1. Introduction

Finance and Corporate Affairs Minister Nirmala Sitharaman introduced the Corporate Laws (Amendment) Bill, 2026 in the Lok Sabha to amend the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

The Bill proposes a range of reforms aimed at enhancing the ease of doing business, reducing compliance burdens, and modernising corporate governance. Key measures include decriminalisation of procedural defaults, relaxation of CSR norms, flexibility in corporate operations, and simplification of regulatory processes.

2. Origin and Intent

The Bill seeks to address gaps in the existing corporate legal framework by simplifying regulatory requirements and promoting a more business-friendly environment. It aims to align India’s corporate laws with global best practices while supporting the growth of companies, LLPs, and startups.

Currently, companies meeting the following criteria are required to spend at least 2% of their average net profits on Corporate Social Responsibility (CSR):

• Net worth of ₹500 crore or more, or 
• Turnover of ₹1,000 crore or more, or 
• Net profit of ₹5 crore or more 

The proposed amendments include:

• Increasing the CSR applicability threshold (net profit) from ₹5 crore to ₹10 crore 
• Extending the deadline for transferring unspent CSR funds from 30 days to 90 days

3. Key Amendments and Policy Changes

• Decriminalisation of Corporate Offences
  • Minor procedural offences reclassified as civil violations 
  • Replacement of criminal penalties with monetary fines 

• Changes in Corporate Social Responsibility (CSR)
  • CSR threshold increased from ₹5 crore to ₹10 crore (net profit) 
  • Mandatory CSR spending remains at 2% of average net profits 
  • Extended timeline for transfer of unspent CSR funds (30 → 90 days) 
  • Relief measures for smaller companies 

• Corporate Governance and Compliance Reforms
  • Reduced compliance burden for small and one-person companies 
  • Relaxation in auditor appointment norms 
  • Lower additional filing fees 
  • Strengthened role of the National Financial Reporting Authority and Regional Directors 

• Hybrid Meetings and Digital Governance
  • Companies permitted to hold AGMs and EGMs via video conferencing 
  • Requirement of at least one physical AGM every three years 

• Capital Structure Flexibility
  • Rationalisation of share buyback provisions 
  • Greater flexibility in capital structuring while maintaining safeguards

• Framework for Trust Conversion
  • Enables conversion of specified trusts (registered under Securities and Exchange Board of India / IFSC) into LLPs 
  • Enhances flexibility for financial entities and investment structures

4. Impact

The proposed amendments are expected to significantly enhance the ease of doing business in India by reducing the compliance burden and legal risks associated with minor procedural defaults. By decriminalising such offences and replacing them with monetary penalties, the Bill creates a more business-friendly regulatory environment, particularly benefiting startups, small companies, and LLPs. The relaxation of Corporate Social Responsibility (CSR) norms, including the increase in the applicability threshold and extended timelines for handling unspent funds, is likely to provide greater financial and operational flexibility to companies.

Further, the introduction of hybrid meeting provisions marks a shift towards digital governance, enabling companies to conduct AGMs and EGMs through video conferencing while maintaining a minimum physical oversight requirement. Rationalisation of capital-related provisions, such as share buyback norms, will allow companies greater flexibility in managing their capital structures. At the same time, enhanced roles for regulatory bodies like the National Financial Reporting Authority and Regional Directors are expected to strengthen oversight and governance standards.

5. Conclusion

The Corporate Laws (Amendment) Bill, 2026 represents a significant step toward modernising India’s corporate regulatory framework. By decriminalising minor offences, easing compliance requirements, and introducing operational flexibility, the Bill supports businesses—particularly startups, small companies, and LLPs—while ensuring robust governance standards in a rapidly evolving economic landscape. Overall, the reforms balance regulatory simplification with necessary safeguards, fostering a more efficient corporate ecosystem.