Corporate Laws (Amendment) Bill, 2026 A Comprehensive Analysis: 107 Clauses, Two Laws, One Transformative Overhaul
On 18th March 2026, Finance Minister Nirmala Sitharaman introduced the Corporate Laws (Amendment) Bill, 2026 in Lok Sabha – simultaneously amending the Limited Liability Partnership Act, 2008 and the Companies Act, 2013.
This is not routine legislative housekeeping. This bill is the most comprehensive overhaul of Indian corporate law since the Companies (Amendment) Act, 2017. It decriminalises over 40 offences, restructures the NFRA into a quasi-judicial regulator, formally recognises IFSC/GIFT City entities, creates a new valuation architecture under IBBI, and fundamentally alters the compliance landscape for every company registered in India.
This article provides a section-by-section analysis of every material change – with exact statutory language, the amendment, and its practical consequences.
PART I: AMENDMENTS TO THE LIMITED LIABILITY PARTNERSHIP ACT, 2008
1. New Definitions – Section 2(1)
The bill inserts four new definitions into the LLP Act, creating the legal framework for IFSC/GIFT City operations.
1.1 Specified IFSC LLP [New Clause (tb)]
Existing provision: No definition of IFSC LLP existed in the LLP Act.
| NEW | “Specified International Financial Services Centre LLP” means a limited liability partnership which is set up in an International Financial Services Centre and regulated by the International Financial Services Centres Authority. |
Also inserted: “permitted foreign currency” means a currency which may be specified by the International Financial Services Centres Authority in consultation with the Central Government. [Clause (qa)]
Practical Impact: This creates a distinct legal sub-category of LLP – with a separate regulatory framework, naming convention, currency, and compliance regime – mirroring what Section 43A now does for IFSC companies under the Companies Act.
1.2 IFSC LLP – Registered Office, Name, Contributions [Sections 13, 15, 32]
Three mandatory requirements now apply to Specified IFSC LLPs:
| Provision | Existing Law | Post-Amendment |
| Section 13 – Registered Office | Office may be anywhere in India | Specified IFSC LLP shall have its registered office at an International Financial Services Centre, at all times |
| Section 15 – Name | Ends with “LLP” or “Limited Liability Partnership” | Must include suffix “International Financial Services Centre LLP” |
| Section 32 – Contributions | Monetary value disclosed in accounts as prescribed | Each partner’s contribution must be accounted and disclosed in permitted foreign currency |
2. Trust-to-LLP Conversion – New Section 57A + Fifth Schedule
This is arguably the most significant LLP amendment for the Alternative Investment Fund (AIF) ecosystem.
Existing provision: Section 58 permitted conversion only from a firm, private company, or unlisted public company into an LLP. Trusts were excluded.
| NEW S.57A | “A specified trust may convert into a limited liability partnership in accordance with the provisions of this Chapter and the Fifth Schedule.” Explanation: ‘specified trust’ means a trust established under the Indian Trusts Act, 1882 or under a Central Act or State Act, and registered by the Securities and Exchange Board of India, or by the International Financial Services Centres Authority, as the case may be, having such activities as may be prescribed. |
Fifth Schedule – Key conditions:
- Trustees of the specified trust shall alone become partners of the resulting LLP – no third party can become partner
- Consent of three-fourths (3/4th) of the investors of the trust is mandatory
- Upon conversion: all property, assets, interests, rights, privileges, liabilities, obligations transfer to the LLP automatically – without further assurance, act or deed
- Specified trust deemed dissolved upon conversion
- All existing agreements, contracts, employment contracts, court proceedings continue as if LLP were the original party
- Former trustees remain personally liable (jointly and severally with LLP) for obligations incurred before conversion
- LLP must carry a conversion notice on all official correspondence for 12 months
Why this matters: The vast majority of Category I and Category II AIFs registered with SEBI are structured as trusts. This amendment, for the first time, gives them a clear statutory pathway to convert to an LLP – which has lower compliance costs, pass-through taxation, and greater flexibility for fund managers. GIFT City AIFs registered with IFSCA are equally covered.
