The Fast Track Merger (FTM) route was introduced under Section 233 of the Companies Act, 2013, enabling specified classes of companies to obtain approval for merger and amalgamation schemes from the Regional Director (RD) instead of the National Company Law Tribunal (NCLT) within a shorter timeframe. Over time, India’s corporate restructuring framework has been progressively liberalized by strengthening the fast-track mechanism and easing the burden on the NCLT.
MCA Broadens Fast-Track Route for Mergers and Demergers
A scheme of merger or amalgamation under Section 233 of the Act may be entered into between any of the following classes of companies, as amended by the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025:
(i) between Holding Company and its wholly owned subsidiary;
(ii) between two or more small companies;
(iii) between two or more start-up companies;
(iv) one or more start-up company with one or more small company; or
(v) one or more unlisted company (other than section 8 company) with one or more unlisted company (other than section 8 company) where every company involved in the merger,-
(a) has, in aggregate, outstanding loans, debentures or deposits not exceeding two hundred crore rupees, and
(b) has no default in repayment of loans, debentures or deposits referred to in sub-clause (a),
on a day, not more than thirty days before the date of notice referred to in clause (a) of sub-section (1) of section 233 of the Act and on the date of filing of scheme under sub-section (2) of section 233 of the Act
(vi) a holding company (listed or unlisted) and a subsidiary company (listed or unlisted): Provided that this clause shall not apply where the transferor company or companies are listed;
(vii) one or more subsidiary company of a holding company with one or more other subsidiary company of the same holding company where the transferor company or companies are not listed.
(viii) merger of the transferor foreign company incorporated outside India being a holding company with the transferee Indian company being its wholly owned subsidiary company incorporated in India referred to in sub-rule (5) of rule 25A (cross border inbound merger)
Example- 1:
Green Harvest Foods Pvt. Ltd., an unlisted food processing company, and FreshLink Distribution Pvt. Ltd., an unlisted logistics and distribution company, have decided to merge to create an integrated food supply chain. Green Harvest has outstanding borrowings of ₹125 crores, while FreshLink has borrowings of ₹165 crores. Neither company has defaulted in repayment of its borrowings. Both companies have decided to merge. Can the merger take place between the companies?
Before the Amendment: Their merger was not eligible for the fast-track route as it was not covered under the specified class of companies. Therefore, they had to proceed through the regular NCLT approval process.
After Amendment: Since both companies satisfy the loan and repayment conditions, they are eligible to opt for a fast-track merger. Accordingly, they can directly apply for approval of the merger via the Regional Director.
Example-2:
UrbanNest Holdings Pvt. Ltd. holds 78% of the share capital of UrbanNest Developers Pvt. Ltd., a company engaged in residential township development. The remaining 22% is held by private equity investors. To simplify the group structure and eliminate duplicate compliance costs, the holding company proposes to merge with its subsidiary.
Can the merger take place through the fast-track merger route?
- Before the Amendment: The companies cannot merge via a fast-track route unless the merger takes place between the holding company and its wholly-owned subsidiary company. Since UrbanNest Developers Pvt. Ltd. is not a wholly-owned subsidiary, a merger cannot take place via a fast-track route.
- After Amendment: Both companies can merge via the fast-track route as the requirement of a wholly-owned subsidiary has been removed.
Example-3:
RetailSphere Limited is the holding company of QuickCart Pvt. Ltd., an unlisted grocery delivery company, and Lifestyle Trends Limited, a listed fashion retail company. To create a unified retail platform and improve operational efficiency, the group proposes to merge QuickCart Pvt. Ltd. into Lifestyle Trends Limited.
Can the merger take place through the fast-track merger route?
- Before Amendment: The merger was not eligible for the fast-track route as it was not covered under the specified class of companies.
- After Amendment: Since QuickCart Pvt. Ltd (the transferor) is unlisted, the merger can proceed under the FTM route.
