Simplifying Mergers: MCA Broadens the Fast-Track Route under the Companies Act

The Ministry of Corporate Affairs (“MCA”) has introduced significant amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“Merger Rules”), effective 8 September 2025 (“Amendment”). The Amendment expands the scope of Rule 25 of the Merger Rules by adding new categories of companies eligible to undertake mergers through the fast-track route (“Fast Track Mergers”).

Fast Track Mergers

Unlike the conventional merger process under Sections 230 to 232 of the Companies Act, 2013 (“CA Act”), which mandates approval from the National Company Law Tribunal(“NCLT”), the fast-track merger route permits mergers to be sanctioned by the Regional Director, in accordance with the procedure prescribed under Section 233 of the CA Act read with the Merger Rules.

Under the Fast Track Merger process, the companies involved are required to issue notices to the Registrar of Companies(“RoC”) and the Official Liquidator inviting objections, file a declaration of solvency, and obtain the consent of at least 90% of shareholders and 90% in value of creditors prior to submitting the scheme to the Regional Director. If no objections are raised, the Regional Director may approve the scheme directly or, if deemed necessary, refer it to the National Company Law Tribunal(“NCLT”) for consideration.

Key Amendments

The Amendment introduces a few significant changes to the scope of the Fast Track Route. A brief overview of each newly eligible category of entities is provided below:

Merger between one or more unlisted companies: Merger between one or more unlisted companies (not being a company referred to in Section 8 of the CA Act), where such companies:

(a)have, in aggregate, outstanding loans, debentures or deposits not exceeding INR 200 crores; and

(b)have no default in repayment of loans, debentures or deposits referred to in (a) above.

The above criteria must be satisfied as of a date not earlier than 30 days prior to the filing of the scheme of amalgamation with the RoC and the Official Liquidator for their comments or objections. Furthermore, to comply with the requirement, a certificate issued by the auditor of each company is required to be filed along with the scheme.

Merger between holding company and subsidiary company: Pursuant to the Amendment, a merger between a holding company (listed or unlisted) and one or more subsidiary company (listed or unlisted) is permitted, provided that the transferor company is not listed on any stock exchanges.

Merger between two or more subsidiaries: A merger between one or more subsidiary company of a holding company with one or more other subsidiary company of the same holding company is permitted, provided that the transferor company or companies are not listed on any stock exchanges.

Merger of foreign holding company with its Indian wholly owned subsidiary: A foreign holding company incorporated outside India can now merge with its wholly owned Indian subsidiary under the Fast Track Route.

Additionally, the Amendment also provides:

(a) that in case of a company regulated by a sectoral regulator such as Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India or Pension Fund Regulatory and Development Authority, the notice inviting objections shall be issued to the concerned regulator and to respective stock exchanges, for listed companies, for objections or suggestions; and

(b) for the Central Government, in the course of issuing an order under Section 233, to stipulate arrangements for the transfer of assets, properties, liabilities, employees and legal proceedings, mirroring the scope of powers available to the NCLT.

Further, the Amendment extends the timeline for submitting an application to the jurisdictional Regional Director to 15 days, as opposed to the earlier limit of 7 days from the conclusion of the members’ or creditors’ meeting. The application is now also required to include a statement explaining the manner in which comments or observations received from sectoral regulators or stock exchanges have been addressed within the scheme.

Conclusion

The Merger Rule’s amendment of India’s Fast Track Merger framework signals a decisive shift towards simplifying corporate restructuring. With its extended applicability to unlisted and group entities, the MCA has modernised the process to meet evolving business needs without compromising on safeguards. For organisations pursuing consolidation or internal reorganisation, the updated Section 233 of CA Act (read with the Merger Rules) presents an efficient, economical, and legally robust solution.