Summary: The Fast Track Merger mechanism under Section 233 of the Companies Act, 2013, read with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, provides a simplified merger route without approaching the NCLT for eligible companies. It covers specified categories including small companies, holding and wholly-owned subsidiary companies, start-up companies, certain unlisted companies meeting specified debt and repayment conditions, and permitted cross-border mergers. The process involves board approval, Form CAA-9 notices, GNL-1 filings, declarations of solvency in Form CAA-10, member and creditor approvals, MGT-14 filing, submission of the scheme to the RoC and Regional Director, consideration of objections, confirmation in Form CAA-12, and filing of the order through INC-28. Members holding at least 90% of shares and creditors representing 9/10th in value must approve the scheme. Key considerations include eligibility, accounting standards compliance, creditor consent documentation, the 60-day Regional Director period, appointed and effective dates, RBI requirements for cross-border mergers, stamp duty, and applicable tax-neutral treatment.
- A. Fast Track Merger under Section 233: Overview and Benefits
- B. Fast Track Merger Eligibility: Companies and Conditions
- C. Fast Track Merger Procedure: Step-by-Step Process and Forms
- D. Key Timelines at a Glance — Fast Track Merger Forms and Timelines
- E. Fast Track Merger: Key Compliance and Legal Considerations
A. Fast Track Merger under Section 233: Overview and Benefits
The Fast Track Merger (FTM) mechanism under Section 233 of the Companies Act, 2013, read with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, provides a simplified route for mergers and amalgamations that does away with the requirement of approaching the National Company Law Tribunal (NCLT). It is designed to reduce cost, time, and procedural complexity for eligible companies.
B. Fast Track Merger Eligibility: Companies and Conditions
Fast Track Merger can be availed by:
- Two or more small companies;
- A holding company and its wholly-owned subsidiary company;
- Two or more start-up companies;
- One or more start-up company with one or more small company;
- A holding company and its subsidiary company, whether listed or unlisted, provided the transferor company is not listed;
- One or more subsidiary companies of the same holding company, provided the transferor company is not listed;
- Merger of a foreign holding company with its wholly owned Indian subsidiary, as permitted under Rule 25A(5).
- One or more unlisted company, (not being company referred to in Section 8 of the Act) with one or more unlisted company, (not being company referred to in Section 8 of the Act), where every company involved in the merger:
(a) has, in aggregate, outstanding loans, debentures or deposits not exceeding Rs. 200 crore; and
(b) has no default in repayment of such loans, debentures or deposits, on a day not more than 30 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 the scheme under sub-section (2) of Section 233 of the Act.
“Small Company” (Section 2(85)) means a company, other than a public company, having:
- Paid-up share capital not exceeding Rs. 10 crores; and
- Turnover not exceeding Rs. 100 crores.
Note: Holding/subsidiary companies are themselves excluded from the definition of “small company” — verify latest threshold notifications before relying on these figures. “Start-up company” should be a DPIIT-recognised entity under the applicable Startup India notification.
Objector eligibility (Rule 25(4)): only a member holding not less than 5% of total shares, or a creditor with debt amounting to not less than 5% of total outstanding debt as per the latest audited financial statement, is entitled to raise objections/suggestions on Form CAA-9.
