Corporate Laws (Amendment) Bill, 2026: Detailed analysis

Introduction

There are certain major proposals with respect to Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026), which was to be introduced in Lok Sabha which change most of the sections of companies act. On 23^rd March 2026, Lok Sabha referred this bill to Joint Parliamentary Committee for further scrutiny. I have 100% covered them all through this writeup.

IFSC & IFSCA Recognition

International Financial Services Centre (IFSC) and International Financial Services Centres Authority (IFSCA) are now formally defined in the LLP Act, 2008.

Specified IFSC LLP must restrict its objects strictly to financial services activities permitted under IFSCA Act and matters incidental thereto, as per regulatory framework.

Permitted Foreign Currency

Introduces concept of foreign currency transactions for LLPs. Currency will be notified by IFSCA in consultation with Central Government.

 Specified IFSC LLP

A new category of LLP that can be incorporated in IFSC and regulated by IFSCA. This creates a special class of LLPs distinct from normal LLPs.

A proviso in section 11(2) is inserted for Specified IFSC LLPs must restrict objects to financial services activities permitted under IFSCA Act, 2019 and activities incidental thereto, hence objects must align with IFSCA regulatory framework.

Also section 13 is amended to make IFSC LLP to always maintain registered office in IFSC, with a mandatory suffix- “International Financial Services Centre LLP” as per section 15.

Section 34 was amended to add that, If LLP is in IFSC and uses foreign currency then books, accounts, financials must be in foreign currency with Exception that IFSC Authority (IFSCA) can allow Books to be maintained in INR and Section 38 added that ignoring Registrar’s request for information now leads to a fixed penalty of ₹10,000, here, Section 68 clarify that foreign currency filing (IFSC LLP) documents may be filed in foreign currency but fees / penalties should only in INR

Dual Declaration Requirement (Section 11(1))

Earlier, only a general compliance statement was required. Now Clause (c) states that a subscriber to incorporation document must declare that all legal requirements under LLP Act & Rules are complied with. New Clause (d) states that a professional declaration is mandatory, where engaged by Advocate / CA / CMA / CS (in practice), Certifying proper incorporation compliance.

Section 23 and 25 i.e. LLP Agreement

For some special LLPs i.e. those regulated by SEBI (like investment funds), or IFSCA (IFSC entities), The rule of “file every change with ROC” may not apply strictly instead filing requirement will be as per rules prescribed (i.e., government can relax or modify it) and after Amendment in section 25 if partner joins/leaves during year or other prescribed cases, there is no immediate filing required, At year end you can submit all changes together in one annual filing

Section 32: Deals with contribution by partners (money / property / services) and Disclosure

Earlier, partner’s contribution could be in money, property, or services and value of contribution to be recorded and disclosed in INR with no restriction i.e. LLP could accept contribution in Indian Rupees freely

Now, in case of IFSC LLP the contribution must be in foreign currency, INR contribution not allowed going forward, and if earlier investment was in rupees then it must be converted into foreign currency.

Section 33A was added to apply Section 247 of Companies Act, 2013 to LLPs wrt Valuation must be done by a Registered Valuer

LLP valuation is now formal, regulated, and professional just like companies.

Section 57A introduced to convert Trust to LLP

Specified Trusts (registered with SEBI / IFSCA) can now convert into LLP, i.e. investment structures (like AIF trusts) can become LLP with condition that trustees should be partners in LLP

Section 58 gives conversion effect

After conversion, LLP is formed officially and all assets & liabilities automatically transfer and old entity (firm/company/trust) will be dissolved with no need for separate transfer deeds and multiple registrations

Fifth Schedule states detailed rules for trust conversion

• Consent of 75% investors required
• All contracts, employees, licenses to be continued
• Ongoing cases to continue in LLP name
• Trustees remain personally liable for old liabilities
• Registrar has power to refuse registration if not satisfied with documents
• LLP must disclose conversion status in all correspondence for 12 months
• Non-compliance attracts penalty ranging from ₹10,000 to ₹1,00,000 plus daily fine

Section 68B Appeal against registrar

New Section 68B provides that any person aggrieved by the decision of Registrar (e.g., name approval, incorporation refusal) can file an appeal before an officer of Central Government within prescribed time and manner.

