Fast Track Merger

What is Fast Track Merger?

A Fast-Track Merger (FTM) under the Companies Act, 2013, is a simplified corporate restructuring process introduced under Section 233 to make mergers and amalgamations quicker, cost-effective, and less burdensome compared to the regular NCLT route.

Unlike the traditional process under Sections 230–232, which requires multiple tribunal hearings, a fast-track merger allows certain classes of companies, such as small companies, start-ups, holding and subsidiary companies, unlisted companies meeting prescribed financial conditions, fellow subsidiaries, and even foreign holding companies with Indian subsidiaries, to obtain approvals directly from the Regional Director (RD).

This route shortens timelines (typically 60–90 days), reduces compliance complexity, and lowers costs, making it a preferred option for eligible companies seeking efficient business consolidation or restructuring.

Official Definition of "Fast Track Merger"

"Fast Track Merger" as defined in legislation(s)

Companies Act, 2013

It regulates the incorporation, responsibilities, governance, and dissolution of companies in India.

Section 233 of the Act provides for fast-track mergers between certain classes of companies, subject to approval by the Central Government, delegated to Regional Directors.

Companies (Compromises, Arrangements and Amalgamations) Rules, 2016

The MCA introduced it to simplify and expedite corporate restructuring. It also aims to provide a streamlined process for mergers and amalgamations without requiring tribunal intervention. Initially, the fast-track process was limited to mergers between two or more small companies and between a holding company and its wholly owned subsidiary. In 2021, to promote ease of doing business, the MCA amended the Companies CAA Rules to include start-up companies, allowing fast-track mergers between start-ups or between a start-up and a small company. In 2024, the scope was further expanded to permit reverse flipping, mergers of foreign holding companies with their Indian wholly owned subsidiaries, under the same simplified procedure.

Companies (Compromises, Arrangements and Amalgamation) Amendment Rules, 2025                            

As announced in the Union Budget Speech 2025 - 2026, the Government emphasized the need to further broaden the scope of such mergers.                                                                Following stakeholder consultations, the MCA introduced another Amendment to the Companies CAA Rules. Through this Amendment, the following additional classes of companies have been included under Rule 25 for availing the fast-track merger/demerger procedure:                                                 Two or more unlisted companies (excluding Section 8 companies) that meet prescribed thresholds of outstanding loans, debentures, or deposits.                                                         Holding company and its subsidiary, provided the transferor company is not listed.                     Two or more subsidiaries of the same holding company, again excluding cases where the transferor is a listed company.                                                                                         2. The Amendment replaces old forms and introduces new ones:                                           CAA-9: For notifying the proposed scheme and inviting objections.                                   CAA-10: Declaration of solvency.                                                                    CAA-10A: Auditor’s certificate for financial compliance.                                            CAA-11: Filing approved scheme with meeting results and valuation report.                             

3. Companies availing the fast-track route under the new thresholds will be required to submit a certificate from their auditor in Form  CAA-10A, confirming:                                          No default in repayment of loans, debentures, or deposits.                                      Outstanding amounts are within the ₹200 crore limit.                                                    

4. If the company is regulated by authorities like Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA), or is listed, it will send the scheme notice to the relevant regulator and stock exchange and will address any objections or suggestions received.                                                         

5. The transferee company will file:                                                                     A copy of the approved scheme.                                                                     Meeting results of shareholders and creditors.                                                           A valuation report in Form CAA-11, attached to Form RD-1.                                             A statement explaining how objections were resolved (if applicable).                                    6. The Amendment confirms applicability to schemes involving:                                      Division or transfer of undertakings under Section 232(1)(b)                                         The government can apply relevant provisions from Section 232(3)(a) to (j)                            7. A new format (Form CAA-12) has been introduced for issuing the government’s confirmation order of the scheme.

Legal provision(s) relating to "Fast Track Merger"

Fast Track Mergers are governed by Section 233 of the Act, read with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Merger Rules).