C. Fast Track Merger Procedure: Step-by-Step Process and Forms
| Sr. | Step | Particulars | Timeline / Due Date |
| 1 | Board Meeting | Approve draft scheme of merger/amalgamation; authorise filing of the scheme with the RoC for inviting objections/suggestions from stakeholders. | — |
| 2 | Notice under Form CAA-9 | Each transferor and transferee company issues notice of the proposed scheme to: (a) jurisdictional RoC, (b) jurisdictional Official Liquidator, and (c) persons affected by the scheme, inviting objections/suggestions. | 30 days for objections |
| 3 | Filing of e-Form GNL-1 | GNL-1 to be filed by both transferor and transferee companies for filing notice under Section 233(1)(a)read with Rule 25(1) of CAA Rules, 2016 to ROC of the proposed scheme inviting objections or suggestions, if any | 30 days from the date of the notice |
| 4 | Declaration of Solvency – CAA-10 | Each company files a Declaration of Solvency with the RoC, along with prescribed fees, before convening the general meeting. | Before convening the meeting of members and creditors for approval of the scheme. |
| 5 | Filing of e-Form GNL-2 | GNL-2 to be filed by transferor and transferee companies for filing of Declaration of Solvency to the Registrar. | Before convening the meeting of members and creditors for approval of the scheme. |
| 6 | General Meeting | Convene a general meeting for approving the scheme. Approval requires consent of members holding at least 90% of total number of shares. | 21 clear days’ notice |
| 7 | Meeting of Creditors / Consent | Convene a meeting of creditors and secure approval of creditors representing 9/10th in value, OR obtain written consent/approval from creditors representing 9/10th in value. | 21 days’ notice (if meeting held) |
| 8 | Filing of e-Form MGT-14 | File the approved resolution with the RoC in e-Form MGT-14. | Within 30 days of passing the resolution |
| 9 | Filing scheme with RoC and Regional Director – CAA-11 in E Form GNL-1 to RoC and in E form RD-1 to Regional Director | Transferee company files the approved scheme with the jurisdictional RoC (Form CAA-11) along with the report of the result of each meeting, and with the jurisdictional Regional Director, together with a copy of the scheme and report of the meetings. | Within 15 days from conclusion of meetings of members and creditors |
| 10 | RoC / OL objections to Regional Director | The RoC and Official Liquidator may communicate objections or suggestions to the Regional Director. If none is received within the period, no objection is presumed. | Within 30 days of receipt of the scheme |
| 11 | Confirmation Order by Regional Director – CAA-12 | If satisfied the scheme is in public interest / interest of creditors, RD issues confirmation order in Form CAA-12. If not satisfied (based on RoC/OL objections), RD may apply to NCLT under Section 232. If RD neither confirms nor refers within 60 days, no objection is deemed. | Within 60 days of receipt of the scheme |
| 12 | Registration of Order — Form INC-28 | Confirmation order of the RD (or NCLT, if referred) is filed with the RoC of the place where the registered offices of the companies are situated. | Within 30 days of receipt of the order |
| 13 | Effect of Registration | On filing: transfer of property, rights and liabilities of transferor to transferee; dissolution of transferor without winding up; pending legal proceedings continue against transferee; and any other consequences prescribed under the scheme. | On filing of Form INC-28 |
D. Key Timelines at a Glance — Fast Track Merger Forms and Timelines
| Activity | Form | Timeline |
| Notice to RoC / OL / persons affected | Form CAA-9 | 30 days for objections |
| Declaration of Solvency | Form CAA-10 | Before general meeting |
| General meeting notice | — | 21 clear days |
| Creditors’ meeting notice | — | 21 days |
| RoC / OL objections to RD | — | Within 30 days of scheme filing |
| RD confirmation / reference to NCLT | Form CAA-12 | Within 60 days of scheme filing |
| Filing confirmation order | Form INC-28 | Within 30 days of order |
E. Fast Track Merger: Key Compliance and Legal Considerations
- Ensure the eligibility criteria (small company / holding-subsidiary / start-up) are met as on the date of filing, not just at incorporation.
- Auditor’s certificate confirming the company’s books of account comply with applicable Accounting Standards should accompany the scheme.
- Maintain proper documentary evidence of creditor consents where the creditors’ meeting is dispensed with.
- Track the 60-day silence period carefully — absence of communication from the RD within 60 days is deemed “no objection”, and this should be documented for the company’s records.
- If the RD refers the matter to the NCLT, the fast track advantage is lost, and the scheme proceeds under the standard Section 232 mechanism.
- The notice convening the general meeting should be accompanied by an explanatory statement disclosing details of the scheme and its effect on stakeholders, in line with Section 230(3) read with Section 233.
- Distinguish and fix the “Appointed Date” (accounting date of merger) from the “Effective Date” (date of registration of the RD/NCLT order in Form INC-28) in the scheme document.
- For cross-border mergers under Rule 25A, obtain prior RBI approval and ensure compliance with the Foreign Exchange Management (Cross Border Merger) Regulations, 2018, including valuation as per internationally accepted pricing methodology.
- Factor in state-wise stamp duty implications on the scheme/confirmation order, which vary by jurisdiction.
- Confirm tax-neutral treatment of the amalgamation under Section 2(1B) read with Section 47(vi) of the Income-tax Act, 1961, where applicable, in consultation with a tax advisor.
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*This document is for educational purposes only and does not constitute legal advice
Author : Ms. Monisha Agrawal , Manager at M/s Ronak Jhuthawat & Co, Practicing Company secretary Call: +91 98874 22212 | Email: [email protected]
