The Ministry of Corporate Affairs (MCA) has notified significant amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 through its notification dated 4 September 2025. These sweeping changes expand the ambit of fast-track mergers (FTM) under Section 233 of the Companies Act, 2013 (the Act), and reduces the burden on the National Company Law Tribunals (NCLTs).
The reforms not only broaden eligibility but also extend the scope of FTMs to demergers and cross-border structures, marking one of the most notable liberalizations of India’s corporate restructuring framework in recent years.
A. Key Amendments
1. Notice Requirements
- Form CAA-9 (notice inviting objections or suggestions) must now be sent not only to the Registrar of Companies and the Official Liquidator but also to sectoral regulators such as RBI, SEBI, IRDAI, and PFRDA where applicable.
- In the case of listed companies, notice must also be provided to the relevant stock exchanges.
This enhancement ensures regulatory bodies are kept in the loop and provides greater transparency.
2. Broadened eligibility for Fast-Track Mergers (Rule 25(1A)
The fast-track route, earlier confined only to small companies, start-ups, and mergers of holding companies with wholly owned subsidiaries, now expands its coverage to:
- Unlisted companies: Two or more unlisted companies (excluding Section 8 companies) can merge via the FTM route, provided:
- Aggregate borrowings (loans, debentures, deposits etc). ≤ ₹200 crore and
- No default has occurred in such borrowings.
- Auditor's certification in Form CAA - 10A is mandory.
- Holding–subsidiary mergers: Permitted even if not wholly owned and even where the holding is listed, so long as the transferor company is not listed.
- Fellow subsidiaries: Subsidiaries of the same holding company can now merge, provided the transferor companies are not listed.
- Cross-border mergers: Reverse flips—where a foreign holding company merges with its Indian wholly owned subsidiary—are explicitly covered under the fast-track process, streamlining inbound group consolidations.This expansion significantly widens the pool of eligible companies and group structures that can use the simplified FTM route.
3. Application extended to Demergers
For the first time, the rules expressly recognize that schemes of division or transfer of undertakings (demergers) can also be carried out under the fast-track process. While Regional Directors had informally permitted this earlier, statutory recognition now removes ambiguity and enhances flexibility.
4. Procedural Updates
- Declaration of Solvency (Form CAA-10) must now be filed as an attachment to Form GNL-1.
- Form CAA-11 now requires disclosure of results of meetings of members and creditors, as well as the registered valuer’s report.
- Approved schemes must be filed within 15 days of shareholder and creditor meetings.
These refinements aim to bring uniformity and improve process efficiency.
B. Opportunities and Benefits
The widened scope of fast-track mergers presents significant opportunities for companies, advisors, and regulators:
1. Decongestion of NCLTs
With thousands of merger and demerger applications piling up each year, NCLTs have long faced substantial delays. By shifting a larger chunk of relatively straightforward restructurings to the Regional Directors (RDs), the amendments can reduce the caseload and allow tribunals to focus on more complex insolvency and litigation matters.
2. Faster timelines and predictability
The FTM process is bound by a 60-day deemed approval timeline. This certainty allows businesses to plan integrations, reorganizations, and financing arrangements with confidence, rather than waiting indefinitely for NCLTs approval.
3. Cost savings
The NCLT driven mergers often involve repeated hearings, higher costs etc. FTM process minimize such costs and dependencies for the extended period. For medium-sized companies where cost-benefit analysis determines whether restructuring is worthwhile, this makes a material difference.
4. Flexibility in group reorganizations
Earlier, only holding–wholly owned subsidiary mergers qualified. Now, group companies can restructure using fellow subsidiary mergers, non-wholly-owned subsidiary mergers, and even demergers. This provides Indian companies a greater flexibility to simplify shareholding, consolidate businesses under one entity or hive off verticals.
5. Boost to cross-border consolidation
The recognition of reverse flips (foreign parent merging with Indian subsidiary) makes India more attractive for global corporations that proposes to simplify their Indian presence. This particularly benefits technology, manufacturing, and financial services multinationals with layered structures.
6. Ease of doing business
The reforms align with the government’s broader objective of reducing compliance friction. By enabling faster, cheaper, and broader access to fast-track processes, India’s restructuring framework becomes more competitive compared to other jurisdictions.
C. Practical Challenges and Open Issues
Despite these welcome changes, certain hurdles persist:
1. High approval thresholds
- Section 233 requires 90% approval in value from both shareholders and creditors (in value) at the respective meetings. For closely held unlisted companies, this may be achievable. But for listed companies or those with dispersed shareholding, this is practically difficult.
2. Implementation hurdles for property transfers
- Regional Director approvals, though valid, may not be fully accepted by local authorities. For example, sub-registrars often insist on NCLT orders before registering transfer of immovable property. Without clear instructions to state authorities, companies may face difficulties in giving effect to RD-approved schemes.
3. Regulatory overlaps
- While notices now go to regulators like RBI, SEBI, IRDAI, and PFRDA, there is no statutory timeline for them to respond. Any delay or silence can jeopardize the scheme’s progress. Clear rules on deemed consent or response deadlines would be essential to prevent bottlenecks.
4. Cross-border complexities
- Though reverse flips are permitted, they still require RBI approval and compliance with sectoral caps, FEMA regulations, and land-border restrictions. In practice, these additional consents can take longer period, leaving cross-border FTMs slower than intended.
5. Valuation disputes
The amendments require disclosure of registered valuer reports in Form CAA-11. Minority shareholders or creditors may challenge valuations, leading to disputes or delays, particularly in group reorganizations involving fellow subsidiaries or non-wholly-owned subsidiaries.
D. Conclusion
The MCA’s 2025 amendments represent a major liberalization of India’s corporate restructuring regime. By expanding the scope of fast-track mergers to include larger unlisted companies, fellow subsidiaries, non-wholly-owned subsidiaries, demergers, and certain cross-border structures, the reforms promise to reduce timelines, cut costs, and encourage group reorganizations.
At the same time, challenges remain—particularly around high approval thresholds, SEBI’s oversight for listed entities, and procedural bottlenecks in property registration.
Nevertheless, the changes mark a decisive step toward decongesting the NCLTs and advancing India’s “ease of doing business” agenda. For many corporates, the fast-track merger route is now a far more attractive and practical restructuring option.
Author: Vijith Kumar - Associate