Example-4:
Innovatech Global Inc., incorporated in the United States, owns 100% of Innovatech India Pvt. Ltd., which provides software development and IT support services in India. As part of a global restructuring exercise, the foreign parent company proposes to absorb its Indian subsidiary.
Can the merger take place through the fast-track merger route?
- Before Amendment: Such cross-border mergers were possible only under the regular NCLT route, requiring multiple approvals, including RBI/FEMA clearances.
- After Amendment: With Rule 25 explicitly recognising such mergers under Section 233 of the Companies Act, 2013, the process can be undertaken through the RD, providing a clearer and faster route.
Regular vs. Fast-Track Merger Process under the Companies Act, 2013
Sections 230–232 of the Companies Act, 2013 lay down a legal framework for compromises, arrangements, and mergers applicable to all categories of companies, including listed, unlisted, private, and public entities. This process involves multiple stages and requires approval from the National Company Law Tribunal (NCLT), making it a relatively lengthy and complex process.
In contrast, Section 233 of the Act provides a simplified and fast-track mechanism for mergers/amalgamations, specifically available to certain classes of companies—namely, two or more small companies, a holding company and its wholly-owned subsidiary, or start-up companies, etc.
This route bypasses the approval of National Company Law Tribunal (NCLT) unless the Central Government, upon receipt of objections or suggestions, considers it necessary to refer the scheme to the Tribunal. Instead, requisite approvals are obtained administratively from the Central Government (through the Regional Director), making the process quicker, more cost-effective, and efficient for eligible companies.
PROCEDURE FOR FAST TRACK MERGER:
Eligibility Check and Appointment of Professionals
Firstly, the Applicant Companies need to check whether they are eligible to file application under fast track route- if yes, then the next step is to appoint the registered valuer for arriving at the share exchange ratio, and statutory auditor for auditors’ report on statement of assets and liabilities, eligibility certificate, etc.
Conduct Board Meeting:
The Applicant Companies conduct the board meeting to approve the draft notice inviting suggestions or objections in form CAA-9, draft scheme of merger, statement of assets and liabilities, draft declaration of solvency in form CAA-10, draft notice of meeting of shareholders and creditors, if any and to approve the valuation report.
Filing of notice of draft scheme of merger and declaration of solvency
The applicant companies shall send notice in form CAA-9 alongwith the proposed scheme of amalgamation to the ROC, Official Liquidator or any other person affected by the scheme to invite objections or suggestions. Provided that if the companies are regulated by sectoral regulator such as RBI, SEBI, IRDAI or PFRDA, as the case may be, same shall also be sent to concerned regulator and to respective stock exchanges, in case of listed company.
Declaration of solvency shall be filed by each of the companies involved in the scheme of merger or amalgamation in Form No.CAA.10 as attachment to Form GNL-1.
Members and Creditors Approval:
After expiry of 30 days from the date of filing Form CAA-9, the applicant companies are required to convene a meeting of shareholders and obtain approval of the scheme by passing a resolution with at least 90% of the total number of shares. Further, approval of creditors representing at least 90% in value is required. However, where creditors holding 90% in value provide their written consent, the meeting of creditors may be dispensed with.
As of early 2026, the Corporate Laws (Amendment) Bill, 2026 has been discussed to further lower the shareholder approval threshold from 90% to 75% (aligning it with NCLT-route requirements).
Filing of MGT-14:
The applicant companies are required to file e-Form MGT-14 with the ROC within 30 days of passing the resolution. It is advisable to file it before submitting e-form RD-1, which is required to be filed within 15 days from the date of passing the resolution.
Filing of approved scheme of merger:
Within 15 days from the date of the meeting of shareholder or creditors, if any, the Transferee company shall file the scheme of amalgamation along with the report of registered valuer and report of meeting in form CAA-11 to RD in e-form RD-1.