3. AIF Compliance Relaxations – Sections 23 & 25
Two provisos inserted specifically for SEBI/IFSCA-regulated LLPs (i.e., AIFs structured as LLPs):
| S.23(2) OLD | “The limited liability partnership agreement and any changes, if any, made therein shall be filed with the Registrar in such form, manner and accompanied by such fees as may be prescribed.” |
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| S.23(2) NEW | Proviso added: In case of class or classes of limited liability partnerships regulated by SEBI or IFSCA, the requirement of filing any changes in the LLP agreement shall be such as may be prescribed [i.e., annual filing permitted instead of change-by-change]. |
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| S.25(2) NEW | Proviso added: For SEBI/IFSCA regulated LLPs, the requirement to furnish details of changes in partners to the Registrar shall be on an annual basis in such form and manner as may be prescribed. |
Impact: Currently, every change in an AIF’s LLP agreement or partner details requires immediate MCA filing – burdensome for funds with frequent investor subscriptions/redemptions. Annual filing aligns with typical fund reporting cycles.
4. Incorporation Declaration – Optional [Section 11]
One of the most practically significant changes for professionals.
| OLD S.11(1)(c) | “There shall be filed along with the incorporation document, a statement in the prescribed form, made by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the limited liability partnership and by any one who subscribed his name to the incorporation document…” |
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| NEW S.11(1)(c) & (d) | (c) Statement by any one person who subscribed to the incorporation document – always required. (d) Declaration by advocate/CA/CMA/CS – required only where a limited liability partnership engaged such professionals in its formation or incorporation. |
Impact: Professional declaration at LLP incorporation is now optional – triggered only if the professional was actually engaged. This reduces the compliance burden for simple incorporations while retaining the declaration requirement where professionals add substantive value.
5. Appeal Against Registrar – New Section 68B
| NEW S.68B | “Any person aggrieved by the decision of the Registrar under section 12 or section 16, may prefer an appeal to such officer of the Central Government, in such form and manner, and within such period, as may be prescribed.” |
Impact: Sections 12 (certificate of incorporation) and 16 (registered office) decisions of the Registrar were previously not subject to a clear statutory appeal mechanism. This inserts a formal appellate route.
6. Decriminalisation – LLP Act
Section 38(4) inserted – Non-compliance with Registrar requisitions (other than summons):
| OLD S.38(3) | “Any person who, without lawful excuse, fails to comply with any summons or requisition of the Registrar under this section shall be punishable with fine which shall not be less than two thousand rupees but which may extend to twenty-five thousand rupees.” |
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| NEW S.38(4) | “Any person who, without lawful excuse, fails to comply with any requisition of the Registrar, other than summons, under this section, shall be liable to a penalty of ten thousand rupees.” |
Impact: Bifurcation between summons (remains criminal) and other requisitions (now civil penalty of Rs. 10,000). Section 34(6) – books of account default – also decriminalised with penalties substituted for fines.
PART II: AMENDMENTS TO THE COMPANIES ACT, 2013
7. Small Company – Threshold Expansion [Section 2(85)]
This is the single most impactful provision for the Indian SME ecosystem.
