New Delhi, March 23 – To promote ease of doing business and reduce compliance burden, the government on Monday proposed a series of amendments to the Companies and LLP laws, including changes in CSR norms, decriminalisation of procedural defaults, flexibility in share buybacks, and relaxations for small firms.
Simplifying M&A procedures, allowing companies to hold AGMs in hybrid mode, enabling the constitution of multi-disciplinary partnership firms, giving more powers to regional directors, and enabling the setting up of special NCLT benches to hear specific matters under the Companies Act and the Insolvency and Bankruptcy Code (IBC) are among the other proposals.
Finance and Corporate Affairs Minister Nirmala Sitharaman introduced the Corporate Laws (Amendment) Bill, 2026, in the Lok Sabha on Monday to amend the Limited Liability Partnership (LLP) Act, 2008, and the Companies Act, 2016. The bill has been referred to a Joint Parliamentary Committee for detailed analysis.
In a significant move, the corporate affairs ministry has proposed changes to Corporate Social Responsibility (CSR) norms under the Companies Law, whereby the net profit criteria will be raised to Rs 10 crore and the number of days for transferring the unspent CSR funds to a separate account will be increased from 30 days to 90 days.
Revised eligibility threshold with regard to the constitution of CSR committees by companies has also been proposed.
Currently, a company having a net worth of at least Rs 500 crore or turnover of Rs 1,000 crore or more or net profit of Rs 5 crore or more in the three preceding financial years is required to shell out at least 2 per cent of its average net profit towards CSR activities.
Apart from proposing decriminalisation of various procedural defaults under the Companies Act and the LLP Act by replacing criminal provisions with civil penalties, the bill has mooted simplification of procedures relating to mergers and amalgamations through rationalisation of approval thresholds for fast-track mergers.
There will also be a provision to enable the filing of applications before a single bench of the National Company Law Tribunal (NCLT) having jurisdiction over the transferee company.
Relaxations have been proposed for small companies by providing exemption from CSR requirements related to auditor appointment for the prescribed class of such entities, and companies are to be allowed to hold Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) through video conferencing or other audio visual means with requirement for holding at least one AGM in physical mode within a specified period.
Among others, the bill provides clarification that compromise or arrangement under the Companies Act shall not be allowed, where the process of liquidation has commenced under the IBC and recognises new forms of instruments linked to the value of share capital for executive compensation, as well as seeks to strengthen the role of the National Financial Reporting Authority (NFRA).
As per the bill, enabling provisions will be made to constitute special NCLT benches to hear specific matters under the Companies Act and the IBC, as well as for the conversion of specified non-trading entities registered with state governments into section 8 or not-for-profit companies.
Facilitating companies and limited liability partnerships operating in International Financial Services Centres by allowing them to issue and maintain share capital in foreign currency, as permitted by the International Financial Services Centres Authority and simplification of procedures to facilitate quicker and simpler closure or voluntary exit for companies are also among the other provisions.
Other changes mooted include flexibility in buy-back of shares for prescribed classes of companies, rationalisation of provisions relating to producer companies and easing compliances for Alternative Investment Funds, which are formed as limited liability partnerships.
Enabling multi-disciplinary partnerships for cost auditors and secretarial auditors in a similar manner as provided for financial auditors, enhancing monetary thresholds of fines for compounding of offences by Regional Directors so as to reduce the burden on the NCLT, making third party professional certification at the time of incorporation optional and replacement of certain affidavits required under the Companies Act with self-declarations have also been proposed in the bill.
In the Lok Sabha, Sitharaman refuted certain allegations made by Opposition members, saying the bill has been introduced after two years of deliberations.
The minister said the bill is aimed at promoting further ease of doing business and ease of living for corporates by decriminalising more provisions and amending others. It is also for providing ease of compliance for ‘one-person companies’, small companies, startups and producer companies.
In the bill's statement of objects and reasons, she said the amendments also seek to streamline the existing regulatory practices to strengthen, as well as recognise new concepts, in light of the rapidly evolving corporate landscape and changing business practices.
Anjali Malhotra, Partner- Regulatory, at advisory firm Nangia Global, said the proposed amendments aim to decriminalise more offences, enhance ease of doing business, enhance the role of Regional Directors & NFRA to strengthen governance, and align India’s corporate framework with global best practices.
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