Parliamentary Panel Recommends Compliance And Governance Reforms In Corporate Law Overhaul

A Joint Parliamentary Committee (JPC) has recommended the adoption of the Corporate Laws (Amendment) Bill, 2026 with a series of clause-wise changes aimed at reducing compliance burdens, modernising corporate governance and strengthening India's regulatory framework.

The committee submitted its report in both Houses of Parliament on Monday after months of consultations with government departments, regulators, industry associations, legal experts and professional bodies.

The Bill proposes amendments to the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008 to further improve the ease of doing business while enhancing investor protection and regulatory oversight.

The committee, chaired by BJP MP Sudheer Gupta, said the proposed legislation seeks to further decriminalise procedural defaults by replacing criminal provisions with civil penalties, as per ANI.

It also proposes relaxations under the Corporate Social Responsibility (CSR) framework, enhanced powers for the National Financial Reporting Authority (NFRA), and a legal framework enabling specified trusts to convert into LLPs.

The report also recommended easing compliance requirements for One Person Companies, small companies, start-ups and producer companies, while streamlining regulatory procedures, recognising emerging business models and removing ambiguities through drafting changes.

The parliamentary panel said it held 25 sittings, received 130 memoranda from stakeholders, including six Members of Parliament, and heard 83 experts and representatives from ministries and regulators before finalising its recommendations.

Digital Governance And IFSC Reforms

The committee endorsed a digital-first governance framework that would permit hybrid and virtual shareholder meetings, electronic voting and automated filings.

However, companies would still be required to hold at least one physical annual general meeting each year to ensure shareholder participation and accountability.

The panel also supported greater operational flexibility for companies and LLPs operating in International Financial Services Centres (IFSCs), including allowing eligible entities to maintain share capital in permitted foreign currencies.

It further backed a framework to facilitate the conversion of specified trusts into LLPs.

What Do The Experts Say?

Experts said that the amendments are a step towards making corporate compliance more proportionate and business-friendly.

"The committee has pushed forward the cause of the industry to have LLPs a convenient and workable form for funds in India," said Vivaik Sharma, Partner, Cyril Amarchand Mangaldas (CAM).

Atul Pandey, Partner at Khaitan & Co, said that the the importance of the amendments lies less in any single reform and more in reducing procedural friction across the corporate lifecycle.

On the relaxations for LLPs operating in IFSCs, he added, "allowing specified IFSC LLPs to maintain partner contributions and financial records in foreign currency should reduce administrative complexity and better align legal requirements with commercial reality."

"Similarly, facilitating the conversion of eligible investment structures into LLPs could make GIFT City a more attractive jurisdiction for fund managers and investment platforms, provided the final framework adequately addresses investor rights, tax neutrality and regulatory coordination," Pandey said.

CAM's Sharma echoed similar sentiments, stating, "The proposal should eventually help AIFs setup as LLPs to be able to report changes in partners occurring due to admission of investors on an annual basis. It would also enable IFSC AIFs in Gift City to report capital raised in permitted foreign currency, without requiring a separate notification in this regard."