Corporate Laws Amendment Bill, 2026:
What changes for India Inc, investors

New Delhi, Aug 4, 2026

From easier mergers and higher thresholds for small companies to stronger audit oversight and digital governance, here's what the proposed corporate law changes mean

The government is looking to simplify doing business and improve investor protection by making changes to The Companies Act, 2013, and The Limited Liability Partnership (LLP) Act, 2008 through the Corporate Laws (Amendment) Bill, 2026. The Joint Parliamentary Committee (JPC) on Monday submitted its report in Parliament, backing the proposed legislation.

The Bill was introduced in the Lok Sabha in March and was referred to a JPC for detailed scrutiny. After months of consultations with government departments, regulators, industry bodies, legal experts, professional institutes and other stakeholders, the report was tabled in both the Lok Sabha and the Rajya Sabha. The Bill aims to reduce compliance hurdles, speed up business decisions and strengthen oversight in areas such as auditing, investor protection and accountability. 

Why corporate laws needed an update 

The Companies Act, 2013 has undergone several amendments over the past decade, but businesses say some provisions continue to create unnecessary compliance burdens. According to Ernst & Young LLP, these include rules affecting smaller companies, mergers and restructuring, as well as firms operating in emerging sectors such as financial services in GIFT City. The government says the latest Bill is intended to update corporate laws to reflect changing business models, the growing use of digital governance and India's ambition to become a global investment hub. 

Bigger relief for small companies 

The Bill proposes to expand the definition of a small company. Currently, companies qualify if they have paid-up capital of up to ₹10 crore and turnover of up to ₹100 crore. The Bill proposes doubling these limits to ₹20 crore and ₹200 crore, respectively.

This matters because small companies enjoy several compliance relaxations, including fewer board meetings, simplified financial reporting and lower filing requirements.

According to EY, by bringing more businesses under this category, the compliance costs will be reduced, and management will be able to focus more on growth than paperwork. 

Faster mergers with fewer procedural hurdles 

The Bill also seeks to make mergers quicker, particularly those that qualify for the fast-track route. At present, certain mergers require approval from shareholders holding at least 90 per cent of the total share capital. The proposed amendment lowers this threshold to 75 per cent of the shareholding at the meeting.

The objective is to prevent a small minority from delaying routine corporate restructurings while retaining shareholder oversight. The JPC has also recommended additional safeguards, including exit rights for dissenting shareholders in certain fast-track mergers. 

Stronger oversight of auditors 

The Bill proposes to give the National Financial Reporting Authority (NFRA) wider powers by expanding its oversight of audit firms, strengthening its inspection and investigation powers, and enhancing its disciplinary framework.

The move reflects a broader global push towards stricter audit standards and greater board accountability following a series of high-profile corporate governance failures. These include the collapse of Wirecard AG in Germany in 2020 after it admitted that €1.9 billion of cash on its balance sheet did not exist, and the accounting scandal at Toshiba Corporation in Japan, where profits were overstated for over seven years from 2008 to 2014, driven by corporate pressure from top executive. In India, the crisis at Infrastructure Leasing & Financial Services (IL&FS) in 2018, following a series of debt defaults, exposed weaknesses in corporate governance, financial reporting and oversight. 

Making company law fit for the digital age 

The Bill also seeks to bring company law in line with the way businesses operate today by giving greater legal backing to digital governance. It allows wider use of virtual meetings and electronic processes for shareholder participation and company administration, building on practices that became common during the pandemic. The JPC has endorsed these measures while recommending safeguards to ensure investor interests remain protected. 

Changes for LLPs and GIFT City 

The Bill also amends the LLP Act to make the limited liability partnership structure more flexible and better suited to evolving business needs. A key focus is creating a clearer legal framework for LLPs operating in International Financial Services Centres (IFSCs) such as GIFT City, including provisions related to foreign currency transactions and regulatory oversight.

The JPC has also backed additional safeguards for the proposed conversion of certain trust structures into LLPs, including mandatory investor approval and regulatory clearance before such conversions can take place. 

Ease and transparency around implementing CSR projects 

The Bill proposes to ease some of the CSR compliance requirements for companies. It raises the net profit threshold for setting up a Corporate Social Responsibility (CSR) committee from ₹5 crore to ₹10 crore, while also increasing the exemption limit for constituting a CSR committee where annual CSR spending does not exceed ₹1 crore, up from the current ₹50 lakh.

Companies will also get more time to transfer unspent CSR funds to the designated account, with the deadline extended from 30 days to 90 days after the end of the financial year. In addition, the government will have the power to exempt certain categories of companies from CSR obligations through prescribed rules. 

Greater focus on investor protection 

While the Bill is aimed at making compliance easier, the JPC has recommended several additional measures to strengthen investor confidence. These include better protection of investor confidentiality and stronger safeguards during corporate restructuring.

Bharat Varadachari, partner and national leader, entity compliance & governance, EY India, told Business Standard that the Bill reflects a clear commitment to advancing India's corporate law reform agenda.

"While broadly endorsing the government's proposals, the Committee has introduced several thoughtful refinements, including dissenting shareholder exit rights in fast-track mergers, value-based investor approval and regulatory consent requirements for trust-to-LLP conversions, investor confidentiality protections. The Committee has also sought to strengthen the CSR framework through greater transparency around implementing agencies and has endorsed the continued evolution of technology-enabled shareholder participation through virtual meeting and digital governance mechanisms," he said. "Taken together, these recommendations reinforce governance and investor protection while preserving the Bill's ease-of-doing-business objectives."

At a glance: 10 key changes proposed

[The Business Standard]