Parliament panel backs corporate law overhaul

A parliamentary committee in India has endorsed significant changes to the nation's corporate law framework. The report, published in relation to the Corporate Laws (Amendment) Bill, 2026, suggests reducing criminal sanctions for procedural errors while retaining harsher penalties for fraud and other serious offenses.

The committee calls for replacing criminal provisions with civil penalties for most procedural lapses. Small businesses and startups would benefit from relaxed corporate social responsibility (CSR) norms and exemptions from mandatory requirements. The report also proposes allowing certain specified trusts to convert into limited liability partnerships (LLPs), boosting flexibility in fund structuring.

A stronger role for the National Financial Reporting Authority (NFRA) is recommended, coupled with a digital-first governance model. This would permit virtual shareholder meetings, electronic voting, and automated filings, with at least one annual general meeting held in-person each year.

Additionally, the committee proposes permitting International Financial Services Centres (IFSC) companies to issue and maintain share capital in foreign currency. To facilitate ease of doing business, the report suggests allowing hybrid and virtual shareholder meetings, along with electronic voting and automated filings.

The bill, if passed, would represent a shift towards proportionate enforcement, moving lower-risk procedural defaults to in-house adjudication with monetary penalties, while maintaining criminal action for fraud and other serious violations. The committee's recommendations were shaped by stakeholder consultations, including more than 900 suggestions from various stakeholders.