| OLD S.2(85) | “small company” means a company, other than a public company – (i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and (ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees. |
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| AMENDED | Sub-clause (i): “ten crore rupees” substituted with “twenty crore rupees” Sub-clause (ii): “one hundred crore rupees” substituted with “two hundred crore rupees” |
Net effect on benefits – small companies are entitled to:
- Board meetings: 1 per calendar year (One Person Company, small company, dormant company) – not once per half-year [amended S.173(5)]
- Penalty reduction: One-half of applicable penalty under any provision – max Rs. 2 lakh (company) and Rs. 1 lakh (officer) [S.446B]
- Charge registration: 120 days instead of 60 days [S.77 – new proviso]
- Auditor appointment: May be exempt – subject to prescribed conditions [new S.139(12)]
- CSR: Below revised thresholds, not required to comply
- Additional fees cap: Rs. 2 lakh maximum on delayed filings [S.403 amendment]
- Compounding: Fast-track compounding before Regional Director
8. CSR – Threshold Revision and Relaxations [Section 135]
| OLD S.135(1) | “Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee…” |
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| AMENDED S.135(1) | “five crore” substituted with “ten crore, or such sum as may be prescribed” |
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| CSR Parameter | Earlier | After Amendment |
| Net profit trigger for applicability | Rs. 5 crore | Rs. 10 crore (or prescribed sum) |
| CSR Committee exemption threshold | CSR spend < Rs. 50 lakh | CSR spend < Rs. 1 crore (or higher prescribed) |
| Transfer to Unspent CSR A/c (ongoing project) | 30 days from FY end | 90 days from FY end |
| Complete exemption | Not available | Available for prescribed class of companies |
9. AGM/EGM – Hybrid Meetings Enabled [Sections 96, 100, 101]
| NEW S.96(3) | “A company may hold its annual general meeting physically, or through video conferencing or other audio-visual means, either wholly or partly, in such manner and subject to such terms and conditions, as may be prescribed: Provided that if the number of members referred to in sub-section (2) of section 100 requisition the meeting to be held in a hybrid mode, the company shall hold the meeting in such mode: Provided further that every company shall hold its annual general meeting in physical mode at least once in every three years.” |
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| NEW S.100(7) | “A company may hold its extraordinary general meeting physically, or through video conferencing or other audio-visual means, either wholly or partly, in such manner and subject to such terms and conditions, as may be prescribed: Provided that if the number of members referred to in sub-section (2) requisition the meeting to be held in a hybrid mode, the company shall hold the meeting in such mode.” |
Section 101 amendment: EGMs conducted wholly through video conferencing may be called by giving only 7 days notice (instead of 21 days).
Key safeguard: Physical AGM mandatory at least once every 3 years – pure virtual operations not permanently permitted.
10. Director Identification Number – Complete Framework [Section 154]
Section 154 was previously a single-line provision. The bill restructures it with sub-sections (2) through (7) – creating a full lifecycle framework:
| OLD S.154 | “The Central Government shall, within one month from the receipt of the application under section 153, allot a Director Identification Number to an applicant in such manner as may be prescribed.” |
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| NEW S.154(2) | “A person who has been allotted Director Identification Number under sub-section (1) shall submit such information towards verification of his particulars to the Central Government or an officer authorised by that Government in this behalf at such intervals and in such manner, as may be prescribed.” |
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| NEW S.154(3) -DEACTIVATION/CANCELLATION | DIN may be deactivated or cancelled where: (a) the person does not comply with periodic verification under S.154(2); or (b) the DIN was allotted in contravention of law; or (c) the director has incurred disqualification under S.164, or where Tribunal/court has passed an order. |
Consequences – S.154(4) & (5): Deactivated DIN = director cannot function. Cancelled DIN = office becomes vacant.
Section 167(2) simultaneously amended: Director who functions knowing his office is vacant/DIN is deactivated/cancelled faces penalty of Rs. 5 lakh (listed company) or Rs. 2 lakh (other company) – previously punishable with imprisonment.
11. Director Disqualifications – New Grounds [Section 164]
Two new grounds for disqualification as director added:
| NEW S.164(1)(j) | “He has been an auditor or a secretarial auditor or a cost auditor or a registered valuer or an insolvency professional of the company or its holding, subsidiary or associate company discharging the functions as such under this Act or under the Insolvency and Bankruptcy Code, 2016 during the immediately preceding three financial years or during the current financial year.” Explanation: Where audit/valuation is by a firm, such partners who conducted the audit/valuation are disqualified. |
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| NEW S.164(1)(k) | “He has not been assessed by the Board to be a fit and proper person in accordance with such criteria, as may be prescribed: Provided that different criteria for fit and proper person may be prescribed for different class or classes of companies.” |
Section 164(2) – Non-filing disqualification trigger tightened: Changed from ‘three financial years’ to ‘two financial years’ of continuous non-filing of financial statements or annual returns.
