Parliament panel backs corporate law overhaul
New Delhi: A joint committee of parliament has backed an overhaul of India's corporate law framework, proposing further decriminalization of procedural lapses, compliance relief for
New Delhi: A joint committee of parliament has backed an overhaul of India's corporate law framework, proposing further decriminalization of procedural lapses, compliance relief for small businesses, and relaxed corporate social responsibility (CSR) norms In its report on the Corporate Laws (Amendment) Bill, 2026, tabled in Parliament on Monday, the committee also proposed a stronger role for the Financial Reporting Authority (NFRA) and a framework allowing specified trusts to convert into limited liability partnerships (LLPs). 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. Also Read | Blackstone-backed Aadhar Housing sees no need to raise capital for four years 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 rationalize existing statutory mechanisms while introducing new frameworks aligned with global best practices. Ease of doing business The proposed amendments, the report said, are intended to promote ease of doing business by further decriminalizing provisions, easing compliance requirements for one-person, small, producer companies and startups, streamlining regulatory practices, recognizing new concepts in the evolving corporate landscape and carrying out drafting and clarificatory changes to remove ambiguities. It said 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. 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, changes relating to auditor appointments for prescribed classes of small companies and a reduction in additional fees.
Also Read | Centre nudges RRBs to ramp up digital banking to spur growth It further noted that the legislation introduces a statutory framework that enables specified trusts registered with the Securities and Exchange Board of India (Sebi) or the International Financial Services Centres Authority (IFSCA) to convert into LLPs, facilitating greater flexibility in fund structuring and improving the ease of doing business. 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. It additionally proposes 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. Wide consultations 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 finalizing its recommendations.
The BriefWire