In a bid to further expand the applicability of fast track mergers, and in line with the regulatory intent reflected in the Union Budget 2025-26 speech^[3] aiming to simplify and broaden the ambit of fast-track mergers, the Ministry of Corporate Affairs (“MCA”) issued a public notice on April 4, 2025 which proposed to include certain additional classes of companies within the purview of fast-track mergers (“Public Notice”)^[4]. In furtherance of the Public Notice, MCA has now notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (“2025 Amendment Rules”) dated September 4, 2025, which, inter alia, widens the net for fast-track mergers in India (as detailed below).

Overview of Key Amendments:

The following key amendments have been introduced pursuant to the 2025 Amendment Rules:

•  Expansion of Applicability of Fast-Track Mergers: Pursuant to the 2025 Amendment Rules, the MCA has extended the eligibility to avail fast-track merger route to certain additional classes of companies, which include merger between:
  • Unlisted Companies, i.e., an unlisted company (other than Section 8 company) with another unlisted company (other than Section 8 company), with reasonable debt exposure (aggregate outstanding debt not exceeding INR 200 crores) and no default in repayment thereto.^[5] This amendment has significantly broadened the applicability of fast-track mergers to all unlisted companies, whether public or private and whether related or unrelated, other than Section 8 companies, to avail the fast-track merger route;
  • Holding and Subsidiary Companies, i.e., a holding company (listed or unlisted) and a subsidiary (listed or unlisted), however, this clause will not be applicable in case the transferor company (i.e., the holding company or the subsidiary company, as the case may be) is a listed entity. Previously, fast-track mergers only covered mergers between holding company and its WOS, and therefore, this amendment is a step forward in terms of including mergers between holding company and any subsidiary (subject to the limitation of transferor company to not be a listed entity);
  • Subsidiaries of Holding Companies, i.e., a subsidiary with another subsidiary of the same holding company, however, this clause will not be applicable in case the subsidiary company being the transferor is a listed entity. This broadly aligns with the amendment set out in (ii) above, considering the contextual similarity in terms of enabling intra-group restructuring under the fast-track merger route; or
  • Inbound Reverse Merger, i.e., a transferor foreign company being a holding company with its Indian WOS in accordance with Rule 25A(5) of the 2016 Rules. While this provision was introduced in 2024 under Rule 25A(5) of the 2016 Rules, the given provision has now been incorporated into Rule 25 to make it self-contained and comprehensive – covering both domestic and cross-border fast-track mergers.
• Clarificatory change in relation to division or transfer of undertaking: Vide the 2025 Amendment Rules, the provisions of Rule 25 will also become applicable to a scheme of division or transfer of undertaking of a company as referred to in Section 232(1)(b) of the Companies Act.
• Other procedural relaxations in Fast-Track Merger Framework: The 2025 Amendment Rules have also provided certain procedural relaxations with respect to the fast-track mergers which include:
  • The requirement to serve notice for receiving objections or suggestions to concerned sectoral regulators has also been explicitly laid down pursuant to the 2025 Amendment Rules.^[6]
  • The timeline for the purposes of filing of scheme by transferee company with the Central Government has been extended from 7 days to 15 days, after the conclusion of the meeting of members or class of members or creditors or class of creditors. Also, the transferee company is required to file the report of the registered valuer along with the scheme.^[7]

Analysing the implications of the amended scope of fast-track merger regime

The 2025 Amendment Rules are a positive step towards further enabling ease of doing business by allowing wide array of eligible companies to undertake corporate restructuring under fast-track merger route. Set out below is an analysis of the potential opportunities and implications of the amendments:

• Catalyzing Corporate Restructuring: By allowing fast-track merger between (a) unlisted companies (having limited debt exposure), (b) holding and subsidiary companies, or (c) fellow subsidiaries, the 2025 Amendment Rules will drastically reduce procedural complexities, administrative costs and lengthy timelines of a traditional merger approval process, thereby enabling the eligible companies to restructure in an efficient and seamless manner.

The inclusion of fellow subsidiaries within fast-track merger regime will enable consolidation and streamlining of group companies, particularly large conglomerates, without subjecting these companies to the complexities of a tribunal-driven process. Apart from intra-group restructuring, the amendments will also benefit unrelated public/private unlisted companies (with limited debt exposure) to opt for merger / demerger process through the fast-track merger route.

• Declogging the Burden of NCLT: Since NCLTs are swamped with pending cases, the corporate structuring process has slowed down and the administrative costs and timeline for approvals have increased. Please note that as of March 2025, approximately 15,000 cases (pertaining to mergers and amalgamation, insolvency and bankruptcy and other company law petitions) were pending before the NCLT. By enabling fast-track mergers for wide array of eligible companies, the amendments will enable a shift in various intra-group restructuring matters from NCLT to RDs, thereby reducing the burden of NCLTs, and enabling NCLTs to focus on more complex matters.
• Potential Challenges: While the amendments are a significant step towards expediting corporate restructuring, there may be certain implementational hurdles in relation to the following:
• Dilemma for listed companies: It is pertinent to note that the Companies Act prescribes that fast-track merger scheme shall receive prior approval of respective members or class of members at a general meeting holding at least 90% of the total number of shares (“90% Threshold”).^[8] While the amendment is a welcome move for expediting intra-group restructurings, the efficacy of the fast-track merger involving listed transferee is yet to be tested in view of the 90% Threshold.