Section 167(1)(a) – Office vacation amended: Where disqualification under S.164(2) is incurred, office becomes vacant in all companies (including defaulting company) after 6 months from date of disqualification or expiry of tenure, whichever is earlier. Explanation inserted: ‘date of incurring disqualification’ = date on which company fails to comply with S.164(2)(a) or (b).
12. IFSC Companies – Foreign Currency Share Capital [New Section 43A]
| NEW S.43A(1) | “A company, set up and incorporated in the International Financial Services Centre, shall issue and maintain its share capital in a permitted foreign currency: Provided that a company set up and incorporated in the International Financial Services Centre prior to the commencement of the Corporate Laws (Amendment) Act, 2026 may convert its share capital from Indian rupee to a permitted foreign currency within such period and in such manner, as may be specified by regulations by the International Financial Services Centres Authority, in consultation with the Central Government.” |
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| NEW S.43A(2) | “A company referred to in sub-section (1), maintaining its share capital in a permitted foreign currency shall prepare and maintain its books of account, and other relevant books and papers, financial statements and all other records in the permitted foreign currency.” |
Key safeguard [S.43A(4)]: Fees, fines and penalties under the Companies Act shall continue to be paid in Indian rupees – regardless of the company’s functional currency.
13. Mergers & Amalgamations – Major Structural Changes [Sections 230, 233, 233A]
13.1 Single NCLT Bench – Section 230
| NEW PROVISO S.230(1) | “On and from the commencement of the Corporate Laws (Amendment) Act, 2026, every application to be made under this section or sections 231 to 233 to the Tribunal, shall be made to the Tribunal having jurisdiction over the transferee company or the resultant company, as the case may be, and such Tribunal shall exercise all the powers of the Tribunal referred to in such sections for all the companies involved in the schemes of compromise or arrangement or amalgamations.” |
Impact: Previously, each company involved in a merger had to file before the NCLT bench having jurisdiction over it – creating multiple proceedings. Now a single bench (of the transferee/resultant company) handles all companies involved. Pending applications continue before existing benches under old law.
13.2 Fast-Track Merger – Lower Thresholds [Section 233]
| Approval | Old Threshold | New Threshold |
| Member approval [S.233(1)(b)] | 90% of total number of shares | 75% of value of shares held by members present and voting |
| Creditor approval [S.233(1)(d)] | Nine-tenths (90%) in value | At least three-fourths (75%) in value |
13.3 Treasury Shares – New Section 233A
| NEW S.233A(1) | “Where a transferee company, as a result of a compromise or an arrangement which has taken place prior to the commencement of the Companies Act, 2013, has held any shares in its own name or in the name of any trust (whether on its behalf or on behalf of any of its subsidiary or associate companies), such shares shall, within a period not exceeding three years from the date of commencement of the Corporate Laws (Amendment) Act, 2026, be dealt with or disposed of in such manner, as may be prescribed.” |
S.233A(2): Failure to dispose – shares shall be cancelled and extinguished by the company, deemed to be reduction of share capital.
This targets legacy treasury share structures created under old merger law prior to April 1, 2014.
