The Ministry of Corporate Affairs (MCA) has expanded the scope of fast-track mergers under Section 233 of the Companies Act, 2013. This regulatory change aims to simplify the merger and amalgamation process for a wider range of companies. Initially, this streamlined procedure was available only for small companies, and between a holding company and its wholly-owned subsidiary. Recent amendments have progressively broadened this scope. A 2021 amendment included start-up companies, allowing for fast-track mergers between two or more start-ups, or between a start-up and a small company. Further changes in September 2024 permitted the merger of a foreign holding company with its Indian wholly-owned subsidiary. Following a budget announcement, the latest amendment, effective September 4, 2025, further extends the fast-track process to new categories. These include mergers between two or more unlisted companies that meet specific financial thresholds, and between a holding company and its subsidiary, or between two or more subsidiaries of the same holding company, as long as the transferor company is not a listed entity. These updates are intended to improve the ease of doing business by reducing procedural complexities for a greater number of companies.
Ministry of Corporate Affairs
MCA Widens the scope of fast track mergers under the Companies Act, 2013
Posted On: 11 SEP 2025
The Companies Act, 2013 regulates the incorporation, responsibilities, governance, and dissolution of companies in the country. Section 233 of the Companies Act, 2013 provides for merger or amalgamation of certain companies (Fast Track Merger) through approval of Central Government [Delegated to Regional Directors]. Section 233(1) of the Companies Act, 2013 allows mergers/demergers between (i) two or more small companies and (ii) holding company and its wholly owned subsidiary. Section 233 empowers Central Government (MCA) to prescribe, by way of rules, additional classes of companies who can avail such fast track process.
In order to facilitate ease of doing business and allow small companies and start-up companies to avail such fast track procedure, amendment was made in the year 2021 in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (CAA Rules) to extend the scope of fast track process for merger/demergers between (a) two or more start-up companies and (b) one or more start-up company with one or more small company. Subsequently through amendment made in CAA Rules in September, 2024, merger of a transferor foreign company incorporated outside India being a holding company with the transferee Indian company being its wholly owned subsidiary company incorporated in India (reverse flipping) has also been allowed through fast track merger procedure.
Pursuant to Para 101 of the Budget Speech (2025-2026), it was decided to further enhance the scope of such mergers. For this purpose, the CAA Rules have been amended on 4th September, 2025 after holding stakeholders consultations. Through this amendment mergers/demergers in respect of following additional classes of companies have been included in rule 25 of such rules for availing the fast track merger/demerger procedure:-
a. Two or more unlisted companies (other than section 8 companies) which meet prescribed thresholds of outstanding loans, debentures or deposits;
b. Holding company and subsidiary companies excluding cases where transferor company is a listed company;
c. Two or more subsidiaries of the same holding company excluding cases where transferor company is a listed company.
The relevant amendment notification (Gazette Notification no. G.S.R 603 (E) dated 04.09.2025) has been placed on the website of the M/o Corporate Affairs (www.mca.gov.in).
