Joint Parliamentary panel backs Corporate Laws (Amendment) Bill, 2026
New Delhi, Aug 3
A Joint Committee of Parliament has backed the Corporate Laws Bill, 2026, while recommending further decriminalisation of procedural lapses, as well as compliance relief and easier corporate social responsibility norms for small businesses.
The committee's report, tabled in the Parliament on Monday, states that the proposed amendments in the Bill are intended to promote ease of doing business by further decriminalising provisions, easing compliance requirements for one-person, small, producer companies and startups, streamlining regulatory practices, recognising new concepts in the evolving corporate landscape, and carrying out drafting and clarificatory changes to remove ambiguities.
The Bill marks a shift towards proportionate enforcement by moving lower-risk procedural defaults to in-house adjudication with monetary penalties while reserving criminal action for fraud and other serious violations, it said.
The parliamentary committee has recommended the introduction of a fixed penalty of Rs 50,000 for certain non-compliances and permitting in-kind CSR contributions for small companies. It has also suggested that exemption from mandatory statutory audit be allowed only for small businesses and not for public companies.
Another recommendation aims to make it easier for foreign companies to move their operations to India by enabling "seamless re-domiciliation of foreign companies to IFSC without requiring winding-up in their home jurisdiction".
Besides, the committee has recommended dropping imprisonment provisions for failure to comply with NFRA orders in line with decriminalisation, and that penalty recoveries be handled through the framework proposed in new Section 454B.
The committee also highlighted the Bill's proposals to provide further relaxations under the CSR framework, including exemptions from mandatory CSR obligations for eligible small companies,
The report said the primary objective of the Bill is to simplify corporate legal procedures, reduce compliance burdens, and strengthen corporate governance in line with recommendations of the Company Law Committee and earlier amendments to the Companies Act, 2013.
It said the Bill seeks to replace criminal provisions for various procedural defaults under the Companies Act and the Limited Liability Partnership (LLP) Act, 2008, with civil penalties, while retaining criminal sanctions for serious violations.
The committee noted that the proposed legislation aims to rationalise existing statutory mechanisms while introducing new frameworks aligned with global best practices.
The report said the Bill also seeks to facilitate companies and LLPs operating in International Financial Services Centres (IFSCs) by permitting them to issue and maintain share capital in foreign currency as allowed by the IFSCA. In addition, it has proposed a digital-first governance framework by enabling hybrid and virtual shareholder meetings, electronic voting and automated filings, while requiring companies to hold at least one annual general meeting in physical mode.
The committee said it received 130 memoranda containing more than 900 suggestions from stakeholders, including six Members of Parliament, and held extensive consultations with ministries, regulators, industry associations, professional bodies, banks, legal experts and corporate stakeholders before finalising its recommendations.
It also undertook a study visit to Mumbai to obtain views from industry associations, capital market institutions, startups, trusts, investment firms and banking institutions.
— IANS
Reader Comments
Good move to ease doing business, but I hope the government doesn't go overboard with decriminalisation. Serious frauds should still attract strict punishment. Also, allowing in-kind CSR contributions for small companies is practical — not every small firm has cash lying around for CSR. Overall, a balanced approach by the committee.
The re-domiciliation provision for foreign companies to IFSC is a game-changer! This will attract global companies to set up base in India without the headache of winding up in their home country. We are really positioning India as a global business hub. But let's also ensure our domestic startups get equal attention. 🤔
Interesting to see India moving towards more business-friendly regulations. The digital-first governance with hybrid shareholder meetings is very modern. However, the requirement to hold at least one physical AGM seems a bit backward — why not make it fully optional? That would truly ease compliance for global companies.
As a chartered accountant, I've seen clients struggle with the fear of criminal prosecution for things like missing a deadline or filing an incorrect form. This Bill is definitely a step in the right direction. But I wish the committee had also addressed the issue of overlapping penalties between different sections. Clarity would have been appreciated!
Great initiative for startups! The CSR exemptions for small companies and the relaxed audit norms will take a huge load off young entrepreneurs. However, I'm a bit concerned about dropping imprisonment for NFRA violations — shouldn't there be some deterrent for non-compliance with a regulator? Hope they have a solid civil penalty mechanism in place.