The Corporate Laws (Amendment) Bill 2026 introduces significant revisions to India’s legal framework, prioritising civil penalties over criminal sanctions and expanding regulator independence, amid ongoing debate over enforcement and governance safeguards.
India’s Corporate Laws (Amendment) Bill 2026 marks the country’s latest and most ambitious effort to trim criminal penalties from routine corporate defaults. Introduced in the Lok Sabha on 23 March 2026, the Bill would amend both the Companies Act 2013 and the Limited Liability Partnership Act 2008, shifting a range of compliance failures towards civil penalties and away from imprisonment. Supporters say it is part of a broader move to make company law more proportionate and business-friendly. Critics, however, argue that the measure goes too far in handing law-making power to the executive and risks weakening governance safeguards.
The reform sits within a longer trend. India has already decriminalised dozens of company law offences through earlier amendment laws, and the Jan Vishwas Act 2023 extended that approach across a wide range of statutes. As PRS Legislative Research notes, the new Bill would continue that trajectory by removing criminal sanctions for several procedural defaults, including failures to file information, keep proper books or comply with certain registrar requisitions. India Briefing said the change is intended to reduce pressure on the courts and encourage voluntary compliance rather than punishment for technical lapses.
One of the most significant institutional changes in the Bill concerns the National Financial Reporting Authority, or NFRA. The authority was set up under Section 132 of the Companies Act 2013 and has been tasked with overseeing accounting and auditing standards, monitoring compliance and protecting public interest. Government material says the Bill would give NFRA greater scope to make rules about its own functioning and to separate investigation from disciplinary work. That would place it more firmly in the mould of an independent regulator, closer to the operational autonomy seen in other financial oversight bodies.
The Bill also seeks to tighten audit independence by restricting non-audit services offered by statutory auditors. That move reflects lessons drawn from earlier corporate scandals and follows international reform patterns that emerged after Enron, including the Sarbanes-Oxley framework in the United States and audit reforms in Europe. Alongside that, the legislation proposes procedural changes to mergers and amalgamations, including a single-window style filing process through the National Company Law Tribunal bench of the resulting company. PRS says the Bill would also lower the shareholder and creditor approval threshold for certain mergers from 90 per cent to 75 per cent, a change designed to make corporate restructurings easier to complete.
The Bill further recognises Restricted Stock Units and Stock Appreciation Rights as legitimate forms of pay, bringing statutory clarity to compensation structures already used by many companies. Proponents say that should reduce uncertainty around disclosure and governance. Yet the draft has also drawn criticism for relying heavily on phrases such as “as may be prescribed”, which leave key matters to subordinate legislation. In the article’s own assessment, that creates a constitutional concern: Parliament may set policy and delegate detail, but it should not leave essential questions such as penalty levels, compliance thresholds and CSR treatment too open-ended.
The biggest unresolved issue may be deterrence. Moving from criminal punishment to civil penalties can work only if enforcement is swift, predictable and credible. The Bill assumes that regulators and adjudicators will be able to impose meaningful penalties, but it does not itself provide much detail on how those penalties will be calibrated or enforced. That leaves an awkward gap between reform and implementation. The result, unless the draft is tightened, could be a law that decriminalises by reclassification while leaving the harder question of effective corporate discipline to later rules.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