14. Registered Valuers – IBBI as Valuation Authority [Section 247]
| OLD S.247(1) | “…it shall be valued by a person having such qualifications and experience, registered as a valuer and being a member of an organisation recognised, in such manner, on such terms and conditions as may be prescribed and appointed by the audit committee or in its absence by the Board of Directors of that company.” |
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| NEW S.247(1A) | “The Insolvency and Bankruptcy Board of India established under section 188 of the Insolvency and Bankruptcy Code, 2016 shall be the Valuation Authority for the purposes of this section.” |
IBBI as Valuation Authority shall:
- Grant/renew recognition to valuers’ organisations
- Grant/renew registration to valuers
- Make recommendations on valuation standards and policies
- Monitor and enforce compliance with valuation standards
- Oversee quality of recognised organisations and registered valuers
Penalty regime [New S.247(3), (3A)]:
- Recognised organisation violation: Certificate cancelled (6 months to 10 years) + penalty up to Rs. 1 crore
- Registered valuer violation: Certificate cancelled + penalty up to Rs. 10 lakh
- Fraudulent valuation [S.247(3C)]: Imprisonment up to 1 year + fine Rs. 50,000 to Rs. 25 lakh or 8x remuneration, whichever is less
15. NFRA – From Watchdog to Enforcer [Section 132 + New Sections 132A to 132K]
This is the most substantive set of amendments in the entire bill from a professional perspective. A dedicated analysis appears in Article 2 of this series. Key structural changes:
- NFRA converted to body corporate with perpetual succession and common seal [S.132(1A)]
- New enforcement powers: advisory, censure, warning, mandatory training referral to Central Government [S.132(4)(c)(C)(D)(E)]
- Non-compliance with NFRA order: imprisonment up to 6 months + fine Rs. 1-5 lakh (individual), Rs. 5-25 lakh (firm) [S.132(4A)]
- NFRA Fund created – self-sustaining from fees and penalties [S.132B]
- Auditor registration with NFRA now mandatory [S.132A]
- Supersession by Central Government possible for up to 6 months [S.132H]
- NFRA empowered to levy fees and make regulations [S.132-I, S.132J, S.132K]
16. Buy-Back – Flexibility and New Instruments [Section 68]
| NEW PROVISO S.68(2)(g) | “Provided further that such class or classes of companies, as may be prescribed, may make up to two offers of buy-backs within a period of one year reckoned from the date of the closure of the preceding offer of buy-back, if any, if the second buy-back during the year is not made earlier than six months from the date of closure of the preceding offer for buy-back during the year.” |
New instruments recognized: Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs) added alongside ESOPs in Sections 42, 62, and 68 – recognising their use in executive compensation.
Affidavit requirement removed [S.68(6)]: Declaration of solvency no longer needs to be verified by an affidavit.
Decriminalisation [S.68(11)]: Fine (Rs. 1-3 lakh) → Penalty (Rs. 25 lakh for listed; Rs. 2 lakh for others; officers: Rs. 5 lakh listed, Rs. 2 lakh others).
17. Enforcement Architecture – New Sections 454B, 454C, 454D
17.1 Recovery of Penalties [Section 454B]
| NEW S.454B(1) | “If a person fails to pay the penalty imposed under this Act, the Recovery Officer may draw up under his signature a statement (herein referred to as certificate) in the specified form specifying the amount due from the person and shall proceed to recover from such person the amount specified in the certificate by one or more of the following modes, namely – (a) attachment and sale of movable property; (b) attachment of bank accounts; (c) attachment and sale of immovable properties; (d) arrest of that person and his detention in prison; (e) appointing a receiver for the management of movable or immovable properties, and for this purpose, the provisions of sections 220 to 227, 228A, 229, 232, the Second Schedule and Third Schedule to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962… shall apply with necessary modifications.” |
17.2 Settlement Mechanism [Section 454C]
| NEW S.454C | Any person against whom proceedings are initiated for contravention may file an application to the Specified Authority before the penalty order is passed. Authority may settle on payment of prescribed sum after considering nature, gravity and impact of contravention. No appeal against settlement order. Settlement amounts credited to Consolidated Fund of India. |
17.3 Pre-Deposit for Appeal [Section 454D]
| NEW S.454D | “No appeal by a person, who is required to pay any amount in terms of an order of – (a) the National Financial Reporting Authority under section 132; or (b) the Valuation Authority under section 247; or (c) the adjudicating officer under section 454, shall be entertained by the Appellate Tribunal or Regional Director or the Appellate Authority… unless the appellant has deposited ten per cent. of that amount in the manner as directed.” |
Impact: Ten percent pre-deposit requirement mirrors the GST appellate pre-deposit framework – designed to reduce frivolous appeals while preserving the right of genuine appellants.
