What Happened
- The Corporate Laws (Amendment) Bill, 2026, was introduced in the Lok Sabha during the second phase of the ongoing Budget Session by Finance Minister Nirmala Sitharaman.
- The bill seeks to amend two key corporate statutes: the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.
- The proposed amendments are based on recommendations of the Company Law Committee (2022) and aim to enhance ease of doing business, reduce compliance burden, and address regulatory gaps in the existing framework.
- The Bill is expected to incorporate CSR-related relaxations, including proposals to exempt certain classes of companies from mandatory CSR obligations.
- The Lok Sabha session is scheduled to run until April 2, 2026, providing a window for the bill's legislative passage.
Static Topic Bridges
Companies Act, 2013 — Governance Structure and CSR Mandate
The Companies Act, 2013 is the comprehensive legislation governing corporate law in India, replacing the Companies Act, 1956 (which had been in force for over five decades). It introduced significant reforms including mandatory independent directors, audit committees, women directors on boards, class action suits, and mandatory Corporate Social Responsibility (CSR) spending.
- Companies Act, 2013: enacted September 6, 2013; administered by the Ministry of Corporate Affairs (MCA)
- Section 135 — CSR mandate: applies to companies with (a) net worth ≥ ₹500 crore, OR (b) turnover ≥ ₹1,000 crore, OR (c) net profit ≥ ₹5 crore in any preceding financial year
- CSR spend: 2% of average net profits of preceding 3 financial years
- Board-level CSR Committee: minimum 3 directors, including at least 1 independent director (mandatory for eligible companies)
- Unspent CSR amounts: must be transferred within 6 months of FY end to the PM National Relief Fund or other Schedule VII funds; if for ongoing projects, to a separate "Unspent CSR Account" (introduced via 2019 amendment)
- Schedule VII: lists permissible CSR activities (education, health, environment, gender equality, rural development, etc.)
Connection to this news: The 2026 amendment bill proposes to relax CSR requirements for certain smaller eligible entities — implementing Company Law Committee 2022 recommendations that the current blanket threshold may impose disproportionate compliance costs on companies marginally above the threshold.
Limited Liability Partnership (LLP) Act, 2008 — Key Features
The Limited Liability Partnership Act, 2008 (in force from March 31, 2009) created a new hybrid business form in India, offering the organisational flexibility of a partnership while providing limited liability protection to partners (akin to shareholders in a company). An LLP has a separate legal personality, can sue and be sued, and partners' liability is limited to their agreed contribution.
- LLP Act enacted December 12, 2008; in force March 31, 2009
- Key distinction from traditional partnership: LLP has separate legal identity (Indian Partnership Act, 1932 partnerships do not); limited liability for partners
- Key distinction from company: no mandatory board structure, no mandatory annual general meeting, lower regulatory filings
- Designated Partners: at least 2 required; at least one must be resident in India (≥120 days/year, as amended in 2022)
- LLP (Amendment) Act, 2021: introduced ~29 changes effective April 1, 2022 — including start-up LLP category, small LLP concept, decriminalization of minor offences
- Small LLP: defined to encourage micro and small enterprise participation in the LLP format
Connection to this news: The Corporate Laws (Amendment) Bill 2026 continues the reform trajectory initiated by the 2021 LLP Amendment, likely further simplifying compliance and expanding flexibility — particularly for start-ups and small businesses that prefer LLP structure.
Ease of Doing Business Reforms — India's Legislative Journey
India's ranking in the World Bank's Ease of Doing Business (EoDB) index improved dramatically from 142nd in 2014 to 63rd in 2020 (the last year the index was published). This improvement was driven substantially by decriminalisation of minor corporate offences, online business registration, simplified compliance, and regulatory rationalisation across the Companies Act, LLP Act, and allied statutes.
- World Bank EoDB Index: last published 2020 (India ranked 63rd); discontinued after methodology concerns
- India's key regulatory reform milestones: Insolvency and Bankruptcy Code, 2016; Companies (Amendment) Acts of 2017, 2019, 2020; LLP Amendment Act, 2021
- Decriminalisation drive: the Companies (Amendment) Act, 2020 decriminalised 46 offences under the Companies Act, converting criminal penalties to civil/monetary defaults
- Company Law Committee (2022): constituted by MCA to review compliance burden; recommended further simplifications including CSR threshold recalibration and LLP structural improvements
- India's DPIIT (Department for Promotion of Industry and Internal Trade) coordinates EoDB reforms across ministries
Connection to this news: The Corporate Laws (Amendment) Bill 2026 is part of a consistent reform agenda to reduce regulatory friction for businesses — translating the Company Law Committee's 2022 recommendations into legislation four years after the report.
Key Facts & Data
- Companies Act, 2013: enacted September 6, 2013; replaces Companies Act, 1956
- CSR threshold: net worth ≥ ₹500 cr OR turnover ≥ ₹1,000 cr OR net profit ≥ ₹5 cr
- CSR spend: minimum 2% of average net profits of preceding 3 financial years (Section 135(5))
- LLP Act in force: March 31, 2009
- LLP (Amendment) Act, 2021: approximately 29 amendments, effective April 1, 2022
- Company Law Committee 2022: basis for the 2026 amendment bill
- India's World Bank EoDB ranking: 142nd (2014) → 63rd (2020)
- Budget Session 2026 second phase: ends April 2, 2026