Fast Track Mergers

Below are the answers referring to Rule 25 (1A) of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 as amended vide notification dated 04 th September, 2025:

(i)Here both are Start-up companies, hence merger/amalgamation between two startup companies is permitted.

(ii)Here DEF Private Limited is a Start-up Company and XYZ Ltd is a public Company, hence merger between start-up and public company is not permitted.

(iii)QWE Private Limited is an unlisted company and IOP Private Limited is section 8 company, not for Profit Company. Merger is not permitted since IOP Private Limited is a section 8 company.

(iv)Merger/amalgamation between 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; in this case ABC Ltd. is listed & transferor, hence not permitted.

(v)Merger/amalgamation between 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; in this case merger/amalgamation is permitted.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 2(a) (Syllabus 2022).

For Financial Year (F.Y.) 2024-25, a small company is defined under Section 2(85) of the Companies Act, 2013, as a private company with paid-up share capital not exceeding ₹ 4 crore and annual turnover not exceeding ₹ 40 crores as per profit and loss account for the immediately preceding financial year. This definition excludes holding companies, subsidiary companies, Section 8 (charitable) companies, and companies governed by special acts.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 2(d) (Syllabus 2022).

In exercise of the powers conferred under section 469 read with sections 233 and 234 of the Companies Act, 2013, the Central Government has notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2024 which shall come into effect from 17th day of September, 2024.

In the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, in rule 25A, after sub-rule (4), the following sub-rule shall be inserted, namely:

Where the transferor foreign company incorporated outside India being a holding company and the transferee Indian company being a wholly owned subsidiary company incorporated in India, enter into merger or amalgamation, –

(i)both the companies shall obtain the prior approval of the Reserve Bank of India;

(ii)the transferee Indian company shall comply with the provisions of section 233;

(iii)the application shall be made by the transferee Indian company to the Central Government under section 233 of the Act and provisions of rule 25 shall apply to such application; and

(iv)the declaration referred to in sub-rule (4) shall be made at the stage of making application under section 233 of the Act.”

The Ministry of Corporate Affairs (MCA) has introduced a sub-rule to fast-track the approval process for the merger of a startup incorporated outside India into its wholly owned Indian subsidiary. The foreign holding company and its wholly owned Indian subsidiary will only need to obtain approval from the Reserve Bank of India (RBI) for such mergers or amalgamations, eliminating the need for clearance from the National Company Law Tribunal (NCLT).

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 2A(iv) (Syllabus 2022).

Section 233 outlines a list of conditions which companies proposing to enter into fast-track mergers are required to follow:

A notice of the proposed scheme soliciting objections or suggestions from the Registrar and the official liquidators to be issued by the transferor or the transferee companies within thirty (30) days.

If any objections or suggestions are received, then the same are considered in their respective general meetings and approved/disapproved by their respective members.

A declaration of solvency is required to be filed by both the companies involved in the merger.

The scheme has to be approved by majority of creditors representing nine-tenths in value of the creditors or class of creditors of the respective companies.

The transferee company is required to file a copy of the approval in the prescribed manner, with the Central Government, Registrar and the Official Liquidator where the registered office of the company is situated.

On receiving the said scheme, if the Registrar or the Official Liquidator does not have any objections or suggestions to the scheme, the Central Government shall register the said scheme and issue a confirmation thereof to the companies.

If the Registrar or Official Liquidator has any objections or suggestions, the same may be communicated to the Central government within a period of thirty days. In the absence of any such communication, it would be presumed that no objections were raised.

If the Central Government after receiving the objections or suggestions or for any other reason forms the opinion that the said scheme is not in public interest or in the interest of the creditors, it can file an application before the Tribunal within a period of sixty days.

After filing of such application, the Tribunal has to render its judgment. If it is of the opinion (with reasons recorded in writing) that the scheme should be considered as per the procedure laid down in section 232, it may give directions accordingly.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(c) (Syllabus 2017).

