On 23 March 2026, Nirmala Sitharaman brought forward the Corporate Laws (Amendment) Bill, 2026 (Bill No 85 of 2026) in Lok Sabha. Very likely this Bill is the biggest change to the Companies Act, 2013 and Limited Liability Partnership Act, 2008 that the government has made in one shot. The Bill with 107 clauses is a continuation of the Company Law Committee Report, 2022 and High-Level Committee on Non-Financial Regulatory Reforms, 2025. At the moment, it has been handed over to the 31-member Joint Parliamentary Committee (which on 24 June 2026 also considered the Finance Ministry and National Financial Reporting Authority (NFRA) submissions) for deliberation and submission of the report is due by the Monsoon Session. For the Company Secretaries, the passing of this Bill will be a total transformation of the compliance calendars, board meetings and risk sharing categories.
From Criminal Liability to Civil Adjudication
The main focus of the Bill is on decriminalization.xa A number of procedural defaults e.g., deliberately not providing information to the Registrar, violation of the prescribed Rules, failing in the maintenance of books of account, and not responding to the Registrar’s requisitions get shifted from being offences punishable with imprisonment to being civil penalties to be decided through a new electronic In-House Adjudication Mechanism. Minor filing or documentation irregularities which earlier imposed personal criminal liabilities on promoters, directors, and KMPs will now result in mere monetary penalties imposed administratively, lowering litigation risks without weakening the fundamental obligation to comply. Also, the decriminalization is not a blanket measure it focuses on procedural defaults while retaining serious governance failure cases, including defaults in related-party transactions, for even harsh consequences than before.
Tightened Director and KMP Accountability
On the other hand, to counterbalance such a permissive change, the Bill modifies Section 164 by introducing a requirement for the “fit and proper person” standard, with the effect that company boards will be responsible for the formal assessment and recording. In reality each director meets the criteria set – because of this board composition will be not merely a matter of business judgment but also a compliance documented requirement. Then again, directors who get penalized for a breach of related-party transactions under Section 188 shall be disqualified, thereby extending personal responsibility to those directors who approved the non-compliant transactions, and directors shall keep their DIN records active during the entire period. Also, a totally new Section 203A has been inserted to include a formal, transparent resignation mechanism for entire-time KMP who are non-directors, thereby addressing a long-standing procedural gap. CS teams will be required to adopt new director onboarding, RPT approvals and KMP exit document protocols and diligence.
NFRA’s Expanded Mandate
NFRA has been reorganized into a more powerful, quasi-judicial regulator with corporate status, independent rule-making power and the ability to levy fees. Auditors who are under its jurisdiction must first inform NFRA of their ICAI registration details and also submit periodic returns; non-submission of such information could bring penalties as high as Rs. 25 lakhs.
Apart from this, certain classes of auditors who have been prescribed will be prohibited from giving non-audit services to the company or its holding or subsidiary during the three years following the end of their tenure. Audit committees will need to review the arrangements for the auditors’ independence because now the annual reports will be required to disclose the composition of the Audit Committee and any instance where the Board did not accept its recommendations, with the reasons for such non acceptance.
IBBI as the New Valuation Authority
The Bill has made the Insolvency and Bankruptcy Board of India the sole Valuation Authority. It also means that it will regulate, recognize, and set standards for registered valuers (RVs) under one umbrella only instead of the current situation where there are multiple regulators acting independently in different spheres. From now on, only valuers appointed for company-law purposes will be given to the Audit Committee by way of formal resolution whereas earlier management alone used to decide. CS professionals involved in M&A, share swaps, and fairness opinion advisory work should get ready for detailed paperwork requirements and changes in valuation standards as IBBI implements this bigger role.
Faster Restructuring and Recalibrated Buy-Backs
Sections 230 to 233 have been changed to allow a single NCLT bench – that of the transferee or resultant company – to resolve schemes of arrangement involving multiple jurisdictions, thereby doing away with the current situation of separate, uncoordinated proceedings before each bench. The thresholds for fast-track merger approvals are also relaxed: member approval is changed from 90% of total shares to members holding a majority of at least 75% in value, and the creditor approval is in the same way changed to 75% in value, both present and voting. About buy-backs, companies that are free of debt may now carry out up to two buy-backs per year with a reduced six-month interval between offers, the government may specify class-specific limits different from the uniform 25% cap, and eligibility for buy-back is extended to Restricted Stock Units and Stock Appreciation Rights – now formally recognized plus ESOPs and sweat equity under amended Sections 42 and 62.
Compliance Rationalization Across the Board
Small company thresholds have just about doubled – paid-up capital, for example, increasing from Rs. 10 crores to Rs. 20 crores, and turnover from Rs. 100 crores to Rs. 200 crore – which means a lot of small businesses will be able to enjoy lighter-touch compliance. The CSR net-profit threshold for a CSR Committee is also getting raised from Rs. 5 crores to Rs. 10 crores, and there’s a much longer period – from 30 to 90 days – for the transfer of unspent CSR amounts. The Government even gets a power to exempt prescribed classes of companies from CSR obligations completely. AGMs and EGMs may now be held physically, virtually, or in hybrid mode, subject to a mandatory physical meeting once every three years. For buy-backs, solvency affidavits are replaced with self-declarations, prescribed companies may serve documents electronically, and the Bill allows conversion of specified SEBI- or IFSC-registered trusts into LLPs while creating a setup for Specified IFSC LLPs, further strengthening India’s position as a financial hub jurisdiction.
What This Means for Practice
The Bill, as it stands, is not a law yet its enactment will rely on the JPC’s report and subsequent parliament’s nod, while subordinate regulations on the thresholds and prescribed classes may be introduced gradually. As far as company secretaries are concerned, the path forward is overwhelmingly obvious. On one hand, procedural compliance is being taken out of criminal law and simplified; However, responsibility for real governance failures, non-disclosures of related party transactions, director’s unsuitability, audit independencies being tightened. That’s why, in practical terms, the challenge over the next few months is to identify technical breaches which in a short while, will be punishable at an administrative and civil level, apart from the governance-risk events that will never be. Also, one should start developing internal records on director evaluation, RPT approval processes, and auditor engagement much ahead of when the amended provisions and the corresponding rules will be effective.
Author: Sheetal Patodiya, Senior Associate
Co- Author: Sarthak Singh, Intern
Reference:
Corporate Laws (Amendment) Bill, 2026