Section 76A i.e. adjudication of penalty

Here, LLP / partner can apply for penalty adjudication (in-house) and old court cases can be shifted to adjudication system that means less litigation and faster resolution (Decriminalisation).

Further, ongoing court cases relating to offences now converted into penalty-based framework may be withdrawn and transferred to adjudication mechanism as per scheme notified by Central Government.

Section 134 Board Report

134 (fa) Auditor Remarks Explanation, here board must explain every negative comment / qualification by auditor and 134(pa) Audit Committee Disclosure, here board must disclose audit committee composition, If Board rejects its recommendation, then reasons required to be stated.

Section 135 CSR Changes

• CSR applicability threshold increased from ₹5 Cr to ₹10 Cr (Net Profit)
• Unspent CSR transfer time is increased 30 days to 90 days
• Penalty increased up to ₹1 Cr
• Govt can exempt certain companies

Auditor-Related Changes (Sections 139 to 147)

• Some companies may not need to appoint auditor (as prescribed)
• Audit firm condition states all partners must be registered with recognised institute
• For non-audit services restriction continues even 3 years after auditor’s term ends
• Penalty changes i.e. shift from punishment to monetary penalties

Cost Audit (Section 148)

• Govt can prescribe cost accounting standards
• Penalties clearly defined i.e. MD / CFO / responsible officer ₹5 lakh (listed company) and ₹50,000 (others)
• Company and officers daily penalties for continuing default

Directors related

• Independent Director (Section 149) must satisfy independence at appointment AND throughout tenure, related party threshold is now stricter (even lower % may be prescribed) and can continue in consulting firm only if transactions are below threshold
• DIN (Section 154) Govt can deactivate / cancel DIN if there is non-compliance or wrong information or disqualification and if DIN is deactivated, one cannot act as director and if cancelled then office becomes vacant
• Additional Director (Section 161) here, tenure is reduced, earlier it was till next AGM, now it is till next General Meeting OR 3 months (whichever earlier), also restriction are added i.e. if shareholder rejects person then he cannot be reappointed by Board without approval
• Disqualification (Section 164) new grounds added i.e. Professional Conflict Restriction Auditor / Cost Auditor / Valuer / Insolvency Professional cannot become director immediately, Fit & Proper Criteriae. Govt can now prescribe ethical / financial / integrity standards, Stricter Default Rules i.e. disqualification period reduced (2 years trigger)
• Duties of Directors (Section 166) states if director makes undue gain (personal benefit) then court can order return of such amount to company also penalty structure split was introduced for violation of Section 166 (except sub-sec 5) for listed Co ₹5 lakh and for Others ₹2 lakh
• Vacation of Office (Section 167) stated that if director disqualified (Sec 164(2)) then office becomes vacant in all companies after 6 months and if DIN deactivated/cancelled then Cannot act as director and penalty applies
• Board Meetings relaxation (Section 173) amended for giving relief for small / certain class of companies where earlier minimum 2 meetings per year (gap ≤ 90 days), Now only 1 meeting in a year
• Disclosure of Interest (Section 184) here annual disclosure requirement removed, now only to be disclosed when any interest arises / changes takes place which reduces repetitive compliance
• Loan to Directors (Section 185) this restriction extended to LLPs also (earlier only firms)
• Loan & Investment Penalty(Section 186) here clear penalty added for company ₹1 lakh along with daily penalty and for officer ₹25,000 along with daily penalty
• Register of Contracts (Section 189) non-compliance attracts fixed penalty of ₹2 lakh

Section 203A i.e. KMP Resignation (New section)

As per this section, KMP (non-director) can resign but company must inform ROC and if company fails then KMP can directly inform ROC

Section 230 to 233 Mergers / Arrangements

• Approval threshold modified to 75% (instead of 90%)
• Valuation (Section 247), here IBBI becomes Valuation Authority and only Registered Valuer allowed with strict regulation related to registration, monitoring and penalties and in case of fraud by valuer it will lead to imprisonment and heavy penalty
• Strike Off (Section 248) more conditions added related to non-filing (2 financial years), no activity / real business transactions and no transactions helping in easier removal of shell companies

