The Ministry of Corporate Affairs (“MCA”), through the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (“2025 Amendment Rules”), has significantly widened the scope of the fast-track merger mechanism under Section 233 of the Companies Act, 2013 (“Companies Act”). The 2025 Amendment Rules, notified on 4 September 2025, expand the classes of companies eligible to undertake mergers and amalgamations through the simplified approval route and, for the first time, expressly extend the framework to certain schemes involving the division or transfer of undertakings.

The reform follows the Government’s Budget 2025-26 announcement proposing to widen the scope of fast-track mergers and simplify the process. The amendments are intended to make corporate restructuring more efficient, particularly for unlisted companies with relatively moderate levels of debt and for intra-group reorganisations.

SECTION 233 FAST-TRACK ROUTE
Ordinarily, schemes of merger and amalgamation are undertaken under Sections 230 to 232 of the Companies Act and require the involvement and approval of the National Company Law Tribunal (“NCLT”). Section 233 provides an alternative, simplified route for specified classes of companies, commonly referred to as the “fast-track merger” route.

The key distinction is institutional. Instead of the scheme being approved through the NCLT process under Sections 230 to 232, a qualifying scheme under Section 233 is submitted to the Central Government, whose powers in this regard are exercised through the Regional Director.

The fast-track route was originally available to certain categories of companies, including two or more small companies and a holding company and its wholly owned subsidiary. The framework was subsequently expanded in 2021 to include mergers between two or more start-up companies and mergers between one or more start-up companies and one or more small companies. In 2024, the framework was further developed in relation to certain cross-border mergers involving a foreign holding company and its Indian wholly owned subsidiary. The 2025 Amendment Rules represent a further and more substantial expansion.

WHAT HAS CHANGED?
The 2025 Amendment Rules expand Rule 25(1A) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”) to cover additional categories of transactions.

Broadly, the fast-track route is now available to the following categories:

1. two or more small companies;
2. a holding company and its wholly owned subsidiary;
3. two or more start-up companies;
4. one or more start-up companies with one or more small companies;
5. certain unlisted companies satisfying specified debt and default thresholds;
6. a holding company and its subsidiary which is not wholly owned, subject to the restriction applicable to listed transferor companies, whereby if the subsidiary company is listed, it cannot be merged with its holding company under the fast-track merger route. However, there is no corresponding restriction on the holding company, which may be either listed or unlisted.
7. One or more subsidiaries of the same holding company with one or more other subsidiaries of that holding company, again subject to the restriction applicable to listed transferor companies.
8. a foreign holding company and its Indian wholly owned subsidiary in the circumstances covered by Rule 25A(5).

The significance of the 2025 amendment lies not merely in the number of additional categories, but in the fact that the fast-track mechanism is moving beyond its traditional focus on small companies and wholly owned subsidiaries towards broader corporate group reorganisations.

1. Opening the Fast-Track Route to certain Unlisted Companies
One of the most significant changes is the introduction of a category covering mergers between unlisted companies, other than companies referred to in Section 8 of the Companies Act. The eligibility is subject to two important conditions.

First, each company involved in the merger must have outstanding loans, debentures or deposits, taken in aggregate, not exceeding ₹200 crore.

Second, there must be no default in repayment of such loans, debentures or deposits.

These conditions must be satisfied both:

• on a date not more than 30 days before the date of the notice under Section 233(1)(a); and
• on the date of filing of the scheme under Section 233(2).

The amendment therefore creates a debt-based eligibility threshold rather than limiting access to the fast-track route solely by reference to the statutory definition of a “small company”. An additional safeguard has been introduced through Form CAA-10A, under which the auditor is required to certify that the relevant conditions are satisfied. The certificate is to accompany the approved scheme when filed under Section 233(2). This is particularly relevant for unlisted corporate groups which may not qualify as “small companies” but whose financial profile remains within the prescribed threshold.

2. Beyond Wholly Owned Subsidiaries: Expanding Holding Company–Subsidiary Mergers
The amendment also expands the scope of fast-track merger between a holding company and its subsidiary. The provision is capable of covering a wider range of holding-subsidiary relationships than the traditional holding company–wholly owned subsidiary category. The provision also the holding company and the subsidiary company even if not wholly owned to go for fast-track merger provided that the subsidiary company is not listed. However, there is no such restriction for the transferee company it can be listed or unlisted.