The Fast Track Merger route is available in the following situations:

• a merger between two or more small companies

• a merger between a holding company and its wholly-owned subsidiary (WOS)

• a merger between two or more start-up companies

• a merger of a start-up company with a small company

Process

The process prescribed for Fast Track Mergers requires the parties to the merger scheme to:

• Send notice of the proposed merger scheme to the concerned Registrar of Companies (RoC) and official liquidators (OL), and consider their objections and suggestions in a general meeting

• file a declaration of solvency with the RoC

• seek approval of:

(a) shareholders in a general meeting holding at least 90% of the total number of shares (Shareholder Threshold)

(b) the majority of creditors in a meeting representing at least 90% in value (Creditor Threshold)

• After the proposed merger scheme is approved by the shareholders and creditors in accordance with the Shareholder Threshold and the Creditor Threshold, it is filed with the regional director (“RD”), the RoC and the OL.

• The RD, after considering any objections or suggestions of the RoC and/or the OL to the merger scheme, may either (a) register the merger scheme and issue a confirmation to the parties to the merger scheme; or (b) if it is of the opinion that the merger scheme is not in public interest or in the interests of the creditors, file an application before the NCLT to assess whether the proposed merger scheme should be considered under the NCLT route and not the Fast Track Merger route.

Timelines

Recognizing potential lags in response time from the relevant regulatory authorities, the Ministry of Corporate Affairs notified changes to Rule 25 of the Merger Rules in 2023 to introduce the following timelines for confirmation of the proposed merger scheme under the Fast Track Merger route:

• 45-day timeline if no objections or suggestions are received from the RoC and OL and the RD is of the opinion that the merger scheme is in the public interest or in the interest of creditors.

• 60-day timeline if objections or suggestions are received from the RoC and OL, however, the RD is of the opinion that such objections or suggestions are not sustainable and that the merger scheme is in public interest or in the interest of creditors.

• 60-day timeline for the RD to file an application before the NCLT to consider the scheme under court-approval route if the RD is of the opinion that the merger scheme is not in public interest or in the interest of creditors.

• 60-day deemed approval timeline if the above timelines are not adhered with.

Fast Track Merger and Cross Border Merger

Cross border mergers between Indian and foreign companies are permitted in India under the NCLT route and are governed by Section 234 of the Act read with Rule 25A of the Merger Rules. The MCA amended the Merger Rules to enable inbound merger between a transferor foreign holding company into its Indian WOS under the Fast Track Merger route (Inbound Merger) with effect from September 17, 2024 by introducing Rule 25A(5). This amendment is evidently intended to facilitate “reverse flipping” (which refers to relocation of ownership and assets into India) through the Fast Track Merger route.

A few examples of “reverse flipping” being initiated or completed (not under the Fast Track Merger route) include PhonePe, Groww, Pepperfry and Zepto.

In relation to cross border mergers, the Reserve Bank of India (RBI) has earlier notified the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 (RBI Merger Regulations) to regulate exchange control matters relating to cross border mergers. Cross border mergers undertaken in compliance with the RBI Merger Regulations are deemed to have RBI approval.

Unless otherwise clarified, we assume that if an Inbound Merger under the Fast Track Merger route is undertaken in compliance with the RBI Merger Regulations, it will not require prior RBI approval.

In relation to an Inbound Merger, if the foreign parent is incorporated in a country sharing land border with India or its beneficial owners are situated in or are citizens of such a country, such Inbound Merger will require prior government approval.

"Fast Track Merger" as defined in international instrument(s)

While the term "fast track merger" is not uniformly used across international legal instruments, the concept is widely reflected in frameworks that promote simplified, expedited and non-judicial corporate restructuring and merger procedures, particularly for low-risk or intra-group transactions. It is generally framed around procedural efficiency, proportionality and reduced judicial intervention while maintaining safeguards for creditors and minority stakeholders.

UNCITRAL (Legislative Guide on Insolvency Law)

It provides the clearest normative foundation for fast-track merger kind of mechanisms. While primarily focused on insolvency and restructuring, the Guide explicitly encourages States to adopt simplified reorganisation procedures where the restructuring does not materially affect third-party rights. UNCITRAL emphasises that corporate reorganisations involving related entities, group companies, or entities with limited creditor exposure may be resolved through administrative or regulatory approval mechanisms rather than full judicial proceedings. The Guide stresses that speed, cost-efficiency, and business continuity are critical where the risks to creditors and minority stakeholders are demonstrably low. This approach directly underpins modern fast-track merger regimes by recognising that full court involvement is not necessary in every restructuring or merger scenario, provided minimum safeguards such as disclosure, creditor notice, and objection rights are preserved.