Section 233 of the Companies Act,2013 states that scheme of fast track merger or amalgamation may be entered into between two or more small companies or between a holding company and its wholly-owned subsidiary company or such other class or classes of companies as may be prescribed

Further Rule 25 (1A) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 prescribes that a scheme of merger or amalgamation under section 233 of the Act may be entered into between any of the following class of companies, namely:-

(i)two or more start-up companies; or

(ii)one or more start-up company with one or more small company

Section 233 of the Companies Act, 2013 along with Rule 25 of the Companies Act, 2013 outlines a list of conditions which companies proposing to enter into fast-track mergers are required to follow:

(a)a notice of the proposed scheme inviting objections or suggestions, if any, from the Registrar and Official Liquidators where registered office of the respective companies are situated or persons affected by the scheme within thirty days is issued by the transferor company or companies and the transferee company;

(b)the objections and suggestions received are considered by the companies in their respective general meetings and the scheme is approved by the respective members or class of members at a general meeting holding at least ninety per cent. of the total number of shares;

(c)each of the companies involved in the merger files a declaration of solvency, in the prescribed form, with the Registrar of the place where the registered office of the company is situated; and

(d)the scheme is approved by majority representing nine-tenths in value of the creditors or class of creditors of respective companies indicated in a meeting convened by the company by giving a notice of twenty-one days along with the scheme to its creditors for the purpose or otherwise approved in writing.

(2)The transferee company shall file a copy of the scheme so approved in the manner as may be

prescribed, with the Central Government, Registrar and the Official Liquidator where the registered office of the company is situated.

(3)On the receipt of the scheme, if the Registrar or the Official Liquidator has no objections or

suggestions to the scheme, the Central Government shall register the same and issue a confirmation thereof to the companies.

(4)If the Registrar or Official Liquidator has any objections or suggestions, he may communicate

the same in writing to the Central Government within a period of thirty days:

It may be noted that if no such communication is made, it shall be presumed that he has no objection to the scheme.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 2A(i) (Syllabus 2022).

Section 233 of the Companies Act, 2013 along with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 lay down the certain procedures for fast-track mergers.

(a)Declaration of solvency :

(b)Filing of the Scheme :

(c)Approval of the Scheme by Regional Director/Central Government:

(i)Where no objection or suggestion is received within a period of thirty days of receipt of copy of scheme under section 233(2), from the Registrar of Companies and Official Liquidator by the Central Government and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, it may, within a period of fifteen days after the expiry of said thirty days, issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12:

(ii)If the Central Government does not issue the confirmation order within a period of sixty days of the receipt of the scheme under of section 233(2), it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.

(iii)Where objections or suggestions are received within a period of thirty days of receipt of copy of scheme under section 233(2) from the Registrar of Companies or Official Liquidator or both by the Central Government and

(a)such objections or suggestions of Registrar of Companies or Official Liquidator, are not sustainable and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, it may within a period of thirty days after expiry of thirty days referred to above, issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12.

(b)the Central Government is of the opinion, whether on the basis of such objections or otherwise, that the scheme is not in the public interest or in the interest of creditors, it may within sixty days of the receipt of the scheme file an application before the Tribunal in Form No. CAA.13 stating the objections or opinion and requesting that Tribunal may consider the scheme under section 232 of the Act:

Provided that if the Central Government does not issue a confirmation order under clause (a) or does not file any application under clause (b) within a period of sixty days of the receipt of the scheme under sub section (2) of section 233 of the Act, it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.

(iv)The confirmation order of the scheme issued by the central government or tribunal under section 233(7) of the Act, shall be filed, within thirty days of the receipt of the order of confirmation, in Form INC-28 along with the fees as provided under companies (Registration Offices and Fees)rules 2014 with the Registrar of companies respectively.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 2A(ii) (Syllabus 2017).

Section 233 of the Companies Act, 2013 prescribes simplified procedure for merger or amalgamation of

•two or more small companies, or

•between a holding company and its wholly-owned subsidiary company, or

•such other class or classes of companies as maybe prescribed As per Explanation to Rule 25(1) (1A) of Companies (Compromises, Arrangements

and Amalgamations) Amendment Rules, 2021, "start-up company" means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognized as start-up in accordance with the notification issued by the DPIIT, Ministry of Commerce and Industry.” Further, a scheme of merger or amalgamation under section 233 of the Act may be entered into between any of the following class of companies, namely: -

i.two or more start-up companies, or

ii.one or more start-up company with one or more small company.

Yes, merger proposal can be carried out without the approval of the National Company Law Tribunal. Pursuant to the provisions of section 233 of the Act along with Rule 25 of the Companies (Compromises, Arrangements and Amalgamation) Rules, these Companies can make application to the Regional Director of Ministry of Corporate Affairs, Government of India for fast-track merger.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 3(d) (Syllabus 2017).