The distinction between the transferor and transferee is important for this provision. The mere presence of a listed entity in the transaction does not, by itself, make the transaction ineligible under this category; rather, the specific restriction focuses on whether the transferor company or companies are listed. The provision does not apply where the transferor company or companies are listed.

3. Fellow-subsidiary mergers
A further important development is the introduction of a fast-track route for mergers between one or more subsidiaries of a holding company and one or more other subsidiaries of the same holding company, provided that the transferor company or companies are not listed.

For example, if Company A is the holding company of Company B and Company C, a merger between Company B and Company C can potentially be undertaken through the fast-track mechanism, subject to the prescribed conditions.

4. Foreign holding company and Indian wholly owned subsidiary
The amendment also covers the merger of a foreign holding company with its Indian wholly owned subsidiary, where the conditions under Rule 25A(5) are satisfied.

For example, if a US company holds 100% of an Indian company, the US company can, subject to the applicable requirements, merge into its Indian wholly owned subsidiary. The Indian company would continue as the surviving company. Such a restructuring is commonly referred to as a “reverse flip”, as the corporate structure is effectively moved from a foreign parent company to an Indian company.

This category was already recognised under the cross-border merger framework introduced earlier. The significance of the 2025 amendment is that it expressly includes this type of merger within the classes covered by Rule 25(1A). This provides greater clarity on its eligibility for the fast-track merger framework. However, the merger would still have to comply with the applicable cross-border merger requirements and other regulatory approvals. Therefore, the amendment provides a simpler route under the Companies Act, while the other applicable legal and regulatory requirements continue to apply.

5. Fast-track route applicable to division or transfer of an undertaking
A significant change introduced by the 2025 Amendment Rules is the insertion of Rule 25(9).

Rule 25(9) provides that the provisions of Rule 25 will apply, with necessary modifications, to a scheme involving the division or transfer of an undertaking of a company referred to in Section 232(1)(b) of the Companies Act.

In simple terms, this means that the procedural framework under Rule 25, which sets out the requirements for the fast-track merger process, will also apply to certain schemes involving the division or transfer of an undertaking. The provision is therefore important because the Rule 25 framework is no longer limited to schemes involving only the merger or amalgamation of companies. It can also apply, with necessary modifications, to a scheme involving the division or transfer of an undertaking, where the requirements of the applicable provisions are satisfied.

Importantly, Rule 25(9) does not state that every scheme involving the division or transfer of an undertaking will automatically qualify for the fast-track process. The provisions of Rule 25 would apply mutatis mutandis, meaning that they would apply with the necessary changes depending on the nature of the transaction. Further, while passing its order in relation to such a scheme, the Central Government may make provisions of the nature specified in clauses (a) to (j) of Section 232(3), to the extent applicable. Section 232(3) contains various matters that an authority can deal with while approving a scheme. These can include things such as:

• transfer of property and liabilities from one company to another;
• continuation of legal proceedings by or against the relevant company;
• treatment of employees affected by the scheme;
• dissolution of a company without winding up, where applicable; and
• other matters necessary to give effect to the approved scheme.

So, Rule 25(9) is essentially saying that the Central Government is not limited to simply approving the scheme; its order can also contain necessary directions dealing with matters such as assets, liabilities, legal proceedings and employees, to the extent relevant to the division or transfer of the undertaking.

The amendment therefore expands the scope of the Rule 25 framework by expressly bringing schemes involving the division or transfer of an undertaking within its ambit, subject to the applicable requirements.

ENHANCED REGULATORY OVERSIGHT FOR REGULATED AND LISTED ENTITIES
The amendments also strengthen the regulatory consultation mechanism.

Under the amended Rule 25(1), the notice of the proposed scheme in Form CAA-9 is required to invite objections or suggestions from the Registrar of Companies, the Official Liquidator and persons whose interests are likely to be affected. Where the company is regulated by a sectoral regulator, the notice is also required to be issued to the concerned regulator. The amendment specifically refers to 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”).

For listed companies, the notice is also required to be issued to the relevant stock exchanges for their objections or suggestions within the period contemplated under Section 233(1)(a). This is particularly relevant because the expanded fast-track route can now potentially involve entities with more complex regulatory profiles. The simplified route, therefore, does not eliminate regulatory scrutiny; instead, it expressly incorporates relevant regulatory stakeholders into the process.

