Fast-Track Mergers Reimagined: Analysing the 2025 MCA Amendment and Its Impact on Corporate Restructuring

The concept of fast-track mergers under Section 233 of the Companies Act, 2013, was introduced with the objective of providing a simplified route for intra-group restructurings that did not necessitate extensive judicial oversight. However, despite its promise, the mechanism remained largely underutilised for years, primarily due to restrictive eligibility criteria and limited scope. The Ministry of Corporate Affairs (MCA), through its amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, notified on 8 September 2025, has now sought to transform this landscape. The amendment represents a significant policy intervention aimed at streamlining corporate restructurings, reducing the burden on the National Company Law Tribunal (NCLT), and aligning India’s regulatory approach with international practices.

This reform not only expands the classes of companies eligible to use the fast-track process but also introduces new procedural guardrails to ensure creditor and shareholder protection. It signals the government’s intent to facilitate ease of doing business by simplifying mergers for private, group, and unlisted entities while preserving public interest safeguards.

Broadening the Scope: Expanding Eligibility under the Fast-Track Route

Before the 2025 amendment, the fast-track merger route was limited to a few specific categories such as mergers between two or more small companies, between a holding company and its wholly owned subsidiary, and between start-ups or between start-ups and small companies. This narrow ambit rendered the mechanism unattractive for larger private groups or unlisted companies seeking efficient internal reorganisations.

The 2025 amendment significantly widens the ambit of eligible entities. Two or more unlisted companies may now merge through the fast-track process provided that each company’s total borrowings, including loans, debentures, and deposits, do not exceed ₹200 crore and that neither has defaulted on such obligations. These thresholds must be satisfied both 30 days prior to inviting objections from regulatory authorities and on the date of filing the solvency declaration. Compliance is to be confirmed through a new auditor’s certificate in Form CAA-10A, which accompanies the declaration of solvency in Form CAA-10. This change opens the door to mid-sized unlisted companies that were earlier forced to approach the NCLT, thereby substantially increasing the utility of Section 233.

Further, the amendment permits mergers and demergers between a holding company and its subsidiaries even when the subsidiaries are not wholly owned. Earlier, only 100 percent subsidiaries could merge through the fast-track route. Now, partially owned subsidiaries can also utilise this route, provided the transferor company is not listed. In addition, the new rules include mergers between fellow subsidiaries companies under the same parent, provided the transferor is unlisted. These inclusions significantly liberalise intra-group restructuring, allowing conglomerates to streamline corporate structures without protracted tribunal proceedings.

The amendment also addresses cross-border scenarios by allowing a foreign holding company to merge into its wholly owned Indian subsidiary. This clarification brings greater coherence to the regulatory framework and harmonises it with Rule 25A of the CAA Rules, which governs cross-border mergers. Moreover, the inclusion of divisions or undertakings under the ambit of fast-track mechanisms enables demergers and hive-offs to be executed through the same simplified process. By expressly applying Section 233 to demergers, the amendment removes prior interpretational ambiguities and establishes a comprehensive restructuring route.

Procedural Safeguards: Balancing Efficiency and Accountability

While the amendment liberalises the fast-track merger regime, it maintains stringent procedural safeguards to ensure financial prudence and stakeholder consent. Each company involved must file a declaration of solvency verified by the board and supported by an auditor’s certificate confirming compliance with the debt and default conditions. Approval from shareholders representing at least 90 percent of the company’s share capital and creditors representing 90 percent in value is mandatory. This requirement, though intended to ensure overwhelming consensus, has been a point of contention as it exceeds the three-fourths majority typically required under NCLT-supervised schemes.

The role of regulators also remains pivotal. Companies must notify the Registrar of Companies, the Official Liquidator, and relevant sectoral regulators such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India, and the Pension Fund Regulatory and Development Authority. For listed entities, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, continue to apply, necessitating prior stock exchange approval in most cases. Notably, SEBI’s exemption for mergers between a holding company and its wholly owned subsidiary does not extend to mergers between fellow subsidiaries, thereby limiting the full effect of the new rules in listed structures.