To address this issue, the twin-test for approval as recommended in the Report of the Company Law Committee dated March 21, 2022^[9] can be incorporated by way of amendment to the fast-track merger regime which can help in achieving the objective of facilitating fast-track merger involving listed entities.

• Resource Constraints and Oversight Challenges for Regional Directors (“RDs”): Currently, there are only 7 RDs for each region comprising a number of States and Union Territories^[10], as opposed to 15 NCLT benches across wide array of jurisdictions^[11]. In addition to approving fast-track mergers, RDs are responsible for a range of other matters, including the conversion of private companies to public companies and the shifting of registered offices from one state to another, which may result in resources and capacity constraints for handling fast-track mergers, given the anticipated surge in fast-track merger applications pursuant to this amendment.

Such issues can be efficiently resolved through (A) establishing designated and specialized teams at RDs, (B) incorporating appropriate standard operating procedures which should set out the protocols and procedural frameworks for RDs, (C) building a single-window clearance mechanism for approval required from different sectoral authorities, (D) increasing administrative support staffs, and (E) training and capacity building for building judicial and technical expertise required in handling the fast-track merger cases.

Conclusion

The amendment reflects a progressive step in expediting and simplifying corporate restructuring for certain additional classes of entities – reducing the time and cost and minimizing procedural hurdles compared to the NCLT route. Further, the amendments will assist in reducing the burden on NCLTs by diverting straightforward cases to the fast-track route, thereby allowing NCLT to focus on more complex matters.^[12] However, the efficacy of such amendments is yet to be tested particularly in the backdrop of (a) satisfying 90% Threshold approval requirement in case of listed transferee entity; and (b) capacity and resource constraints for RDs to handle the potential upsurge in fast-track merger matters, which can be appropriately addressed through effective implementation and suitable reforms to the fast-track merger framework.

Footnote

[1] National Company Law Tribunal, Case Status Report (March 2025), available at https://nclt.gov.in/sites/default/files/2025-05/CSR%20Report%20March%2C%202025a.pdf (last accessed on September 12, 2025).

[2] Section 233(1) of the Companies Act read with Rule 25(1A) of the 2016 Rules.

[3] Budget 2025-26, Speech of Nirmala Sitharaman, Minister of Finance, Government of India (February 1, 2025), available at https://www.indiabudget.gov.in/doc/budget_speech.pdf (last accessed on September 12, 2025), Paragraph 101.

[4] Ministry of Corporate Affairs, Government of India, Public Notice, April 4, 2025, available at https://www.mca.gov.in/bin/dms/getdocument?mds=Vl7V8BHbA7gmKAjfxzhiTw%253D%253D&type=open (last accessed on September 12, 2025).

[5] Please note that such threshold conditions shall be applicable on a day not more than 30 days before the date of notice referred to in Section 233(1)(a) of the Companies Act and on the date of filing of scheme under Section 233(2) of the Companies Act. Separately, such unlisted companies would be required to file a certificate from their auditor in the manner prescribed under the Companies Act.

[6] Proviso to Rule 25(1) of the 2016 Rules (inserted pursuant to 2025 Amendment Rules).

[7] Rule 25(4)(a) of the 2016 Rules (revised pursuant to the 2025 Amendment Rules).

[8] Section 233(1)(b) of the Companies Act.

[9] Ministry of Corporate Affairs, Government of India, Report of the Company Law Committee (March 2022), available at https://www.mca.gov.in/bin/dms/getdocument?mds=bwsK%252FBEAFTVdpdKuv5IR5w%253D%253D&type=open (last accessed on September 12, 2025). Please note that the committee recommended twin-test requiring approval by (i) majority of persons present and voting at the meeting accounting for 75%, in value, of the shareholding of persons present and voting; and (ii) representing more than 50%, in value, of the total number of shares of the company.

[10] Ministry of Corporate Affairs, Government of India, Regional Directors, available at https://www.mca.gov.in/content/mca/global/en/contact-us/rd.html (last accessed on September 12, 2025). The seven regions comprise of Eastern Region, Southern Region, Northern Region, Western Region, North Western Region, South East Region and North Eastern Region.

[11] National Company Law Tribunal, National Company Law Tribunal Benches, available at https://nclt.gov.in/national-company-law-tribunal-benches (last accessed on September 12, 2025). The benches are located in the following States/Union Territories: New Delhi, Ahmedabad, Allahabad, Mumbai, Hyderabad, Bengaluru, Chandigarh, Chennai, Cuttack, Guwahati, Jaipur, Kochi, and Kolkata.

[12] National Company Law Tribunal, Case Status Report (March 2025), available at https://nclt.gov.in/sites/default/files/2025-05/CSR%20Report%20March%2C%202025a.pdf (last accessed on September 12, 2025).

This article was originally published in Lexology on 15 September 2025 Co-written by: Rudra Kumar Pandey, Partner; Jyoti Gautam, Senior Associate; Deepti Pandey, Senior Associate. Click here for original article

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