OECD and G20 Principles of Corporate Governance Standards

The G20/OECD Principles of Corporate Governance do not prescribe merger procedures but strongly influence how jurisdictions design simplified corporate transactions. These principles endorse proportional regulation, differentiated treatment for closely held and group companies and streamlined procedures where ownership concentration mitigates governance risk. OECD policy work recognises that intra-group restructurings and mergers involving wholly owned subsidiaries pose lower agency and minority-protection risks, justifying simplified approval mechanisms. Fast-track mergers align with this philosophy by reducing procedural burdens while maintaining transparency and accountability.

"Fast Track Merger" as defined in official government report(s)

J.J. Irani Committee

In 2005, the J.J. Irani Committee recommended legal recognition of contractual mergers in India – mergers that can be implemented without court intervention. This recommendation was codified in the Companies Act, 2013, by inclusion of a mechanism for fast-track mergers (FTMs) of prescribed companies. This mechanism became effective in 2016.

MCA Widens the Scope of fast-track mergers under the Companies Act, 2013

In September 2025, the Ministry of Corporate Affairs (MCA) further expanded the scope of fast-track mergers under Section 233 of the Companies Act, 2013 by amending the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Building upon earlier extensions covering start-ups, small companies, and certain cross-border reverse-flipping structures, the amendment included additional classes such as eligible unlisted companies, holding–subsidiary mergers, and mergers between subsidiaries of the same holding company, subject to prescribed thresholds and exclusions for listed transferor companies. The reform reflects the government’s continued emphasis on procedural efficiency, reduced tribunal involvement, and ease of doing business by allowing a wider set of corporate restructurings to proceed through the fast-track route with approval of the Central Government delegated to Regional Directors.

Ministry of Corporate Affairs taking timely steps to ease compliance burden on the corporates under Ease of Doing Business 2.0 reforms

Under the Ease of Doing Business 2.0 reforms, the Ministry of Corporate Affairs (MCA) has undertaken wide-ranging measures to reduce corporate compliance burdens, including decriminalisation of procedural offences under the Companies Act and LLP law, expansion of the fast-track merger framework, introduction of deemed approvals, facilitation of direct overseas listings, and establishment of centralized processing mechanisms such as C-PACE and CPC. With effect from 1 December 2025, the thresholds for classification as a “small company” were significantly enhanced, bringing a larger number of entities under simplified compliance requirements. These reforms are supported by the MCA21 Version 3 digital platform, which integrates data-driven compliance monitoring, real-time filings, and strengthened grievance redressal systems.

"Fast Track Merger" as defined in case law(s)

Jupiter Alloys Steel (India) Ltd. v. Registrar of Companies (NCLT - 2017)

It refers to proceedings before the National Company Law Tribunal (NCLT) concerning a proposed scheme of amalgamation between Jupiter Alloys & Steel (India) Ltd. and Jupiter Wagons Ltd., where the key issue was seeking dispensation from calling meetings of shareholders and creditors due to unanimous consents, aligning with the Companies Act, 2013's provisions for compromise and arrangement. The NCLT (New Delhi Bench) handled the case, eventually directing compliance and further hearings, particularly regarding notices to authorities like the Registrar of Companies (RoC) and the Ministry of Corporate Affairs (MCA). The NCLT clarified that Section 233 represents a legislative departure from the traditional tribunal-driven merger process, which was created to ensure speed, reduced compliance burden and certainty for low-risk corporate restructurings. The tribunal observed that the fast-track route is based on the presumption that mergers between closely related entities or small companies do not ordinarily warrant intensive judicial scrutiny. The judiciary has thus recognised fast-track mergers as exception-based procedures, carved out from the general merger framework under Sections 230-232.

Santosh Kumar Lahoti v. Registrar of Companies (NCLT - 2024)

In Santosh Kumar Lahoti v. The Registrar of Companies, the National Company Law Tribunal (NCLT) reaffirmed the statutory thresholds for a valid fast-track merger under Section 233. The tribunal held that approval must be obtained from at least 90% of the total share capital and a majority representing nine-tenths in value of creditors to proceed via the fast-track route. Because the requisite thresholds were not met, the tribunal directed that the merger scheme should be considered under the regular merger process (Section 232), not under the fast-track provisions. This decision is significant because it shows that strict procedural compliance remains critical and non-compliance can invalidate a fast-track merger, compelling the use of the full NCLT merger process.

