The Ministry of Corporate Affairs (“MCA”) on September 4, 2025, notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (“CAA Amendment Rules”) vide notification no. G.S.R.603(E), amending the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”). The amendment seeks to widen the scope of the fast-track mergers under Section 233 of the Companies Act, 2013 (“Act”) and Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, by allowing a wider array of companies to undertake combinations through the fast-track route.

Fast Track Mergers prior to the CAA Amendment Rules

Section 230 to Section 232 of the Act provide for the manner in which companies can undertake mergers and amalgamations by way of schemes that are to be filed with and approved by the National Company Law Tribunal (“NCLT”). This process is often lengthy, expensive and cumbersome as it involves procurement of approvals from creditors, shareholders and the NCLT, and requires service of regulatory notices and supervision from the NCLT. By contrast, Section 233 of the Act read with Rule 25 of the CAA Rules facilitates swift and cost-effective mergers for certain kind of companies through the ‘fast-track’ route. A fast-track merger only has to be approved by a regional director (“RD”), the creditors and shareholders, and notices of the same only have to be served to the concerned registrar of companies or official liquidator, who are required to confirm that they have no objection to the transaction.

Prior to the CAA Amendment Rules, fast-track mergers were available for: (a) a merger between two or more small companies, (b) a merger between a holding company and its wholly-owned subsidiary and (c) a merger between start-up companies (inter se or with another small company). In 2024, through the Companies (Compromise, Arrangements and Amalgamation) Amendment Rules, 2024, in order to promoter the merger of foreign holding companies with Indian wholly-owned subsidiary companies, (i.e., ‘reverse flips’), Rule 25A of the CAA Rules was amended to provide that where the transferor company in such transaction is a foreign holding company and the transferee is an Indian wholly owned subsidiary company, such transaction can be undertaken through the fast-track route, subject to the prior approval of the Reserve Bank of India.

Fast Track Mergers under the CAA Amendment Rules

The CAA Amendment Rules further expand the scope of mergers through the fast-track route, making it available to the following companies and combinations:

1. between two or more unlisted companies (excluding companies incorporated under Section 8 of the Act) whose aggregate outstanding loans, debentures or deposits do not exceed INR 200 crore and who have not defaulted in the repayment of such loans, debentures or deposits;

2. between any holding and subsidiary company, whether listed or unlisted (provided that the transferor company is not a listed company); and

3. between two or more subsidiary companies of the same holding company (provided that the transferor company is not a listed company).

This amendment will materially facilitate swift intra-group reorganisations. It is also in line with the MCA’s policy to broaden the fast-track merger corridor from small and start-up companies to mainstream private companies, while ensuring that interests of creditors are safeguarded and companies opting for such transactions are debt-light and have not committed defaults in repayment. Further, by ringfencing listed transferor companies, the CAA Amendment Rules also seek to protect interests of public investors.

Conclusion

With the introduction of the CAA Amendment Rules, India’s fast-track merger framework is now better aligned with practical reorganisation patterns, including vertical and horizontal group combinations and mid-market mergers of companies with modest debt profiles. Companies considering such transactions and counsel advising companies on the same can now proactively examine and suggest structuring transactions to leverage the fast-track pathway for eligible companies, without compromising stakeholder safeguards.

Please find attached a copy of the Amendment, here.

This update has been contributed by Anantha Krishnan Iyer (Partner) and Aradhana Pandit (Associate).

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