The same is to be filed with ROC in e-form GNL-1 and via hand delivery / registered post /speed post / email to OL and to Sector specific regulatory, if applicable.
Approval by Regional Director
Any regulatory authority to which the draft scheme is filed may send its objection directly to the RD. RD may also ask for any additional documents from the transferee company before approval.
Where no objection and suggestion are received from the respective regulatory authority and on satisfaction of RD, it shall pass the approval order of merger in Form CAA-12 within 60 days from the date of filing of the scheme. Provided that if the Regional Director does not issue a confirmation order or does not file any application to NCLT within a period of 60 days of the receipt of the scheme, it shall be deemed that it has no objection to the scheme, and a confirmation order shall be issued accordingly.
Post Approval Compliance:
The Applicant Companies shall file Form INC-28 with respective ROC along with copy of RD order affirming the merger.
The Transferee Company shall also attach working of revised authorized share capital and pay additional fees on increase in authorized share capital, if any as an attachment of form INC-28.
Demerger:
Demerger is a corporate arrangement whereby some part /undertaking of one company is transferred to another company which operates completely separate from the original company. It enables the separation of distinct business verticals into independent entities, allowing each segment to operate with greater strategic focus, accountability, and managerial efficiency.
By isolating high-growth or underperforming divisions, companies can achieve more accurate valuations and attract targeted investors, thereby improving capital allocation and market perception. Additionally, demergers facilitate the realignment of capital structures, reduce operational complexities, and support long-term strategic objectives, ultimately contributing to sustainable value creation for stakeholders.
A groundbreaking change is the insertion of a new sub-rule (9) in Rule 25, which explicitly states that the provisions of the rule shall apply mutatis mutandis to a scheme of division or transfer of undertakings (i.e., demergers). Previously, all demergers required mandatory NCLT approval under Sections 230-232, a time-consuming and costly process. Now, schemes of division or transfer of undertaking (demergers) are expressly permitted under RD route. Rule 25(9) added to explicitly include demerger under section 233. Forms CAA-9, CAA-10, CAA-11 and CAA-12 were amended to include division or transfer of undertaking along with scheme of arrangement, under FTM Route.
What are the challenges faced by the companies while opting demerger under the fast track route:
Creditor Opposition- If a company can’t reach the 90% value threshold it must use the 75% threshold of the Normal Route. As happened in the case of Landcraft Developers Private Limited- Initially proposed under the Fast Track Route, but the company failed to obtain the mandatory 90% No Objection Certificate (NOC) from its unsecured creditors (homebuyers). Since Section 233 requires a high “90% in value” threshold for both members and creditors, the lack of unanimous or high-majority support from the homebuyers forced the company to withdraw the fast-track application and file under the NCLT (Normal) route, where the approval threshold is a lower 75%.
RD Objections: If the RD finds a scheme contrary to public interest, they must refer it to the NCLT for a formal hearing under Section 232. As happened in the case of Asset Auto India Private Limited- The Regional Director (RD) had reservations about the scheme’s fairness or compliance and attempted to reject it outright. The Bombay High Court ruled that the RD cannot simply “reject” a fast-track scheme. If they have objections, they must file an application before the NCLT to have the scheme considered under the Normal Route (Section 232). This ensures judicial oversight rather than just administrative rejection.
Complex Demergers. It involves multiple business segments, cross-border elements, or heavy regulatory scrutiny. These are almost never processed via the Fast Track Route (Section 233) because they involve thousands of stakeholders and billions in assets, making the “90% consent” rule nearly impossible to achieve. Instead, these companies utilize the Normal Route (Sections 230–232), where the National Company Law Tribunal (NCLT) provides judicial oversight to ensure the split is fair to all parties.
Debt Thresholds: As of the September 2025 Amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, the eligibility for the Fast Track Route has been significantly expanded, but it now includes a strict debt threshold to ensure that larger, more financially complex restructurings remain under the judicial oversight of the NCLT.
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