Once all approvals are obtained, the application must be filed with the Regional Director (RD) within 15 days a relaxation from the earlier seven-day requirement. The RD must examine the scheme within 60 days. If no objection is received within this period, the scheme is deemed approved. The RD’s power is administrative rather than judicial; it cannot reject a scheme outright but must refer any matter involving public interest or creditor prejudice to the NCLT under Section 233(5). Judicial precedents such as Asset Auto India v. Union of India have underscored that the RD functions as a supervisory authority whose decisions must adhere to the statutory framework without discretionary rejections.

Despite this framework, practical challenges persist. The high approval threshold may prove difficult for companies with diverse shareholding patterns. Some RDs have accepted approval by 90 percent of shareholders present and voting, though a uniform interpretation remains absent. Additionally, concerns arise regarding the recognition of RD-approved schemes by local authorities, particularly in relation to the transfer of immovable property, as land registrars traditionally rely on court-sanctioned orders.

Policy Rationale and Comparative Perspective

The underlying rationale of the amendment lies in administrative efficiency and the promotion of ease of doing business. NCLT benches across India are overburdened with matters under both the Companies Act and the Insolvency and Bankruptcy Code, leading to prolonged delays in approving corporate restructuring schemes. The fast-track mechanism, with its statutory 60-day timeline and simplified procedures, offers a timely and cost-effective alternative.

The reform aligns closely with the recommendations of the J. J. Irani Committee and the Company Law Committee, both of which advocated for a non-judicial process for private and intra-group mergers that do not implicate public investors. By excluding listed transferor companies and non-profit entities, the amendment preserves necessary safeguards while still broadening access to the process.

A comparative glance at other jurisdictions illustrates India’s gradual convergence with international norms. In Singapore, parent-subsidiary amalgamations proceed with minimal formalities. Delaware law permits a parent owning 90 percent of a subsidiary to merge it without a separate shareholder vote, and Canadian corporate statutes also provide for short-form amalgamations. India’s previous regime was considerably narrower, but the 2025 amendment now brings it closer to these global models. However, the Indian system still retains stricter approval and solvency requirements, reflecting a cautious, balanced approach to corporate liberalisation.

Implementation Challenges and the Road Ahead

The success of the new fast-track merger framework will depend significantly on its implementation by companies and regulators. For unlisted entities and corporate groups, the expanded eligibility offers genuine potential for faster consolidations and cost savings. Cross-border structures may also benefit from simplified procedures, though they will continue to require RBI clearance under the Foreign Exchange Management (Cross-Border Merger) Regulations, 2018.

However, several practical challenges could impede the regime’s effectiveness. The high shareholder approval threshold remains a concern, particularly for companies with dispersed ownership. Furthermore, while RD orders are legally binding, the practical acceptance of such orders by external authorities, such as registrars of property or tax departments, remains uncertain. Without explicit recognition that RD approvals have the same legal standing as NCLT decrees, companies might still face procedural bottlenecks in completing asset transfers.

Another structural concern is the administrative capacity of the Regional Directorates. With only seven RD offices across the country, each handling multiple states and numerous corporate functions, the risk of procedural delays looms large. If the RDs become overburdened, the very purpose of de-clogging the NCLT could be defeated. The government may therefore need to issue operational guidelines or allocate additional resources to ensure timely processing of applications under the fast-track route.

Conclusion

The 2025 MCA Amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules marks a pivotal development in India’s corporate restructuring framework. It signifies a clear policy intent to facilitate ease of doing business by shifting routine corporate reorganisations away from the NCLT to administrative authorities. By extending the fast-track route to unlisted companies with moderate borrowings, partially owned subsidiaries, and fellow subsidiaries, and by recognising cross-border mergers involving Indian subsidiaries, the amendment substantially modernises the merger regime.

At the same time, the reform carefully preserves financial and procedural safeguards through solvency declarations, auditor certification, and stringent consent requirements. The balance between liberalisation and accountability reflects an effort to modernise India’s company law without compromising stakeholder interests.

Yet, as with all structural reforms, its success will hinge on consistent interpretation, administrative efficiency, and regulatory coordination. Early experiences with the expanded framework will determine whether the promise of speed and simplicity can be realised in practice. If implemented effectively, the amendment could redefine India’s approach to corporate restructurings, align it more closely with global standards, and meaningfully de-clog the NCLT system an outcome both businesses and the legal system urgently need.