FM Sitharaman introduces Corporate Laws (Amendment) Bill; Lok Sabha refers it to JPC amid CSR concerns

Union finance minister Nirmala Sitharaman on Monday introduced the Corporate Laws (Amendment) Bill, 2026 in the Lok Sabha, which was subsequently referred to a joint parliamentary committee (JPC) for detailed examination following opposition concerns over corporate social responsibility (CSR) provisions.

The Bill was sent to the JPC through a voice vote after Sitharaman herself proposed wider scrutiny and consultations on the proposed amendments.

Opposition flags CSR dilution concerns

Soon after its introduction, opposition members including Manish Tewari, Saugata Roy and T Sumathy opposed the legislation, alleging that it could dilute the existing mandate requiring companies to spend 2% of their profits on CSR activities.

Responding to the criticism, Sitharaman said that the proposed changes do not alter the CSR framework itself but only seek to amend the criteria for calculating net profits, which determine CSR obligations.

She added the Bill had been brought after nearly two years of deliberations and the concerns raised were “unfounded”.

Ease of doing business

According to the government, the Corporate Laws (Amendment) Bill, 2026 seeks to amend the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008 to further ease compliance and improve the regulatory framework.

Key proposals include:

• Further decriminalisation of minor corporate offences

• Rationalisation of penalties

• Streamlining of regulatory processes

The finance minister said the reforms aim to reduce litigation and promote a more facilitative business environment, particularly for startups, small companies and LLPs.

JPC route indicates broader consultation

While defending the intent of the Bill, the government opted to refer it to a JPC to enable clause-by-clause scrutiny and build broader political consensus.

The committee, comprising members from both Houses of Parliament, will examine the provisions and submit its recommendations before the legislation is taken up for passage.

CSR seen as strategic investment

“In my observation, CSR investment is no longer merely a compliance-related commitment; rather, it is increasingly becoming a strategic investment. This is being driven by the increasing importance given to corporate governance practices, measurable ESG commitment, ever increasing consumer and business stakeholders’ awareness, proactive governmental appreciation, among other factors,” said Pratap Ray, vice-president, finance & governance, Smile Foundation.

“Owing to multiple indicators, despite some relaxation, CSR spending will only increase in coming years as companies are taking this more as a part of their core business strategy,” he added.