Corporate Laws Amendment Bill boosts NFRA powers, eases compliance norms
New Delhi, Mar 23, 2026
The Corporate Laws Amendment Bill proposes decriminalisation, stronger NFRA powers, and simpler compliance norms, alongside reforms in mergers, CSR, and corporate governance
Read "The Corporate Laws Amendment Bill here
Decriminalisation of various procedural defaults, strengthening of the National Financial Reporting Authority (NFRA), stricter provisions for non-audit services, and flexibility in buyback of shares are among the important changes proposed by the government in the Corporate Laws Amendment Bill, which was tabled in the Lok Sabha on Monday.
The Bill has proposed simplified procedures for mergers and amalgamations, and relaxations in corporate social responsibility (CSR) requirements of smaller companies. Introducing a new concept to build an investor-friendly environment, the Bill has brought provisions to facilitate conversion of alternative investment funds (AIFs) formed as trusts into limited liability partnerships (LLPs), which would have easier compliances.
“The main idea behind the changes proposed in the Bill has been to bring ease of doing business for all, and ease of compliance for small companies,” Deepti Gaur Mukherjee, secretary, Ministry of Corporate Affairs, told Business Standard.
The government has proposed a cooling-off period for audit firms, which cannot provide non-audit services to a company or its holding company or subsidiary for a period of three years after the completion of the audit term.
Various provisions relating to the NFRA in the Bill are aimed at bringing the regulator on a par with other watchdogs such as the Securities and Exchange Board of India (Sebi), Competition Commission of India (CCI), and the Insolvency and Bankruptcy Board of India (IBBI). The provisions in the Bill, for instance, empower the NFRA to make regulations that govern its functioning, and delegate its powers and functions to any of its members or officers. The latter is meant to create a division of functions within the NFRA with respect to investigation and disciplinary action.
Taking note of new concepts amid rapidly evolving corporate landscape and changing business practices, the Bill has recognised new forms of instruments linked to the value of share capital for executive compensation, such as Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs) in addition to Employee Stock Option Plans.
The Bill has proposed to allow companies to hold annual general meetings (AGMs) and extraordinary general meetings (EGMs) through videoconferencing, provided at least one AGM is held in physical mode within a specified period.
Providing statutory backing to companies similar to chartered accountancy ones, the Bill allows formation of firms where the majority members are cost accountants or company secretaries. This is to help create multidisciplinary firms that would be able to provide non-audit services. For financial audit services, the law requires a firm to have a majority of chartered accountants as members.
“A key aspect of the proposed reforms is the attempt to align India’s corporate framework with evolving global practices. The Bill reflects a broader regulatory shift towards a more facilitative, modern, and globally aligned corporate law regime,” said Abhishek Paliwal, partner, King Stubb & Kasiva, Advocates and Attorneys.
Addressing the issue of delays in adjudication, the Bill has proposed the constitution of special benches of the National Company Law Tribunal (NCLT) to hear specific matters under the Companies Act and the Insolvency and Bankruptcy Code, 2016.
The Bill has introduced several measures to facilitate entities operating in International Financial Services Centres (IFSCs), including permitting companies and LLPs to operate in foreign currencies and simplifying certain reporting and governance requirements.
The Bill has proposed that mergers will only require filing with the NCLT of the resultant company and not both entities.
“By centralising merger applications at a single NCLT bench, the amendment to Section 230 eliminates the bottleneck of multi-jurisdictional filings. This single-window approach is a landmark step in judicial efficiency, slashing corporate restructuring timelines,” said Ruetveij Pandya, partner, Cyril Amarchand Mangaldas.
The Bill has also sought to clarify that a trust shall be registered as a beneficial owner and trustee shall be registered as a member in the register of members of the company.
The Bill covers changes in the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. The Bill has been referred to a Joint Committee of Parliament.
WHAT THE BILL PROPOSES
• Conversion of specified trusts such as AIFs into LLPs
• Empowering the NFRA to make regulations, delegate functions
• Three-year cooling-off period to provide non-audit services
• Recognition of executive compensations like RSUs and SARs
• Decriminalisation of various procedural defaults
• Permitting companies and LLPs to operate in foreign currencies at IFSCs
[The Business Standard]
