Accelerating India’s Corporate Restructuring: The Ambitious New Fast-Track Merger Rules

In a landmark move poised to reshape India’s corporate landscape, the Ministry of Corporate Affairs (“MCA”) has unveiled the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (“Amendment Rules”). These rules represent a decisive step towards streamlining corporate restructuring and fostering a more agile and business-friendly environment. By significantly broadening the scope of fast-track mergers under Section 233 of the Companies Act, 2013 (“Act”), the MCA aims to reduce the burden on the National Company Law Tribunals, shorten deal timelines, and provide greater clarity for businesses undertaking reorganisations.

A Wider Gateway for Corporate Consolidation

The most impactful change introduced by the Amendment Rules is the substantial expansion of companies eligible for the fast-track route. This move signals a shift from a limited, prescriptive approach to a more inclusive one, opening the doors of this efficient mechanism to a larger swathe of the corporate world.

Previously, fast-track mergers were a privilege reserved for a few:

• Two or more start-up companies.
• Two or more small companies.
• A start-up company with a small company.
• A holding company and its wholly-owned subsidiary.

The Amendment Rules now extend this benefit to several additional categories, which were previously compelled to undergo the time-consuming and resource-intensive NCLT-approved process. The newly eligible entities include:

• Unlisted Companies: A significant addition, allowing unlisted companies (excluding not-for-profit companies) to merge via the fast-track route, provided their total outstanding loans, debentures, or deposits don’t exceed INR 200 Crores and they are not in default of repayment.
• Holding and Subsidiary Mergers: The fast-track route now encompasses a holding company (listed or unlisted) with its subsidiary (listed or unlisted), provided the transferor company is unlisted. This is a crucial expansion, as it is no longer restricted to only wholly-owned subsidiaries.
• Fellow Subsidiaries: Mergers between subsidiaries of the same holding company are now permitted under the fast-track route, subject to the transferor company being unlisted. This simplifies intra-group reorganizations, making it easier for large conglomerates to consolidate operations.
• Cross-Border Mergers: In a move to facilitate “reverse flipping” and encourage foreign investment, the rules now explicitly include mergers of foreign holding companies with their Indian wholly-owned subsidiaries.

This broader eligibility is a boon for businesses, offering them greater flexibility and a more efficient pathway to achieve improved operational efficiencies and smoother business reorganizations.

Navigating a New Regulatory Landscape

While the Amendment Rules champion efficiency, they also introduce a more robust framework for regulatory oversight, ensuring that the fast-track route doesn’t compromise stakeholder interests. Previously, the scheme only required objections or suggestions from the Registrar of Companies (RoC) and the Official Liquidator. The new rules, however, mandate a broader consultative process.

Companies regulated by sectoral regulators, such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority (PFRDA), must now issue notices of their proposed scheme to their respective regulators. Furthermore, in the case of a listed company, notices must also be sent to the relevant stock exchanges. If any of these regulators or stock exchanges raise objections or suggestions, the company must submit a detailed statement explaining how those concerns have been addressed when filing the scheme with the Regional Director (RD).

This expanded compliance requirement, while potentially adding a layer of complexity and time, is a critical safeguard. It ensures that corporate restructurings are undertaken with due diligence and transparency, protecting the interests of a wider range of stakeholders, including investors, policyholders, and creditors.

Clarity for Demergers and Streamlined Forms

Prior to these amendments, the application of the fast-track mechanism to demergers was an ambiguous area, leading to inconsistent interpretations across different Regional Directors. The Amendment Rules resolve this long-standing uncertainty by expressly stating that the fast-track route can now be applied to schemes of division or transfer of undertakings under Section 232 of the Act, with necessary modifications. This clarification provides much-needed legal certainty and uniformity, facilitating corporate demergers just as it does for mergers.

To further streamline the process and enhance standardization, the MCA has revised and introduced several statutory forms. The updated forms include:

• Form CAA-9: Notice of scheme inviting objections or suggestions.
• Form CAA-10: Declaration of solvency.
• Form CAA-11: Notice of approval of the scheme.
• Form CAA-12: Confirmation order of the scheme.

In a noteworthy addition, a new Form CAA-10A has been introduced. This form requires an auditor’s certification confirming that the company has satisfied the specific debt-related conditions outlined in the Amendment Rules for newly eligible unlisted companies.

Conclusion 

The notification of the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, marks a pivotal moment in India’s corporate law regime. By making the fast-track route more accessible, the government is actively working to de-clog the NCLTs and make corporate restructuring a quicker, more efficient process.

For businesses, this translates to greater strategic agility and the ability to undertake reorganizations with reduced timelines and costs. For the economy as a whole, it signals a strong commitment to the “Ease of Doing Business” agenda, fostering an environment that supports corporate growth, investment, and consolidation. While the new regulatory checks add a layer of diligence, they do so without fundamentally undermining the core efficiency that the fast-track route aims to achieve. The balance struck by these reforms is a testament to India’s evolving and modernizing legal framework, one that is increasingly responsive to the dynamic needs of the business world.

Expositor (s): Adv. Archana Shukla