Corporate Laws (Amendment) Bill to improve ease of doing business, greater transparency on ops of companies

The Corporate Laws (Amendment) Bill, 2026, which will amend the Limited Liability Partnership Act, 2008 and the Companies Act, 2013, is expected to greatly improve the ease of doing business for companies while providing more transparency to shareholders.

The Bill was tabled in Lok Sabha on Monday by Finance Minister Nirmala Sitharaman and was referred to a Joint Parliamentary Committee with members from the Lok Sabha and Rajya Sabha who will undertake a detailed analysis and then submit recommendations.

 

IFSCs:

However, the Bill has several amendments that would help lower the compliance burden and enable decriminalisation of certain offences. Amongst its key amendments, the Bill proposes to amend the LLP Act to include new definitions for the terms ‘International Financial Services Centre’, ‘International Financial Services Centres Authority’, ‘permitted foreign currency’ and ‘Specified International Financial Services Centre LLP’, which would enable companies and LLPs in IFSCs to transact and maintain books in permitted foreign currencies are a significant step toward positioning India as a competitive global financial hub.

“This is complemented by structural flexibility such as the introduction of a framework for conversion of specified trusts into LLPs, which is expected to benefit investment vehicles and regulated pooling structures by ensuring continuity of assets and contractual arrangements,” said Amit Maheshwari, Managing Partner, AKM Global.

 

Ease of doing business:

The Bill has also proposed rationalisation of capital-related provisions, including changes around buy-back norms including but not limited to periodicity, which are likely to provide companies with greater flexibility in capital structuring while maintaining necessary safeguards, he further said.

It has also called for decriminalisation of various procedural defaults under the Companies Act and the LLP Act by replacing criminal provisions with civil penalties and simplification of procedures relating to mergers and amalgamations through rationalisation of approval thresholds for fast-track mergers.

The Bill has also proposed amendments to enable companies to hold Annual General Meetings and Extraordinary General Meetings through video conferencing or other audio visual means with requirement for holding at least one Annual General Meeting in physical mode within a specified period.

Prasenjit Sarkar, Partner, Corporate Secretarial and Global Compliance Management Leader, Grant Thornton Bharat said the Bill is in continuation of the government’s endeavour to facilitate greater ease of doing business for corporates. “The proposed amendments are broadly aimed at promoting further ease of doing business by decriminalising more provisions, providing ease of compliance for One Person Companies, small companies, start-up companies, streamlining existing regulatory practices to strengthen and improve the operational efficiency of the enactments; recognising new concepts in light of rapidly evolving corporate land scape and changing business practices; and carrying out drafting and clarificatory changes to remove ambiguities,” he said.

The Bill also proposes to recognise instruments such as Restricted Stock Units and Stock Appreciation Rights, in addition to Employee Stock Option Plans, as executive compensation to be issued with approval of shareholders.

 

Transparency:

Meanwhile, in what would bring greater transparency in operations, the Bill seeks to insert a new section in the Companies Act to provide that certain companies will maintain a website, an email address and other modes of communication and the details would be shared with the Registrar of Companies. “The clause is sought to be made applicable to listed companies or other unlisted public companies meeting relevant thresholds to be provided by rules,” it said.

Similarly, it has also proposed that Board of a company will provide explanations or comments on every observation of the auditors on financial transactions which have any adverse effect on the functioning of the company and any qualification, reservation or adverse remark relating to the maintenance of accounts. Further, the Board’s report would include details in respect of composition of the Audit Committee and where the Board had not accepted any recommendation of the Audit Committee, a statement along with the reasons for the same.

It has also included an amendment to that clarify that a compromise or merger under the Companies Act is not allowed when the liquidation process under the Insolvency and Bankruptcy Code, 2016 has been initiated.

Rishi Agrawal, Co-Founder & CEO, TeamLease RegTech called the Bill a positive and much-needed step towards ease of compliance, something India has been steadily moving towards over the past few years. “The intent is clear, to shift from criminalisation to a more rational, accountable and tech-driven compliance framework. That said, corporate governance risk management is still at the Bill stage and will take its course through the legislative process,” he said.