The Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on March 18, 2026, proposes extensive amendments to the Companies Act, 2013, and the Limited Liability Partnership Act, 2008. Driven by recommendations from the Company Law Committee (2022) and the High Level Committee on Non-Financial Regulatory Reforms, the Bill seeks to foster “Ease of Doing Business” while simultaneously strengthening corporate governance frameworks.
Measures for Ease of Doing Business
- Small Company Threshold [Sec. 2(85)]: Paid-up capital limit increased from ₹10 crore to ₹20 crore; turnover limit increased from ₹100 to ₹200 crore.
- Electronic Service [Sec. 20]: Service of prescribed documents to members permitted exclusively through electronic mode for certain classes of companies.
- Share-Linked Schemes [Sec. 62]: Formal recognition of Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs).
- Buy-back Frequency [Sec. 68]: Allows two buy-back offers per year with a six-month gap between closures in case of certain classes of companies.
- Charge Registration [Sec. 77]: Timeline for registration of charges for prescribed companies increased from 120 days to 180 days
- Virtual/Hybrid Meetings [Sec. 96 & 100]: AGMs and EGMs permitted via video conferencing or audio-visual means. However, companies must conduct a physical annual general meeting at least once every three years.
- Virtual/Hybrid Meetings [Sec. 96 & 100]: AGMs and EGMs permitted via video conferencing or audio-visual means. However, companies must conduct a physical annual general meeting at least once every three years.
- Meeting Notice [Sec. 101]: Notice period for VC-only EGMs reduced to seven days.
- CSR Threshold [Sec. 135]: Applicability based on net profit -The Central Government is empowered to fix and modify the specific net profit applicability criteria
- Auditor Exemption [Sec. 139]: Prescribed classes of companies may be exempted from appointing auditors.
- Board Meetings [Sec. 173(5)]: OPC, Small, and Dormant companies require only one meeting per calendar year.
- Disclosure of Interest [Sec. 184]: Disclosure required only upon a change in interest, not every financial year.
- Investment Loans [Sec. 186]: Contraventions of sub-sections (9) and (10) moved from non-compoundable to adjudicatable offence.
Corporate Governance Related Provisions
- Mandatory Digital Infrastructure [Sec. 12A]: Prescribed classes of companies must maintain a website and e-mail address, with a statutory requirement to intimate these details and any subsequent changes to the Registrar.
- Enhanced Audit Committee Transparency [Sec. 134]: Board reports must now include the committee’s composition and specific reasons if the Board rejects any committee recommendation.
- Explanation on Auditor Remarks [Sec. 134]: The Board must provide detailed explanations or comments on every adverse observation, qualification, or reservation made by auditors in their report.
- Independence in Group Entities [Sec. 149]: Cooling-off restrictions for Independent Directors (IDs) now explicitly extend to the holding, subsidiary, or associate companies.
- Standardized Auditor Qualifications [Sec. 141, 148 & 204]:
- Majority Qualification Requirement: A firm may be appointed as a statutory, cost, or secretarial auditor only if the majority of its partners practicing in India are professionally qualified for such appointment (Chartered Accountants, Cost Accountants, or Company Secretaries in practice, respectively)
- Mandatory Registration of All Partners: Every partner of the firm, regardless of their specific area of practice within a multi-disciplinary setup, must be a person registered with a statutory institute or body established under an Indian law having powers of such registration.
- Restrictions on Non-Audit Services [Sec. 144]: Prescribed classes of auditors are prohibited from providing non-audit services to the company, its holding, or subsidiary for three years post-tenure
- Director Fit and Proper Mandate [Sec. 164]: Boards are now required to assess and ensure that every director meets prescribed “fit and proper” criteria as may be prescribed.
- Related Party Default Disqualification [Sec. 164]: Directorship eligibility is lost if a person is subjected to a penalty for defaults in related party transactions under Section 188.
- Resignation of Non-Director KMPs [Sec. 203A]: Establishes a formal, transparent process for the resignation of whole-time Key Managerial Personnel who are not directors. This framework is similar to that of directors under section 168.
Director Amendments (Appointment/Qualification/Vacation/DIN)
- Additional Directors [Sec. 161]: Tenure limited to next general meeting or three months, whichever is earlier.(Aligned with LODR Regulations)
- Casual Vacancy [Sec. 161]: Appointment limited to next general meeting or three months, whichever is earlier. (Aligned with LODR Regulations)
- DIN Verification [Sec. 154]: Mandatory periodic submission of information for verification of particulars.
- DIN Validity [Sec. 152]: Director shall not function if DIN is deactivated or cancelled.
- Disqualification [Sec. 164(2)]: Triggered by non-filing of returns for two financial years.
- Immediate Vacation [Sec. 167]: Office becomes vacant in all companies (including the defaulting one) after six months from trigger of disqualification.
- LLP Inclusion (Section 185 (Loans to Directors)): Prohibitions on loans, guarantees, and securities extended to limited liability partnerships.
Decriminalization (Fine to Penalty)
- Name Reservation [Sec. 4]: Penalty of ₹50,000 for furnishing incorrect information.
- Prospectus [Sec. 26]: Fixed penalty of ₹2 lakh for contravention.
- Share Variation [Sec. 40]: Penalty of ₹25 lakh for company and ₹2 lakh for officers in default.
- Buy-back [Sec. 68]: Penalty of ₹25 lakh for listed companies and ₹2 lakh for others.
- AGM Default [Sec. 99]: Penalty of ₹1 lakh plus ₹5,000 per day for continuing default.
- Accounts [Sec. 128]: Penalty of ₹5 lakh for listed and ₹50,000 for other companies.
- Audit Sections [Sec. 147]: Contraventions of Sec. 139, 140, 141, 142, and 146