CHANGES TO THE FILING PROCESS
The 2025 Amendment Rules also make certain procedural changes to the manner in which documents are filed.

The Declaration of Solvency in Form CAA-10 is now linked with the filing framework through Form GNL-1. More significantly, the timeline under Rule 25(4) has been modified. The transferee company is required to file the approved scheme, together with the report of the result of each meeting and the registered valuer’s report, with the Central Government within 15 days after the conclusion of the meeting of members or class of members or creditors or class of creditors.

The relevant filing is made in Form CAA-11 as an attachment to Form RD-1. The express reference to the registered valuer’s report provides greater procedural clarity regarding valuation documentation accompanying the scheme.Further, where the transaction involves a company falling within the regulatory framework under the amended Rule 25(1), the scheme must be accompanied by a statement explaining how the objections or suggestions of the relevant sectoral regulator or stock exchange, if any, have been addressed.

REVISED FORMS: ALIGNING DOCUMENTATION WITH THE EXPANDED FRAMEWORK
The 2025 Amendment Rules also replace Forms CAA-9, CAA-10, CAA-11 and CAA-12 and introduce Form CAA-10A. The revised forms are intended to align the documentation with the expanded scope of the fast-track framework. In particular:

• Form CAA-9 – notice of the scheme inviting objections or suggestions;
• Form CAA-10 – declaration of solvency;
• Form CAA-10A – auditor’s certificate confirming compliance with the conditions applicable to the newly introduced unlisted-company category;
• Form CAA-11 – notice of approval of the scheme; and
• Form CAA-12 – confirmation order of the scheme.

STAKEHOLDER PROTECTION REMAINS CENTRAL
Despite the expansion of the fast-track route, the amendments do not dispense with the core stakeholder safeguards under Section 233.

The scheme continues to require the prescribed approval of members and creditors. In particular, the statutory framework requires approval by members or the relevant class of members holding at least 90% of the total number of shares, as well as approval by creditors representing at least 90% in value of the creditors, in accordance with Section 233. The requirement to circulate the scheme and invite objections or suggestions from the Registrar, Official Liquidator and affected persons also continues. For regulated or listed entities, the enhanced notice requirements ensure that the relevant regulator and stock exchanges have an opportunity to raise concerns. Thus, the amendment seeks to simplify the approval forum and procedure, rather than remove stakeholder oversight altogether.

CONCLUSION
The 2025 Amendment Rules mark a significant evolution of India’s fast-track restructuring framework. The amendments move the mechanism beyond its traditional application to small companies and wholly owned subsidiaries and make it available for a broader range of intra-group reorganisations, certain unlisted companies meeting prescribed financial thresholds, fellow-subsidiary mergers and specified cross-border structures. The introduction of Rule 25(9) further expands the potential utility of the framework by bringing certain schemes involving the division or transfer of undertakings within the ambit of the Rule 25 process.

At the same time, the expanded scope does not mean that the fast-track route has become a largely automatic process. The requirements relating to shareholder and creditor approvals, solvency, valuation, regulatory consultation and scrutiny by the Registrar and Official Liquidator continue to provide important safeguards. The additional auditor certification and enhanced involvement of sectoral regulators and stock exchanges are particularly relevant as the mechanism becomes accessible to companies with more complex corporate and regulatory structures.

From a practical perspective, the amendments could make group reorganisations, internal mergers and certain business transfers considerably more efficient by reducing dependence on the NCLT approval process. However, the effectiveness of the expanded framework will ultimately depend on how the Central Government and Regional Directors interpret and administer the new provisions, particularly the application of Rule 25 to schemes involving the division or transfer of undertakings.

Overall, the expanded scope of Fast-Track Mergers represents a shift from a narrowly defined simplified merger route towards a broader restructuring mechanism. By widening eligibility while retaining substantive stakeholder and regulatory safeguards, the 2025 Amendment Rules seek to strike a balance between speed and procedural efficiency on one hand, and transparency, creditor protection and regulatory oversight on the other. The amendments therefore have the potential to make corporate restructuring in India more accessible and commercially responsive, particularly for groups seeking to simplify their corporate structures or reorganise businesses without undergoing the comparatively lengthy NCLT-led process.

By - Diya Khanna & Ayushi Mahawar