Asset Auto India Pvt Ltd v. Union of India (Bombay High Court - 2024)

In Asset Auto India Pvt Ltd v. Union of India, the Bombay High Court addressed the scope of discretionary powers of the Regional Director (RD) under Section 233 of the Companies Act, 2013. The court held that a Regional Director cannot outrightly reject a fast-track merger scheme once statutory prerequisites (such as creditor and shareholder approvals and procedural compliance) are satisfied. Instead, if the RD forms an opinion that the scheme may be against public interest or prejudicial to creditors, the appropriate course under Section 233(5) is to file an application before the National Company Law Tribunal (NCLT) for consideration under the regular merger provisions (Section 232), rather than simply rejecting the scheme. This interpretation ensures that natural-justice safeguards are upheld in fast-track merger decisions.

NCLT Order on fast-track merger Approval under Section 233 (8th May 2025)

A publicly available NCLT order dated 8th May 2025, confirms the practical implementation of Section 233’s fast-track merger route. In this order, the tribunal recorded that Section 233 expressly provides for merger/amalgamation of eligible companies (e.g., small companies or holding/wholly owned subsidiary combinations) via the fast-track procedure without NCLT oversight, subject to statutory compliance, notice to the Registrar of Companies/Official Liquidator, solvency declarations, and approvals by the required thresholds of shareholders and creditors. While not a reported appeal judgment, this order demonstrates how fast-track mergers are sanctioned by tribunals when conditions are met and statutory procedure under Section 233 is followed.

International Experience

European Union (EU)

EU company law permits simplified merger procedures for specific corporate structures, particularly parent–subsidiary and intra-group mergers. Under the EU’s cross-border merger framework, member states may dispense with certain procedural requirements—such as expert reports or shareholder approvals—where ownership thresholds are met and stakeholder risk is limited. The emphasis is on proportionality, creditor protection through disclosure and objection rights, and administrative efficiency rather than judicial approval.

United Kingdom (UK)

The UK provides a streamlined merger mechanism through court-sanctioned schemes of arrangement, which, while judicial in form, are designed to be procedurally efficient and time-bound. For group reorganisations, regulatory practice allows reduced scrutiny where there is no material impact on creditors or minority shareholders. The UK approach reflects an internationally recognised model combining speed with judicial oversight as a safeguard.

Singapore

Singapore explicitly recognises short-form amalgamations under its Companies Act, allowing mergers between a holding company and its subsidiary, or between subsidiaries of the same holding company, without shareholder approval. These transactions rely primarily on solvency declarations and administrative filings, making Singapore one of the clearest examples of a statutory fast-track merger regime aligned with international best practices.

Technological Transformation and Initiatives

The fast-track merger framework under Section 233 of the Companies Act, 2013, has been significantly supported by digital and technology-driven reforms introduced by the Ministry of Corporate Affairs (MCA) under its MCA21 Portal initiatives. These initiatives aim to enhance speed, transparency, traceability, and administrative efficiency, which are central objectives of the fast-track merger regime.

• E-Forms Specific to Fast Track Mergers

The introduction and refinement of dedicated electronic forms, particularly Form CAA-9 (notice of scheme under Section 233), has standardised fast-track merger filings. These forms are designed with built-in validations, mandatory disclosures, and document uploads, reducing errors and improving consistency in regulatory review. Technology-enabled form design ensures that only eligible companies access the fast-track route and that statutory thresholds are transparently disclosed.

• Electronic Record-Keeping and Audit Trail

All fast-track merger filings, approvals, and objections are digitally archived on MCA systems, creating a permanent electronic audit trail. This enhances regulatory accountability and enables easier post-merger verification by authorities, creditors, and other stakeholders. Digital record-keeping also supports data-driven regulatory oversight, allowing the MCA to monitor trends in mergers and compliance behaviour.

Research that engages with Fast Track Merger

The Four Pillars of Change: Unpacking India’s New Fast-Track Merger Regime - By Anand Jayachandran, Supriya Aakulu & Ayushi Mehta

The article discusses how the MCA has unleashed a significant liberalisation of the fast-track merger framework, introducing four revolutionary changes by allowing unlisted companies, non-wholly owned subsidiaries and fellow subsidiary transactions to access the fast-track route, while also streamlining cross-border mergers. This change makes the fast-track route viable for a broader range of entities and seeks to reduce the NCLT’s burden, potentially allowing it to focus on contentious matters requiring judicial oversight.

