Here’s a look at the amendments to the Bill and why it has been sent to the JPC.
The Corporate Laws (Amendment) Bill, 2026, seeks to amend the Limited Liability Partnership Act, 2008 and the Companies Act, 2013, to streamline regulatory processes for companies, and decriminalise minor offences by shifting from criminal penalties to monetary fines . In addition to tweaking norms for convening hybrid annual or extraordinary general meetings, unpaid dividend and the investor protection framework, it also proposes the introduction of a framework for conversion of specified trusts (registered under SEBI / IFSC authority) into Limited Liability Partnerships (LLPs) and an increase of profitability threshold for applicability of corporate social responsibility (CSR).
What are the Acts which the proposed new law seeks to amend and how?
The Companies Act, 2013 was enacted to consolidate and amend the laws relating to companies and introduced significant changes related to disclosures to stakeholders, accountability of directors, auditors and key managerial personnel, investor protection and corporate governance. It was amended in 2015, 2017, 2019 and 2020 to decriminalise certain offences, facilitate ease of doing business, rationalise compliance requirements, and recognise new concepts.
The Limited Liability Partnership Act, 2008 was enacted to make provisions for the formation and regulation of limited liability partnerships and related matters, in the form of an LLP which has the flexibility of a partnership firm but is constituted in the form of a body corporate structure with limited liability and perpetual succession. The LLP Act was amended in the year 2021 to facilitate ease of doing business and to decriminalise certain offences.
What are the key provisions of the proposed law?
The key provisions of the Bill include increasing the eligibility threshold for CSR to be hiked to Rs 10 crore profit from the current one of Rs 5 crore. At the moment, companies are required to spend 2% of the average profit from the last three years on CSR initiatives.
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It also proposes to provide relaxation to small companies by providing exemption from CSR provisions, requirements related to auditor appointment, and reduction in additional fees. The Bill also seeks to increase the time period for transfer of unspent CSR amounts relating to ongoing projects to the unspent corporate social responsibility account with the scheduled bank to 90 days from the current 30 day-period.
Other key provisions include enabling companies to hold Annual General Meetings and Extraordinary General Meetings through video conferencing or other audio visual means, with the requirement of holding at least one Annual General Meeting in physical mode at least once in three years. Also, certain affidavits required under the Act can be replaced with self-declarations.
What are the objections to the Bill?
The objections raised by opposition MPs to the proposed law include contentions that it suffers from excessive delegation of essential legislative functions in violation of settled constitutional doctrines. The Opposition says that the law leaves core policy matters, such as classification of companies for exemptions, determination of compliance requirements, thresholds for Corporate Social Responsibility, audit obligations, and penalty frameworks to subordinate legislation without adequate legislative guidance, especially from Parliament. This, according to the Opposition, is through the Bill enabling sub-delegation of legislative and regulatory powers to authorities such as the National Financial Reporting Authority (NFRA).
The Opposition has also objected to the Bill for permitting the Centre to identify class or classes of companies for different regulatory treatments across multiple provisions and vesting sweeping powers in the Centre to issue directions to and supersede statutory regulators such as NFRA on broad and undefined grounds like public interest.
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Other significant contentions include the alleged attempt to “dilute” CSR requirements as well as removing previous provisions for imprisonment in case of violation of the Companies Act, 2013, alleged dilution of accountability framework in corporate governance that risks weakening shareholder participation, compliance discipline and overall corporate governance standards.
What has been the government’s response?
The government has argued that the proposed provisions are very similar to those given to other regulators, such as SEBI, Competition Commission and IDBI, and the power to make regulations by the NFRA is subject to prior consultation with stakeholders and, further, each regulation is to be laid down before both the Houses of Parliament within 30 days.
With regard to CSR, the government has sought to argue that only the net profit criterion is being amended in favour of small businesses striving to grow, with the net profit criterion of Rs 5 crore being enhanced to Rs 10 crore as a reflection of changes in the nation’s economic scenario now compared with 2013. The government has sought to emphasise that other significant criteria, such as net worth of Rs 500 crore, or a turnover of Rs 1,000 crore are being retained.
With regard to decriminalisation, the government has contended that 21 offences are being moved to the adjudication mechanism, wherein penalties are levied in the Bill. While the process of levying the penalties, according to the government, is transparent and through the e-adjudication platform, the discretion of government officers concerned has been done away with as an anti-corruption measure.
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According to the government, the proposed law will ensure that corporate governance is facilitated, electronic VC meetings will increase shareholder participation, and provisions for small companies are a step forward towards easing their burden on the one hand and helping greater formalisation of MSMEs on the other.
