Bill seeking to ease corporate compliance norms sent to JPC after introduction in Lok Sabha
Finance minister Nirmala Sitharaman introduced the Corporate Laws (Amendment) Bill, 2026 in the Lok Sabha on Monday, with the aim of easing compliance norms and reducing criminal penalties by amending the Limited Liability Partnership Act, 2008 and the Companies Act, 2013.
Following a voice vote on Sitharaman’s proposal, the bill was referred to a joint parliamentary committee comprising members from both houses of parliament for further scrutiny and recommendations.
Opposition members Manish Tewari (Congress), Saugata Roy (Trinamool Congress) and T Sumathy (DMK) opposed the bill, alleging that it seeks to dilute provisions requiring companies to mandatorily allocate 2% of their profits towards corporate social responsibility (CSR).
The finance minister denied the allegations, saying that the bill only aims to change the net profit criteria and not the article on CSR. He said the bill was introduced after two years of discussions and that members’ concerns were unfounded.
The Union Cabinet had given the green flag to the proposed bill, which aims to address the loopholes identified by the Company Law Committee in 2022, focusing on easing the compliance burden on businesses and decriminalizing minor corporate offences.
The proposed changes are expected to rationalize penalties, shift minor procedural errors from criminal liability to monetary penalties, and streamline regulatory processes to improve the ease of doing business.
The changes also aim to improve the overall corporate compliance framework, reduce litigation and promote a more enabling regulatory environment for companies and limited liability partnerships (LLPs). In his statement regarding the purposes and reasons of the bill, the Minister said that the law aims to provide ease of compliance for one-person companies, small companies, newly established companies and manufacturing companies.
new concepts
According to the finance minister, the changes aim to streamline regulatory practices to strengthen and recognize new concepts in light of the rapidly evolving institutional environment and changing business practices. Companies and LLPs in International Financial Services Centers (IFSCs) can transact and maintain books in foreign currencies.
“Provisions that allow companies and LLPs in IFSCs to transact and maintain books in permissible foreign currencies are an important step towards positioning India as a competitive global financial centre,” said Amit Maheshwari, managing partner of AKM Global, a tax and advisory firm. “This is complemented by structural flexibility, such as the introduction of a framework for the conversion of certain trusts into LLPs, which is expected to benefit investment vehicles and regulated pool structures by ensuring continuity of assets and contractual arrangements.”
Maheshwari added that from an audit and assurance perspective, the changes mark a clear shift towards stronger regulatory oversight, driven by the increased powers of the National Financial Reporting Authority, including broader disciplinary mechanisms and more streamlined investigation and penalty processes. At the same time, the bill signals a calibrated step towards ease of compliance for selected entities by allowing the central government to identify classes of companies that can be exempt from mandatory auditor appointments.
“These changes, along with strengthened valuation norms and emphasis on registered valuers, are expected to strengthen the integrity of financial reporting and ensure greater fairness in transactions,” he said.
Maheshwari said the expanded framework for compounding offences, coupled with the continued tough stance against fraud under the Companies Act, reflects a balanced regulatory approach that promotes ease of doing business and maintains a strong deterrent against serious fraud.