Mergers on a Fast-Track - Ravi Shah, Devanshi Dalal & Dhwani Shah

The article discusses about the hurdles in fast-tracking process and also regarding the 2023 Amendment that certainly seems to be a step in the right direction and how it would encourage more companies to consider the FTM route and provide much needed visibility on timelines associated with such process. This will also enable India Inc. to undertake internal restructuring via the FTM route in a more efficient manner. However, to maximise the potential benefits that FTM offers, it is crucial to address some of the challenges existing so far.

Fast-Track Merger under Companies Act 2013 – MCA Broadens Fast-Track Route for Mergers and Demergers - Taxmann Blog

The article analyses the fast-track merger framework under the Companies Act, 2013, focusing on the Ministry of Corporate Affairs’ efforts to broaden its scope for mergers and demergers. It explains how the fast-track route aims to simplify corporate restructuring by reducing reliance on the NCLT, introducing administrative approvals, and prescribing clearer timelines. The article also highlights practical limitations of the framework, including approval requirements from shareholders and creditors, and notes that while recent amendments move in a facilitative direction, certain procedural and compliance challenges continue to affect its wider adoption.

Challenges

• Seeking the approval of shareholders and creditors when the transferee company is a listed company

Section 233(1)(b) of the Companies Act, 2013 requires approval of the members holding at least 90% of the total number of shares. In the case of listed companies, meeting this high threshold often becomes particularly challenging and may significantly delay the approval process, thereby undermining the very objective of enabling quicker mergers. This concern was also recognised in the CLC Report, 2022, which highlighted that the requirement is based on the entire share capital and not merely on shareholders present and voting.

• Regulatory Approvals in case of Cross-Border Mergers

Cross-border mergers require certain approvals, including RBI approval and FEMA clearance. This may lead to longer timelines, as companies must obtain these clearances before giving effect to such schemes. These delays can increase costs for companies, create uncertainty for investors and employees, and slow down the benefits expected from the merger. In some cases, the long process may even discourage companies from going ahead with cross-border mergers.

• Auditor’s Certificate and Compliance Burden

For unlisted companies availing the FTM route, an auditor’s certificate in Form CAA-10A must confirm that the conditions regarding borrowings and defaults are met. Preparing such certificates requires detailed verification of financial records on two separate dates (before inviting objections and at the time of filing). This increases compliance costs, and any inconsistency or delay in certification can hinder the merger process.

• Coordination with multiple Regulators and Stock Exchanges

The amendment expands the notice requirements seeking objections or suggestions for fast-track mergers to include sectoral regulators and stock exchanges in the case of listed companies. While this ensures transparency, it also increases the risk of receiving objections from multiple authorities. This can slow down the process and create uncertainty for companies.

Way Ahead

• Continued Expansion of Eligibility and Scope

The Ministry of Corporate Affairs (MCA) has been actively broadening the categories of companies that can use the Fast Track Merger route, moving beyond just small companies, wholly-owned subsidiaries, and start-ups to include a wider range of unlisted firms under prescribed thresholds. This expansion aligns with the government’s agenda of making corporate restructuring more efficient and reducing regulatory burden.

• Simplifying Procedural Requirements

Experts recommend that the Fast Track Merger regime should continue to simplify procedural and compliance steps including the timing of approvals, documentation, and thresholds for creditor/shareholder consents. Future reforms may aim to streamline documentation required for filings with the Regional Director, clarify timelines for regulatory review and approval and integrate digital / MCA21 portal enhancements for faster submissions and consent capture. This will reduce ambiguity and help companies complete mergers more predictably and transparently.

• Enhancing Ease of Doing Business

The Union Budget and MCA’s reform proposals explicitly state the intention to rationalize merger procedures and align them with global practices to boost ease of doing business in India. Proposed enlargement of the fast-track mechanism is a direct outcome of this policy direction.

• Potential Cross-Border and Sectoral Integration

Although primarily domestic, the Fast Track Merger framework may increasingly intersect with cross-border restructuring and sector-specific regulation:

1.Corporate groups with international subsidiaries may leverage fast-track mergers in combination with foreign law compliance.

2.Regulated sectors (banking, insurance, SEBI-regulated firms) may see more structured guidance to align fast-track merger approvals with sectoral rules. This is an ongoing development area that needs to be explored.