The Companies (Amendment) Bill, 2026 proposes a wide set of changes to the Companies Act, 2013 and the LLP Act. The objective is to further the ease of doing business agenda, reduce compliance burdens, and align corporate law with current business practices.
Here is a detailed look at the major changes proposed by the Bill.
Revised Definition of Small Companies
The Bill significantly expands the scope of “small company” u/s 2(85) of the Companies Act, 2013.
- Paid-up share capital limit: increased to ₹20 crore (earlier ₹10 crore)
- Turnover limit: increased to ₹200 crore (earlier ₹100 crore)
This will bring a larger set of private companies within the small company definition and reduce their compliance burden.
Corporate Social Responsibility (CSR)
Several relaxations have been introduced in the CSR framework:
- The net profit threshold for mandatorily constituting a CSR Committee is increased to ₹10 crore.
- The time limit for transferring unspent CSR amounts related to ongoing projects is extended from 30 days to 90 days.
- Companies with CSR obligations not exceeding ₹1 crore are not required to constitute a CSR Committee.
Note that the CSR spending obligation itself is not removed. Only the procedural requirement of constituting a committee is eased for smaller obligations.
Virtual and Hybrid Meetings
The Bill formally allows companies to conduct AGMs and EGMs through video conferencing or other audio/visual means, either wholly or partly.
Key points:
- If members requisition a meeting in hybrid mode, the company is bound to comply.
- Every company must hold at least one AGM in physical mode once every three years.
The second point preserves some element of physical shareholder engagement.
Mergers and Amalgamations
The Bill simplifies the restructuring process:
- For fast-track mergers, approval is required from a majority of members present and voting, holding at least 75% of the value of shares.
- Applications for compromises, arrangements, or amalgamations are to be made before the Tribunal having jurisdiction over the transferee or resultant company.
The second change streamlines jurisdictional requirements where the transferor and transferee are in different jurisdictions.
Executive Compensation
The scope of employee compensation instruments has been widened. Companies may now issue instruments under any “scheme linked to the value of the share capital of a company.”
This moves beyond traditional ESOPs and formally brings modern compensation structures such as:
- Restricted Stock Units (RSUs)
- Stock Appreciation Rights (SARs)
within the ambit of the Act.
International Financial Services Centres (IFSC)
To improve operational flexibility in IFSCs:
- Companies and LLPs must issue and maintain share capital or partner contributions in a permitted foreign currency.
- Financial statements and books of account are also to be maintained in such currency.
- An IFSC LLP must include the suffix “International Financial Services Centre LLP” in its name.
Note that this aligns IFSC entities closer to international practice and removes the rupee-denomination constraint.
Strengthening of Regulatory Authorities
National Financial Reporting Authority (NFRA)
- NFRA is constituted as a body corporate with a dedicated NFRA Fund.
- NFRA is empowered to issue advisories, censures, and warnings.
- NFRA may mandate additional professional training for auditors.
Insolvency and Bankruptcy Board of India (IBBI)
- IBBI is designated as the Valuation Authority.
- It will regulate valuers, prescribe valuation standards, and monitor compliance.
Decriminalisation of Offences
In line with the ease of doing business agenda, the Bill decriminalises various procedural defaults under the Companies Act and the LLP Act. Criminal penalties, including imprisonment, are being replaced with civil monetary penalties.
This article summarizes proposed reforms under a draft Corporate Laws (Amendment) Bill, 2026, based on policy discussions and committee recommendations. These provisions are not yet enacted law.