Other Key Amendments in Companies Act, 2013

• Section 2 (Definitions), here, “Regional Director” definition introduced, “Registered Valuer” formally defined and Central Govt allowed to permit change in financial year alignment
• Section 12A (New Section) states certain class of companies must maintain a website, Email ID, Communication systems and Details of the same to be filed with ROC
• Section 20 (Service of Documents): mandatory electronic communication for prescribed companies Physical mode only on request (with fee)
• Section 26 (Prospectus): Fixed penalty of ₹2 lakh for non-compliance
• Section 40 (Listing Compliance): Penalty introduced for Company ₹25 lakh and Officer ₹2 lakh
• Section 42 (Private Placement): Scope widened to include schemes linked to share value (ESOP-type structures)
• Section 43A (New section for IFSC Companies)

IFSC companies must maintain share capital in foreign currency Maintain books in foreign currency Fees/penalties payable in INR

• Section 62 & 68 (Buyback & Capital): Flexibility in buyback limits, allows multiple buybacks allowed in a year (with conditions) and schemes linked to share capital included (Second buyback in a year is allowed only after a minimum gap of 6 months from closure of previous buyback)
• Section 77 (Charge Registration): Timeline extended from 60 days to 120 days (for certain classes)
• Section 88 (Register of Members): No trust entries allowed in register

Meetings & Shareholder Governance

• AGM & EGM are allowed in physical / VC / hybrid mode but at least 1 physical AGM in 3 years
• EGM can also be conducted via VC / hybrid mode
• Shorter notice (7 days) allowed for VC-based meetings
• Members can demand hybrid meetings
• If members requisition (as per Section 100 threshold i.e. 10% of members holding paid up share capital/voting rights), company is mandatorily required to conduct meeting in hybrid mode.

IEPF & Accounts related

Section 124 & 125

• Unclaimed buyback proceeds also transferred to IEPF
• Authority can delegate powers

Section 128 Penalty rationalised

Section 131, revision allowed for “immediately preceding” 3 years

NFRA related

NFRA (Major Strengthening) becomes full-fledged body corporate new powers introduced like investigation, penalty, directions, and debarment hence, now it can issue advisory / warning / training directions etc. making NFRA becomes super regulator for audit profession.

A new “National Financial Reporting Authority Fund (NFRA Fund)” under proposed Section 132B to meet expenses of NFRA such as regulatory functions, investigations, administration and enforcement actions

Now, NFRA can make regulations on procedures, staff & operations and filing requirements

Unpaid penalties can be recovered as arrears of land revenue, strengthening enforcement mechanism, and appeal against NFRA order lies before Appellate Tribunal within prescribed time.

Sections introduced wrt NFRA

Section 132A

• Mandatory registration of auditors with NFRA
• Filing of returns / information required

Section 132C

• NFRA can issue directions to auditors

Section 132D

• NFRA empowered to conduct inquiry and impose penalties

Section 132E-132H

• No civil court jurisdiction
• Protection for actions taken in good faith
• Central Govt can supersede NFRA

Section 132J & 132K

• NFRA can make regulations
• Mandatory public consultation (transparency requirement)

Small Companies & Ease of Doing Business

Definition expanded i.e. capital to be ₹20 Cr, turnover to ₹200 Cr, also reliefs provided to these companies from CSR and appointing auditor (for certain class)

 My Analysis: Maybe dormant companies, very small companies with minimal transactions and Certain startups can come into preview of this “certain class”

 Adjudication & Recovery Mechanism

Penalty recovery will be like Income Tax recovery, also settlement mechanism introduced. For appeal a condition introduced to make 10% pre-deposit mandatory.

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Disclaimer: This document is prepared for informational and academic purposes only and is based on the provisions of the Corporate Laws (Amendment) Bill, 2026, as available at the time of drafting. The analysis presented herein is a general interpretation of the proposed amendments and does not constitute professional advice or a legal opinion.

 While due care has been taken in compiling the contents, no representation or warranty is made as to the accuracy, completeness, or reliability of the information. Readers are advised to refer to the relevant statutory provisions, rules, notifications, and professional guidance before taking any decision.

 The author shall not be held responsible for any loss or consequences arising from reliance on this document.

 The author can be contacted at aman.rajput@mail.ca.in