Corporate Law - Reforms and Regulatory Amendments 2026 - Proposed

The Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on March 18, 2026, proposes several significant changes to both the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008.

- Haresh Shah

These amendments are designed to improve the ease of doing business, simplify compliance, and recognize new business practices.

Major changes related to LLPs

Conversion of "Specified Trusts" into LLPs

New Conversion Category: A new section (57A) and a Fifth Schedule are proposed to allow "specified trusts" to convert into LLPs.

Definition: A "specified trust" includes those established under the Indian Trusts Act, 1882, or other Central/State Acts and registered with SEBI or the International Financial Services Centres Authority (IFSCA).

Facilitation: This change specifically aims to allow Alternative Investment Funds ($AIFs), often formed as trusts, to transition into an LLP structure.

Effect of Conversion: Upon registration, all assets, liabilities, and legal proceedings of the trust are transferred to and vested in the new LLP.

Integration of Companies Act Provisions for LLPs

Valuation Standards: The Bill introduces Section 33A to the LLP Act, which mandates that the valuation provisions of Section 247 of the Companies Act, 2013, will now apply to LLPs. This applies to the valuation of a partner's contribution, property, assets, net worth, or liabilities.

Loans to LLPs: Section 185 of the Companies Act is amended to explicitly include LLPs within its purview, ensuring consistent treatment of loans and guarantees to entities where directors have an interest.

International Financial Services Centre (IFSC) LLPs

New Entity Classification: The Bill introduces the concept of a "Specified International Financial Services Centre LLP".