Finance minister Nirmala Sitharaman introduced the Corporate Laws (Amendment) Bill, 2026, in the Lok Sabha on Monday, seeking to ease compliance norms and reduce criminal penalties by amending the Limited Liability Partnership Act, 2008, and the Companies Act, 2013.
The bill was referred to a joint parliamentary committee comprising members from both houses of parliament for further scrutiny and its recommendations after a voice vote on Sitharaman’s suggestion.
Opposition members Manish Tewari (Congress), Saugata Roy (Trinamool Congress) and T Sumathy (DMK) opposed the bill, alleging that it sought to dilute provisions requiring companies to mandatorily set aside 2% of their profit towards corporate social responsibility (CSR).
The finance minister refuted their allegations, saying the bill seeks to amend only the criteria of net profit, not the clause related to CSR. She said the bill was introduced after two years of deliberations and that the apprehensions of the members were unfounded.
The Union Cabinet had given the green flag for the proposed bill, which is intended to address gaps identified by the Company Law Committee in its 2022, focusing on easing the compliance burden on businesses and decriminalizing minor corporate offences.
The proposed amendments are expected to rationalize penalties, shift minor procedural lapses from criminal liability to monetary penalties, and streamline regulatory processes to promote ease of doing business.
The changes are also aimed at improving the overall corporate compliance framework while reducing litigation and encouraging a more facilitative regulatory environment for companies and limited liability partnerships (LLPs). It is aimed at providing ease of compliance for one-person companies, small companies, startups and producer companies, the minister said in the bill’s statement of objects and reasons.
New concepts
According to the finance minister, the amendments seek to streamline regulatory practices to strengthen and recognize new concepts in light of the rapidly evolving corporate landscape and changing business practices. Companies and LLPs in International Financial Services Centres (IFSCs) can transact and maintain books in foreign currencies.
“The enabling provisions allowing 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,” said Amit Maheshwari, managing partner at AKM Global, a tax and consulting firm. “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.”
Maheshwari added that from an audit and assurance standpoint, the amendments mark a clear shift toward stronger regulatory oversight, driven by enhanced powers of the National Financial Reporting Authority, including wider disciplinary mechanisms and more streamlined inquiry and penalty processes. At the same time, the bill allows the central government to prescribe classes of companies that may be exempted from mandatory auditor appointments, signalling a calibrated move toward ease of compliance for select entities.
“These changes, read alongside strengthened valuation norms and the continued emphasis on registered valuers, are expected to reinforce the integrity of financial reporting and ensure greater fairness in transactions,” he said.
The expanded framework for compounding of offences, coupled with the continued stringent stance on fraud under the Companies Act, reflects a balanced regulatory approach—one that promotes ease of doing business while preserving robust deterrence against serious misconduct, Maheshwari said.
