Last Updated on March 23, 2026 5:31 pm by BIZNAMA NEWS
R. Suryamurthy / New Delhi
Government on Monday took a significant step toward overhauling its corporate regulatory framework with the introduction of the Corporate Laws (Amendment) Bill, 2026 in the Lok Sabha, aiming to reduce compliance burdens for businesses while reinforcing oversight in key areas such as auditing, corporate governance, and financial reporting.
Spanning more than a hundred amendments across the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008, the Bill reflects what experts describe as a policy shift toward “proportionate regulation”—reducing criminal exposure for routine lapses while strengthening institutional enforcement.
A key thrust of the Bill is the integration of International Financial Services Centres (IFSCs), particularly GIFT City, into the broader corporate law framework. The proposed changes introduce new categories such as “Specified IFSC LLP” and allow such entities to maintain books and financial statements in foreign currencies, a move aimed at aligning India with global financial hubs.
Amit Maheshwari, Managing Partner at AKM Global, said the provision “positions India more competitively in global finance by enabling operational flexibility for firms operating in IFSCs.” Rajat Mohan, Senior Partner at AMRG & Associates, added that the reforms would enhance GIFT City’s appeal for cross-border financial activity.
The Bill also proposes a structural innovation by enabling the conversion of certain trusts—particularly regulated investment vehicles—into LLPs, ensuring continuity of assets and liabilities while offering limited liability benefits. This is expected to provide fund managers and pooled investment structures with greater operational flexibility.
Alongside these changes, the government has deepened its push for decriminalisation by replacing criminal penalties for a range of procedural violations with civil penalties. Industry experts have largely welcomed the move.
“Procedural non-compliance should not be treated at par with serious fraud,” said Vishwas Panjiar, Managing Partner at SVAS Business Advisors LLP. “The shift to monetary penalties and settlement mechanisms will reduce unnecessary litigation and ease pressure on judicial forums like the NCLT.”
The Bill also attempts to address longstanding procedural bottlenecks. It simplifies merger processes by allowing applications to be heard by a single bench of the National Company Law Tribunal (NCLT) based on the transferee company’s jurisdiction, replacing the earlier system of parallel filings. Voluntary strike-off norms have also been eased to facilitate faster exits for defunct entities.
Corporate governance norms are being updated to reflect post-pandemic realities. Companies will be allowed to hold shareholder meetings through video conferencing, although at least one physical annual general meeting will remain mandatory within a prescribed period.
For smaller firms, the reforms offer tangible relief. The definition of “small company” is proposed to be expanded significantly, raising thresholds for paid-up capital and turnover. This would bring a larger number of businesses under a lighter compliance regime, including exemptions from certain Corporate Social Responsibility (CSR) obligations.
However, the Bill simultaneously raises the CSR applicability threshold and tightens enforcement for those within its ambit, signalling a calibrated approach.
On the oversight front, the National Financial Reporting Authority (NFRA) stands to gain enhanced powers, including the ability to issue directions and impose penalties. Abhishek Paliwal, Partner at King Stubb & Kasiva, said this would “strengthen audit quality and reinforce financial discipline, especially among large corporates.”
Yet, even as the reforms have been broadly welcomed, experts have flagged several areas of concern.
One major issue is the reliance on future rule-making. “The broad direction is clear, but the effectiveness will depend on how the rules are framed and implemented,” Panjiar cautioned, pointing to risks of ambiguity under delegated legislation.
There are also concerns that higher penalties and expanded compliance requirements could increase financial exposure for companies, particularly mid-sized firms. Mohan noted that while procedural simplification is welcome, “the cost of non-compliance may rise under the new framework.”
The expansion of NFRA’s powers has also prompted caution around regulatory overreach. While stronger oversight is seen as necessary, experts warn it could lead to heightened scrutiny and increased compliance expectations.
Another challenge lies in the transition to IFSC-linked provisions. Companies adopting foreign currency accounting and cross-border structures may face short-term operational and compliance complexities as they align with multiple regulatory regimes.
Finally, analysts point to a potential divergence in impact: while smaller companies benefit from relaxations, larger and growing firms could face stricter enforcement and higher penalties, creating an uneven compliance landscape.
Despite these concerns, the consensus remains that the Bill represents an evolutionary step rather than a disruptive overhaul.
“It is about making corporate law more workable and aligned with business realities,” Panjiar said.
With phased implementation planned, the Corporate Laws (Amendment) Bill, 2026 is set to reshape India’s corporate ecosystem—though its ultimate success will hinge on execution as much as intent.