In respect of compromise, arrangement or amalgamation of Government companies, it is not the Tribunal but the Central Government that approves such schemes. Unlike Companies Act, 1956, wherein approval by Central Government was pursuant to Section 621A of the said Act. Notification of Section 233 of the Companies Act, 2013 specifies the procedure for amalgamation etc. of certain companies that include Government companies. Section 233 has been made effective since December 2016 and relevant Rule 25 of Companies (Compromise, Arrangements and Amalgamations) Rule, 2016. Government has not come out with any new policy as stated under Section 237, hence existing policy prevails.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 3(c) (Old syllabus).

In a Fast Track Merger under section 233 of the Companies Act, 2013 and rules made thereunder, broadly the steps followed are as under:

1.Both the companies need to check their Articles of Association and ensure that they have the requisite authority under them to enter into a merger. If no, the Articles of Association should be amended before the merger can take place.

2.Convene the Board meeting and prepare a draft scheme of merger or amalgamation.

3.Prepare the financial statement of assets and liabilities and get an Auditor’s Report prepared.

4.Get the draft scheme approved in the Board meeting.

5.Both the companies need to send a notice to the Registrar of Companies (ROC) and Official Liquidator (OL) of their respective regions inviting suggestions/ objections to the scheme, if any, within 30 days of issuing the notice.

6.Notice to the ROC shall be in Form CAA-9.

7.Both the companies are required to file a declaration of solvency with their respective ROCs. The declaration of solvency shall be accompanied by (a) Board Resolution (b) Statement of Assets and Liabilities and (c) Audit Report.

8.Sending notice for holding shareholders meeting and creditors meeting.

9.Conducting the shareholders meeting and creditors meeting and getting the scheme approved.

10.Filing the results of such meeting with the Regional Director and Official Liquidator by the transferee company.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 1(b) (Syllabus 2017).

The legal provisions pertaining to merger process stipulated in sections 391-394 of the Companies Act, 1956 was not considered as a simple procedure and there was no special provision for small companies. The process involved, inter alia , drafting a merger scheme, taking judicial approval for the scheme, getting Board and shareholders authorization, etc.

Section 233 of the Companies Act, 2013 has introduced the concept of fast track mergers. It carved out an exception from the regular merger procedure. It exempted small companies and holding and subsidiary companies entering into merger arrangements from the regular merger procedure as stipulated under sections 230-232 of the Companies Act, 2013. Section 233 of the Companies Act, 2013 along with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 lay down the entire legal framework of fast track mergers.

Fast track merges provide the following benefits:

•Simplified procedure for merger

•No judicial approval is required

•Separate procedures for small companies to enable them to expand without any roadblocks

•Form filings required also significantly reduced

•Fast track mergers have dispensed with Tribunal approval for mergers. Regional Directors, Registrar of Companies (ROC) and Official Liquidator are the authorities whose approval is required. The process has been simplified to a great extent.

A provision allowing the government to notify any other company in this regard has also been made.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2(c) (Syllabus 2017).

Section 233 of the Companies Act, 2013 provides the conditions which small companies have to follow for the merger (fast track merger). As per the said section further steps in the matter are as follows:

(i)The Registrar will communicate the objections or suggestions to the scheme to the Central government within a period of thirty days. In the absence of any such communication, it would be presumed that no objections were raised.

(ii)If the Central Government after receiving the objections or suggestions or for any other reason forms the opinion that the said scheme is not in public interest or in the interest of the creditors, it can file an application before the Tribunal within a period of sixty days.

(iii)After filing of such application, the Tribunal has to render its judgment. If it is of the opinion (with reasons recorded in writing) that the scheme should be considered as per the procedure laid down in section 232 of Companies Act, 2013, it may give directions accordingly.

Provided that if the Central Government does not have any objection to the scheme or it does not file any application under this section before the Tribunal, it shall be deemed that it has no objection to the scheme.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2A(iii) (Syllabus 2017).

Section 233 of the Companies Act, 2013 has introduced the concept of fast track mergers. It exempted small companies and holding and subsidiary companies entering into merger arrangements from the regular merger procedure as stipulated under sections 230-232 of the Companies Act, 2013. Section 233 of the Companies Act, 2013 along with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 lay down the entire legal framework of fast track mergers.

‘Small Company’ under section 2(85) of the Companies Act, 2013 means a company, other than a public company -

(i)paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and

(ii)turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees:

Provided that nothing in this clause shall apply to, (a) a holding company or a subsidiary company; (b) a company registered under section 8 of the Companies Act, 2013; or (c) a company or body corporate governed by any special Act.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 3(d) (Syllabus 2017).