New Delhi: Union Finance Minister Nirmala Sitharaman is scheduled to introduce a bill to amend the company laws in Lok Sabha on Monday to further ease of doing business, decriminalize minor offences, replace some criminal sentences with civil penalties and reduce compliance burdens for small businesses, start-ups and production companies set up by farmers.
As per the Lok Sabha agenda on Monday, the Finance Minister is scheduled to introduce the Companies Laws (Amendment) Bill, 2026 to “amend” the Limited Liability Partnership (LLP) Act, 2008 and the Companies Act, 2013. While the Companies Act deals with incorporation, governance, disclosures and dissolution of an LLC, the LLP Act provides limited liabilities to partners, said people familiar with the development, requesting anonymity. The Cabinet approved the draft law on March 10.
Both the laws have been amended in the past and the current amendments aim to not only increase the ease of doing business but also provide ease of living to businesses by decriminalizing more provisions, the people said. The Companies Act had previously been amended four times since 2015 to streamline compliance requirements. The LLP Act was previously amended in 2021 with similar objectives.
“The draft law is expected to propose several changes to facilitate compliance, including decriminalization of several provisions, and regulatory easing for small businesses, startups and production companies,” one of the people said. The production company is established by people engaged in activities such as agriculture, fishing, animal husbandry, horticulture, floriculture, fish farming, forestry and forest products.
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The amendments to the laws have been made on the basis of the Company Law Committee (CLC) constituted by the government to facilitate ease of doing business for commercial entities. The CLC submitted its last report to the government on March 21, 2022. The 11-member CLC was constituted in September 2019. Its members included former Lok Sabha Secretary General TK Viswanathan, Kotak Bank Mahindra Managing Director Uday Kotak, Shardul Amarchand Mangaldas & Co CEO Shardul S Shroff, Chartered Accountant G Ramaswamy, and Xpro India Chairman Sidharth. Perla.
Regarding the Companies Law of 2013, some of the CLC’s recommendations included facilitating some companies’ communication with their members only electronically, easing requirements for increasing capital in troubled companies, allowing the submission of declarations with self-certification, allowing companies to hold general meetings in virtual, physical or hybrid modes, strengthening the National Financial Reporting Authority (NFRA) and prohibiting the conversion of cooperative societies to a company. Under the LLP Act, it was recommended to relax the establishment and compliance requirements for producer organizations of farmers, fishermen or artisans.
The CLC’s recommendations were discussed by various stakeholders and were considered by the High-Level Committee on Non-Financial Regulatory Reforms (HLC-NFRR), headed by former Cabinet Secretary and NITI Aayog member Rajeev Gauba. In her speech on the 2025-2026 budget, the Minister of Finance announced the formation of the committee. “A high-level committee on regulatory reforms will be formed to review all regulations, certificates, licenses and authorizations for the non-financial sector,” she said on February 1 last year.
While suggesting that the committee submit its recommendations within a year, Sitharaman said: “The aim is to strengthen trust-based economic governance and take transformative measures to enhance the ‘ease of doing business’, especially in matters of inspection and compliance.” She added that countries would be encouraged to join this endeavour.
