Fast Track Merger under Section 233 of the Companies Act, 2013

Mergers and acquisitions have long been recognized as the strategic tools for growth, expansion and restructuring in the corporate world. Traditionally, in India, the merger process under Section 232 of the Companies Act, 2013 was perceived as lengthy and complex, involving multiple stages before the National Company Law Tribunal (NCLT).

To address these challenges and promote ease of doing business, the legislature introduced the concept of a Fast Track Merger (FTM) under Section 233 of the Companies Act, 2013. This route allows specific classes of companies to merge through a simplified, cost-effective and time-bound process without approaching the NCLT.

With the 2023 and 4 September 2025 MCA amendments, the scope of FTMs has been significantly expanded, including unlisted companies, subsidiaries, fellow subsidiaries, demergers and inbound foreign-to-India mergers.

What is a Fast Track Merger?

A Fast Track Merger (FTM) is a simplified merger process available to prescribed classes of companies. Instead of seeking approval from the NCLT, companies submit the scheme to:

• Regional Director (RD)
• Registrar of Companies (ROC)
• Official Liquidator (OL)

If no objections are raised and the scheme is deemed fair and in public interest, the RD confirms the merger, which becomes effective upon filing with the ROC.

FTMs save time, reduce cost and lower compliance burden, making them especially beneficial for startups, small companies and group restructuring.

Legal Framework

• Section 233, Companies Act, 2013
• Rule 25, Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016
• Companies (CAA) Amendment Rules, 2023 & 2025

The 2025 amendment expanded the classes of companies eligible for FTM and allowed demergers and inbound cross-border mergers.

Eligible Companies for Fast Track Merger (as of 2025)

Initially, only small companies and wholly-owned subsidiaries were covered. The 2025 amendment expanded the scope. Now, the following classes can use FTM: -

1. Two or more small companies

• Paid-up share capital ≤ ₹4 crore
• Turnover ≤ ₹40 crore

2. Holding company and wholly-owned subsidiary

3. Two or more startups or one or more startups with one or more small companies

4. Two or more unlisted companies (excluding Section 8), provided:

• Aggregate borrowings (loans, debentures, deposits) ≤ ₹200 crore
• No default in repayment
• Conditions satisfied on two dates: (i) within 30 days before the notice and (ii) on filing date (auditor’s certificate in Form CAA-10A)

5. Holding company and its subsidiary (not necessarily wholly-owned) – transferor must be unlisted

6. Two or more fellow subsidiaries of the same holding company – transferor must be unlisted

7. Reverse-flip inbound merger – foreign holding company merging into Indian wholly-owned subsidiary

8. Demerger / division / transfer of undertakings – allowed under Rule 25(9)

Exclusion: Transferor cannot be a listed company.

Documents Required

1. Corporate Documents

• MOA & AOA
• Board resolutions approving scheme
• Latest audited financials

2. Scheme & Solvency Documents

• Draft scheme of merger/demerger
• Declaration of solvency (Form CAA-10)
• Auditor’s certificate (Form CAA-10A, if applicable)
• List of creditors certified by CA

3. Approvals & Notices

• Notice of meetings with explanatory statements
• Shareholder & creditor resolutions
• Affidavit verifying the scheme
• Report of results (Form CAA-11)

4. Regulatory Filings

• ROC, RD, OL filings
• NOCs from secured creditors/regulators (if required)
• RD confirmation order

5. Post-Approval Filings

• RD order with ROC (Form INC-28)
• Amended MOA/AOA (if altered)
• Intimations to banks, tax authorities, regulators

Step-by-Step Procedure of Fast Track Merger

1. Board Approval & Draft Scheme

• Board meetings of both companies
• Draft scheme prepared (share exchange ratio, transfer of assets/liabilities, employee treatment, etc.)

2. Issue of Notice (Form CAA-9)

• Notice sent to ROC, OL, sectoral regulators and stock exchanges (if applicable)
• Objections/suggestions may be submitted within 30 days

3. Declaration of Solvency

• Each company files Form CAA-10
• Auditor’s certificate Form CAA-10A required for unlisted companies under new rules

4. Shareholder & Creditor Approval

• Shareholders: 90% in number and value must approve
• Creditors: 90% in value must consent

5. Filing with RD, ROC and OL

• Scheme filed in Form CAA-11, along with resolutions and valuation report
• Filing must be within 15 days of meetings (extended from 7 days)

6. Scrutiny & Approval by RD

• If no objections within 30 days - deemed no objection.
• RD must confirm within 45 days (or 60 days if objections resolved)
• RD may refer to NCLT if scheme is against public interest

7. Final Filing

• RD order filed with ROC in Form INC-28.
• Scheme takes effect; transferor company dissolved without winding up.

Timeline

• Normal merger: 6–12 months or longer.
• Fast track merger: ~90–120 days.
• Statutory deadlines and deemed approval provisions ensure predictable timelines.

Fees Payable in Fast Track Merger

• Form CAA-9: nominal fees
• Form CAA-10 / 10A: based on authorized share capital
• Form CAA-11: standard ROC filing fees
• Form INC-28: filing RD order
• Professional fees (scheme drafting, valuation, certifications, legal opinions) are usually the major cost component

Advantages of Fast Track Merger

• Time-saving: 3–4 months
• Cost-effective: lower compliance and litigation costs
• Encourages startups and small companies to restructure quickly
• Flexibility: covers demergers, subsidiaries, cross-border flips
• Deemed approval ensures faster disposal
• Reduced litigation risk compared to NCLT process

Challenges and Limitations

• High approval threshold: 90% shareholder and creditor consent
• Transferor cannot be listed
• Dual-date compliance for borrowings/defaults
• RD may refer cases to NCLT if not in public interest
• Property transfer, stamp duty, registration issues may arise
• SEBI / stock exchange approvals may still apply if transferee is listed

Recent Trends & Developments

• Increasing use by startups for consolidation (fintech, SaaS, payments)
• Simplified group restructuring: holding-subsidiary and fellow-subsidiary mergers
• 2025 amendment: expanded scope, demergers, inbound foreign-to-India mergers
• Greater reliance on digital filings & electronic approvals

Conclusion

The Fast Track Merger (FTM) mechanism under Section 233 represents a landmark shift in the India’s corporate restructuring. By bypassing the NCLT and relying on RD/ROC scrutiny, FTMs save time, cost and effort.

The 2025 amendments have expanded its scope, covering unlisted companies, subsidiaries, fellow subsidiaries, demergers and inbound cross-border flips, making FTM a powerful tool for modern businesses. If you are seeking for professional help related to FTM, do contact to Remind Legal, our experts will assist you.

While challenges remain (eligibility limits, high approval thresholds, regulatory oversight), FTM is now become more versatile than ever, enabling faster growth, cleaner corporate structures and improved competitiveness.