With the passage of time, change is inevitable. Considering the same, Corporate Amendment Bill, 2026 (Hereinafter referred as ‘the Bill’) has been presented by getting inspired by the recommendations of Company Law Committee, 2022. The committee was made by the Ministry of Corporate Affairs (MCA). The Committee convened five sessions of meetings during which time each topic included in this report was thoroughly addressed and an attempt was made to establish an agreement.[1]
The Companies Act, 2013 and the Limited Liability Partnership Act, 2008 (LLP Act) were enacted with the objective of equipping Indian companies to effectively meet global standards and requirements. Since the economic reforms of 1991, successive governments have introduced numerous reforms, initiatives, and schemes to strengthen various sectors of the economy and address the challenges faced by each sector.
The Bill has been referred to the Joint Parliamentary Committee (JPC). This was seen as an unusual step, but the primary objective behind it was to ensure extensive scrutiny of the Bill, as it had wide public impact and involved several complex issues that needed careful consideration Collectively, these changes reflect a maturing regulatory philosophy that seeks to move away from form-heavy compliance to outcome-based, risk-aligned regulation[2]. If the Bill is passed, the National Financial Reporting Authority (NFRA) will gain stronger enforcement powers, while the Insolvency and Bankruptcy Board of India (IBBI) will become the designated valuation authority.
THE SHIFT IN THRESHOLDS
| Currently | Revision | |
| Small company classification | • Paid-up capital: INR 100 million • Turnover: INR 1 billion | Paid-up capital: INR 200 million Turnover: INR 2 billion |
| CSR applicability | Net profit : INR 50 million | Net profit : 100 million |
| Additional time for registration of charges, under the ad valorem fee route | 60 days | 120 days |
| Threshold for compounding by Regional Directors | 25 million | 1 billion |
The limit for small company is made 2 times more in both turnover and paid-up capital. Now the MSME pattern, small sized company has taken the place of middle-sized company. This will benefit the medium sized companies as now they will fall in small sized companies and have less compliance cost, annual filing to follow.
Smaller companies will benefit from CSR applicability as now the threshold for CSR applicability will be increased. this will lead to increase in ease of doing business for growing companies boosting innovation, economic growth and development.
The liberal procedural rules with regard to registration charges have reduced harsh penalties for procedural delays helping companies avoid unnecessary penalties and procedural hardship.
The unnecessary court proceedings are removed with increasing the threshold for compounding penalties by regional directors.
COMPLIANCESThe proposed amendment to Section 96 of Companies Act, 2013 would bring significant flexibility to corporate governance by allowing companies to conduct Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) in physical, virtual, or hybrid mode on a permanent statutory basis. A new sub-section 100(7) of Companies Act, 2013 is proposed to permit companies to hold EGMs physically or through electronic or hybrid modes, subject to members’ requisition rights.
Section 101 of Companies Act, 2013 is proposed to allow shorter notice periods for EGMs conducted wholly through electronic means, in the manner and duration as may be prescribed.
This change would enable greater participation, reduce logistical constraints, and support the increasing use of digital platforms in corporate functioning. At the same time, the requirement to hold at least one physical AGM every three years would help maintain direct shareholder engagement and accountability.
NFRASection 132 of Companies Act, 2013 is proposed to be revised to strengthen the National Financial Reporting Authority (NFRA) by recognizing it as a body corporate, extending its jurisdiction to bodies corporate, and enhancing its supervisory and enforcement powers, including stricter penalties for non-compliance.[3] Through amendment section 132 A it to be inserted.[4]
Under the proposed framework, National Financial Reporting Authority (NFRA) would be empowered to issue advisories, censures, and warnings, require additional professional training, and refer matters to the Central Government, among other functions. Collectively, these provisions aim to establish a comprehensive NFRA-led audit regulatory framework covering auditor registration, oversight, and enforcement.
DECRIMINALISATIONThe Bill introduces major changes to how corporate offences and penalties are handled. Section 441 Companies Act, 2013 increases the limit for compounding offences from ₹25 lakh to ₹1 crore, which is expected to reduce court cases and ease the litigation burden.[5]
New Sections 454B to 454D Companies Act, 2013 strengthen the penalty system by allowing authorities to recover unpaid penalties, providing a settlement option for certain violations, and requiring companies to deposit 10% of the penalty amount before filing an appeal.
A key change is the decriminalisation of many procedural defaults, such as delays in filings, minor documentation errors, lapses in Board procedures, buy-back rules, charge registration, prospectus requirements, and directors’ disclosure obligations. These will no longer lead to imprisonment but will instead be treated as civil offences with monetary penalties imposed by designated officers.
To support this, Section 454C introduces a settlement process where companies can resolve penalty matters before a final order is passed. Section 454B also allows authorities to recover penalties by attaching property or bank accounts if payments are not made.[6]
Pending criminal cases related to such procedural defaults will be withdrawn and shifted to the new penalty system. This makes compliance outcomes more predictable since penalties are fixed and measurable instead of uncertain criminal proceedings.
Overall, companies may benefit by clearing past non-compliances through settlement and improving their compliance record, especially during mergers or acquisitions. However, since penalties have not been significantly increased in many cases, there are concerns that it might lead to weaker compliance in some areas.
LLP ACTThe Bill introduces several key changes for Limited Liability Partnerships (LLPs). For LLPs in an International Financial Services Centre (IFSC), it requires that they carry out permitted financial services activities, maintain their registered office within the IFSC, and disclose partner contributions in permitted foreign currency, along with a transition plan for existing LLPs.
It also allows certain trusts to convert into LLPs under a new legal framework, provided they are registered with SEBI or the IFSC Authority, and their trustees’ become partners in the LLP.
A voluntary adjudication mechanism is introduced, enabling LLPs or their partners to apply for settlement of penalties by paying prescribed fees.
The Bill further simplifies incorporation requirements by making professional certification mandatory only when an advocate, chartered accountant, cost accountant, or company secretary is actually involved in forming the LLP.
In addition, it introduces a valuation framework for LLPs by aligning partner contribution valuation with Section 247 of the Companies Act, 2013, ensuring a standardized method for valuing assets, liabilities, and contributions.
CONCLUSIONThus, the Bill not only changes the framework for the employees but employers as well by making amendments to private placement proposed under Section 42(2) of Companies Act, 2013extending statutory recognition to RSUs, SARs and similar instruments. The Bill focuses on making amendments in more than 107 clauses, to change the entire corporate governance landscape which will make India’s company standout at global level with simplified regulatory framework.
Authored By:Varun S. Ahuja
Ahuja Law Offices
M: 9971673660
[1] https://www.legalbites.in/company-law/a-comprehensive-study-of-the-company-law-committee-report-2022-552489 , visited at 14 may,2026
[2] https://www.ey.com/content/dam/ey-unified-site/ey-com/en-in/technical/alerts-hub/documents/2026/03/regulatory-alert-corporate-laws-amendment-bill2026.pdf
[3] https://www.scconline.com/blog/post/2026/04/01/corporate-laws-amendment-bill-2026-introduced-in-lok-sabha/?utm_source=chatgpt.com)**
[4] https://www.cyrilshroff.com/wp-content/uploads/2026/03/Client-Alert-The-Corporate-Laws-Amendment-Bill-2026.pdf
[5] https://www.scconline.com/blog/post/2026/04/01/corporate-laws-amendment-bill-2026-introduced-in-lok-sabha/?utm_source=chatgpt.com)**
[6] https://www.cyrilshroff.com/wp-content/uploads/2026/03/Client-Alert-The-Corporate-Laws-Amendment-Bill-2026.pdf