18. Decriminalisation – Comprehensive Table
The bill converts criminal offences (punishable with fine/imprisonment) to civil penalties across multiple provisions. Select key changes:
| Section | Subject | Earlier Punishment | Penalty After Amendment |
| S.26(9) | Contravention in prospectus | Fine Rs. 50K-3L (company + person) | Rs. 2 lakh (company + person) |
| S.68(11) | Buy-back default | Fine Rs. 1-3L (company + officer) | Listed: Rs. 25L (co), Rs. 5L (officer); Others: Rs. 2L each |
| S.99 | AGM default | Fine up to Rs. 1L + Rs. 5K/day | Rs. 1L + Rs. 5K/day; max Rs. 2L (co), Rs. 50K (officer) |
| S.128(6) | Books of account default | Fine Rs. 50K-5L | Listed: Rs. 5L; Others: Rs. 50K; (sub-s.1/5: listed Rs. 20L, others Rs. 5L) |
| S.166 | Director duties (except S.5) | Fine Rs. 1-5L | Listed: Rs. 5L; Others: Rs. 2L |
| S.167(2) | Disqualified director continues | Fine Rs. 1-5L | Listed: Rs. 5L; Others: Rs. 2L |
| S.249(2) | Wrong strike-off application | Fine up to Rs. 1L | Rs. 50,000 |
| S.392 | Foreign company contravention | Fine Rs. 1-3L + Rs. 50K/day | Rs. 1L + Rs. 500/day; max Rs. 5L; officer Rs. 25K + Rs. 200/day; max Rs. 2L |
| S.453 | Wrong use of ‘Limited’ | Fine Rs. 500-2000/day | Rs. 1L + Rs. 500/day; max Rs. 5L |
| S.469(3) | Rules violation | Fine up to Rs. 5K + Rs. 500/day | Penalty up to Rs. 5L + Rs. 5K/day |
19. Compounding Limit Raised [Section 441]
| OLD S.441(1)(b) | “…where the maximum amount of fine which may be imposed for such offence does not exceed twenty-five lakh rupees, by the Regional Director or any officer authorised by the Central Government…” |
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| AMENDED | “twenty-five lakh rupees” substituted with “one crore rupees” |
Impact: Regional Directors can now compound offences with maximum fine up to Rs. 1 crore – significantly reducing NCLT’s load and enabling faster resolution of corporate defaults at the regional level.
CONCLUSION: What This Bill Fundamentally Changes
The Corporate Laws (Amendment) Bill, 2026 represents a paradigm shift across five dimensions:
- Compliance architecture: Decriminalisation removes the threat of criminal prosecution for procedural defaults – but simultaneously raises civil penalty amounts significantly. The risk has not disappeared; it has transformed.
- Regulatory density: NFRA and IBBI (as Valuation Authority) emerge as powerful sectoral regulators – creating SEBI-equivalent oversight frameworks within the Companies Act ecosystem.
- IFSC integration: GIFT City entities – both companies and LLPs – receive a comprehensive statutory framework for foreign currency operations, bringing the Companies Act in line with IFSCA regulations.
- AIF ecosystem: The trust-to-LLP conversion pathway and relaxed filing for SEBI/IFSCA-regulated LLPs represent targeted relief for India’s Rs. 12+ lakh crore AIF industry.
- Enforcement effectiveness: The IT-Act-style recovery mechanism, pre-deposit for appeals, settlement framework, and raised compounding limits create a complete enforcement continuum that did not previously exist.
For practitioners: The bill will require detailed rule-making before most provisions become operational – the Central Government has been delegated rule-making powers across 50+ provisions. The transition period will be critical to monitor.
For businesses: The expansion of the small company threshold, CSR relaxations, hybrid meeting permissions, and settlement framework offer genuine relief – but the tighter DIN regime, new disqualification grounds, and mandatory NFRA registration for auditors demand immediate attention.
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About the Author: Adv. Mohit Jain is an Advocate and Tax Advisor with over 10 years of experience in GST and Income Tax litigation, practicing before the Delhi High Court, ITAT, CIT(A), GST Appellate Authority, and NCLT. He is the founder of AdvoFin Consulting Pvt Ltd, specialising in accounting, bookkeeping and compliance services for Indian businesses.
Email: advofinconsulting@gmail.com | Phone: +91 92116 76467
Disclaimer: This article is for informational and educational purposes only and does not constitute legal or professional advice. Readers are advised to consult their professional advisors before acting on any information contained herein.
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