Information is current as of March, 2026.

Frequently Asked Questions

1. What is the Corporate Laws Amendment Bill 2026?

The Corporate Laws (Amendment) Bill, 2026 is a legislative proposal introduced in the Lok Sabha on March 23, 2026, by the Ministry of Corporate Affairs. It seeks to amend the Companies Act, 2013 and the Limited Liability Partnership Act, 2008 to simplify compliance, decriminalise procedural offences, modernise governance frameworks, and strengthen regulatory institutions like NFRA and IBBI.

2. When was the Corporate Laws Amendment Bill 2026 introduced?

The Bill was introduced in the Lok Sabha on March 23, 2026. On the same day, it was referred to a Joint Parliamentary Committee (JPC) for detailed examination. The JPC will review the provisions and submit its report before the Bill returns for parliamentary debate and voting.

3. What is the current status of the Corporate Laws Amendment Bill 2026?

As of March 2026, the Bill has been referred to a Joint Parliamentary Committee. It has not yet been passed by either House of Parliament. The provisions will take effect only after the Bill is passed and receives Presidential assent, followed by notification of specific sections by the Central Government.

4. What is decriminalisation under the Corporate Laws Amendment Bill?

The Bill decriminalises over 20 offences under the Companies Act and LLP Act by converting criminal penalties (imprisonment plus fine) into civil penalties (monetary only). This applies to procedural and technical defaults such as late filings, non-compliance with registrar requisitions, and contravention of rules — not to substantive fraud, which continues to carry criminal liability.

5. How does the Bill affect virtual AGMs?

The Bill permits Annual General Meetings to be held in physical, virtual, or hybrid mode. However, at least one physical AGM must be held every three years. Virtual EGMs can be called with a reduced notice period of 7 clear days instead of 21. Members can also requisition a hybrid mode EGM.

6. What is the “fit and proper” test for directors?

The Bill introduces a “fit and proper person” criterion for director appointments under Section 164. The specific parameters will be prescribed through rules by the Central Government. The concept is similar to fit and proper tests already applied by SEBI and RBI for regulated entities, and it will likely cover financial integrity, competence, and track record.

7. How does the Bill change merger and amalgamation approvals?

The fast-track merger approval threshold is reduced from 90% to 75% for both shareholders (by value of shares among members present and voting) and creditors (by value). Multi-NCLT adjudication is eliminated in favour of the transferee company’s NCLT jurisdiction. The OL report requirement for demergers is also removed.

8. What are the new NFRA powers under the Bill?

NFRA is reconstituted as a body corporate with independent legal personality. It gains the power to issue advisory notices, censure, and warnings, impose penalties and debar auditors, make its own regulations, appoint staff, and establish a dedicated fund. Auditors must register with NFRA and file prescribed documents, with daily penalties ranging from Rs 25,000 to Rs 10 lakh for non-compliance.

9. How does the Recovery Officer mechanism work?

Under new Section 454B, when civil penalties imposed under the Companies Act or LLP Act remain unpaid, a Recovery Officer appointed by the Central Government can attach and sell movable and immovable property, and attach bank accounts to recover the unpaid amount. The powers mirror Income Tax recovery provisions.

10. How does the Bill affect small companies?

Small company thresholds are doubled — paid-up capital limit increases to Rs 20 crore (from Rs 10 crore) and turnover limit increases to Rs 200 crore (from Rs 100 crore). Small companies benefit from reduced board meeting requirements (one per calendar year instead of one per half-year), extended charge registration timelines (120 days instead of 60), and potential audit exemptions.

11. What changes for share buyback under the Bill?

The 25% cap on buyback remains the general rule, but the Central Government can prescribe different percentages for different company classes. Debt-free companies can now conduct two buyback offers per year with a six-month gap (previously one year). The director solvency affidavit requirement is eliminated.

12. What are RSUs and SARs under the Bill?

The Bill amends Section 62 to formally recognise Restricted Stock Units (RSUs), Stock Appreciation Rights (SARs), and other share-value-linked schemes alongside ESOPs. This gives statutory backing to compensation instruments already widely used by Indian startups and listed companies.

13. How does trust-to-LLP conversion work?

Under new Section 57A and amended Section 58 of the LLP Act, trusts established under the Indian Trusts Act, 1882 or other legislation, registered with SEBI or IFSCA, and engaged in prescribed activities can convert to LLPs. Upon conversion, all assets, liabilities, and legal proceedings transfer automatically to the new LLP.

14. What are the IFSC LLP provisions?

The Bill creates “specified IFSC LLPs” that operate within International Financial Services Centres in foreign currency. Partner contributions, books of account, and financial statements can all be maintained in permitted foreign currencies. Existing IFSC LLPs must convert INR contributions to foreign currency within a prescribed timeline.

15. What concerns have been raised about the Bill?

Key concerns include whether decriminalisation will reduce deterrence for corporate misconduct, ambiguity around the “fit and proper” criteria until rules are notified, the risk of audit exemptions enabling shell companies, the cascading impact of director disqualification on multi-board directors, and the mechanics of trust-to-LLP conversion for AIFs including consent thresholds and FEMA implications.

Conclusion

The Corporate Laws Amendment Bill 2026 represents the most comprehensive set of amendments to India’s corporate law framework since the Companies Act was enacted in 2013. From decriminalisation and penalty reform to NFRA strengthening, virtual AGM provisions, and the introduction of IFSC LLPs, the Bill touches virtually every aspect of how companies and LLPs are governed in India. While the Bill is currently before a Joint Parliamentary Committee and its provisions will take effect only after passage and notification, the direction of reform is clear. Professionals who begin preparing now — updating compliance frameworks, reviewing board governance processes, and understanding the new penalty and enforcement mechanisms — will be best positioned when these changes take effect. Bookmark this page and check back for updates as the Bill progresses through Parliament.