MCA Expands Scope of Fast-Track Mergers: A New Era for Corporate Restructuring in India

Introduction

The Ministry of Corporate Affairs (MCA) has notified an amendment dated 4 September 2025 (G.S.R. 603(E)) to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”).[1] The amendment substantially expands the scope of fast-track mergers under Section 233 of the Companies Act, 2013, allowing a wider class of companies including unlisted and group entities to undertake mergers and demergers through an expedited, low-cost, tribunal-free mechanism.

This reform marks a major stride in the government’s Ease of Doing Business and Corporate Simplification initiatives, aligning India’s corporate restructuring regime with international best practices.

Understanding the Fast-Track Merger Mechanism

Section 233 of the Companies Act, 2013[2] was introduced to provide a simplified merger route for small companies and wholly owned subsidiaries. Unlike regular mergers that require National Company Law Tribunal (NCLT) approval, the fast-track process requires only the consent of shareholders, creditors, and approval from the Regional Director (RD), thereby cutting down the procedural burden, costs, and time.

Key Advantages of Fast-Track Mergers

• No requirement for NCLT approval, reducing litigation timelines.
• No need to issue public advertisements or convene court-sanctioned meetings.
• Reduced administrative and compliance burden.
• Automatic dissolution of transferor company upon registration of the scheme.
• Substantial cost and time savings making it a preferred choice for intra-group reorganisations.

Evolution of the Fast-Track Merger Framework

Since its introduction, Section 233 has evolved to keep pace with India’s rapidly changing business environment:

• 2017: The framework initially covered mergers between two or more small companies or between a holding company and its wholly owned subsidiary.
• 2021 Amendment: The scope was expanded to include start-ups and mergers between start-ups and small companies.
• 2024 Amendment: Enabled reverse flipping allowing a foreign holding company to merge with its wholly owned Indian subsidiary via the fast-track route, promoting inward investment and simplifying global restructurings.

Each stage of expansion reflected the government’s recognition of the growing need for flexible, time-bound, and cost-efficient corporate restructuring mechanisms.

The 2025 Amendment: A Wider Net for Corporate Consolidation

Through its September 2025 amendment[3], the MCA has taken a bold step by further liberalising the fast-track merger regime. Three new classes of companies have now been made eligible under Rule 25 of the amended CAA Rules, namely:

1. Two or more unlisted companies (excluding Section 8 companies) meeting prescribed thresholds of outstanding loans, debentures, or deposits.
2. A holding company and its subsidiary companies, provided the transferor company is not listed.
3. Two or more subsidiaries of the same holding company, again excluding cases involving a listed transferor company.

This expansion represents a paradigm shift extending the benefit of simplified mergers and demergers to large private groups, family-owned conglomerates, and unlisted corporates, enabling them to restructure seamlessly within India’s regulatory framework.

Legal and Strategic Significance

The amendment is a game-changer for India’s mergers and acquisitions (M&A) ecosystem.
 By eliminating the need for NCLT intervention, qualifying companies can now:

• Complete internal reorganisations faster, reducing transaction timelines from months to weeks.
• Lower transaction costs, as extensive hearings, advertisements, and tribunal filings are avoided.
• Simplify group consolidations and spin-offs, a frequent requirement for conglomerates, private equity-backed portfolio entities, and family-owned businesses.
• Facilitate cross-border realignments, especially when combined with the 2024 reverse flipping provision.

These reforms are expected to catalyse private equity exits, strategic acquisitions, and business reorganisations, giving India’s corporate law landscape a global edge.

Safeguards and Compliance Requirements

While the fast-track process eases procedural hurdles, creditor and shareholder protections remain robust:

• Approval of at least 90% in value of shareholders and creditors is mandatory.
• Statutory filings with the Registrar of Companies (ROC) and Regional Director (RD) must be made through e-Form GNL-1 and CAA-9.
• The Regional Director retains the power to refer a scheme to the NCLT if it believes the merger is against the public interest or the interests of stakeholders.
• Listed entities remain excluded, ensuring transparency and regulatory oversight in public market transactions.

These checks ensure that while the ease of restructuring improves, stakeholder protection and regulatory integrity are not compromised.

Impact on India’s Ease of Doing Business

The fast-track merger expansion reflects a consistent governmental approach simplify compliance while safeguarding accountability.
 It complements other reform initiatives such as:

• Decriminalisation of corporate offences,
• Introduction of online company incorporation and e-adjudication, and
• Digitisation of filings through the MCA21 Version 3 portal.

Collectively, these measures reinforce India’s image as a jurisdiction conducive to efficient corporate restructuring, attracting domestic and foreign investment alike.

Potential Challenges and Legal Considerations

Despite its benefits, practical challenges remain:

• Determining threshold-based eligibility for unlisted companies may involve interpretational ambiguity.
• Managing cross-holdings within group entities could raise valuation and tax complexities.
• Creditors’ consent may slow down timelines if financial institutions seek additional clarity.
• The absence of NCLT oversight, though beneficial for speed, could raise concerns about minority shareholder rights if not carefully regulated.

Law firms and in-house legal teams must therefore ensure compliance diligence, corporate governance, and transparent documentation to mitigate potential disputes.

Conclusion

The MCA’s 2025 amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 marks a transformative evolution in India’s corporate restructuring landscape.
 By extending the fast-track merger framework under Section 233 of the Companies Act, 2013 to unlisted companies and group entities, the government has effectively mainstreamed a once-niche mechanism.

This legal development reflects a mature, progressive, and business-responsive regulatory environment, balancing ease of doing business with stakeholder protection.

For India Inc., the message is clear the path to faster, efficient, and legally secure corporate restructuring has never been more accessible.

[1] The relevant amendment notification (Gazette Notification no. G.S.R 603 (E) dated 04.09.2025) has been placed on the website of the M/o Corporate Affairs (www.mca.gov.in).

[2] ection 233(1) of the Companies Act, 2013 allows mergers/demergers between (i) two or more small companies and (ii) holding company and its wholly owned subsidiary.  Section 233 empowers Central Government (MCA) to prescribe, by way of rules, additional classes of companies who can avail such fast-track process.

[3] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2165660#:~:text=Section%20233(1)%20of%20the,avail%20such%20fast%20track%20process