Introduction: The Need for Speed in Corporate India
For over a decade, the fast-track merger framework under Section 233 of the Companies Act, 2013 failed to deliver on its promise of speed. Strict eligibility rules and slow administrative processes meant that even straightforward merger proposals were routinely sent by Regional Directors to the NCLT. What was intended to be a fast-track route often became just as time-consuming as the regular merger process.
This position changed significantly in late 2025. Acting on the Union Budget’s assurance to simplify and accelerate merger approvals, the Ministry of Corporate Affairs notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 in September.
The amendments mark a substantial shift in the fast-track merger regime. Most notably, eligibility has now been expanded holding companies can now merge with any unlisted subsidiary, and not only wholly-owned ones. In addition, the introduction of “deemed approval” mechanism has strengthened the effectiveness of Section 233. Where the Regional Director or Official Liquidator does not raise objections within 60 days, the merger stands automatically approved. This reform directly addresses administrative delays and finally enables a faster, tribunal-free merger pathway for corporate groups.
The Fast-Track merger regime evolved from a restrictive 2016 framework for Small Companies into a broad 2025 pathway for Holding and Unlisted Subsidiaries, largely driven by the landmark Asset Auto India (2024) judgment. This Bombay High Court ruling clarified that Regional Directors exercise strictly administrative rather than judicial power, thereby curbing subjective rejections and establishing the legal confidence for the 2025 “Deemed Approval” mechanism. Consequently, the regime has shifted from a clogged administrative funnel to a streamlined alternative that minimizes Tribunal intervention for internal group restructuring.
Advancement: Why the 2025 Amendments Were Necessary
The 2025 amendments were introduced to address two major problems that were earlier slowing down the merger process.
First, the NCLT backlog had reached to critical levels. By March 2025, more than 14,961 (which is nearly 15,000) cases were pending before different NCLT benches across the country (provided by the Ministry of Corporate Affairs). Mergers that should ideally have been completed within 6 to 8 months were instead taking 18 to 24 months. These delays blocked the efficient use of capital and held back routine business restructuring.
Second, the “wholly-owned subsidiary” requirement was too restrictive.
Earlier, the fast-track merger route under Section 233 was available only to small companies, start-ups, and mergers between a holding company and its wholly-owned subsidiary. This created an unreasonable situation where a holding company owning even 99% of a subsidiary could not use the fast-track process and was forced to approach the NCLT. As a result, large corporate groups had to incur high costs and long delays for simple internal reorganisations.
To resolve these issues, the 2025 amendments which was effective from September 2025 shifted non-contentious, internal mergers away from the NCLT and placed them under the administrative control of the Regional Director. This change was aimed at easing the NCLT’s workload while ensuring faster and more efficient merger approvals.
The New Legal Landscape: Key 2025 Amendments
The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 have substantially restructured the fast-track merger framework under the Section 233, with the objective of providing a framework for swift, undisputed mergers without recourse to the NCLT. The key changes that occurred are as follows.
A. Expanded Eligibility (Rule 25(1A))
The scope of the fast-track merger regime has been significantly widened.
Unlisted Companies
Two or more unlisted companies may now merge through the fast-track route, provided that:
- They aren’t companies falling under Section 8
- Their aggregate outstanding loans, debentures, or deposits do not exceed ₹200 crore
- There are no subsisting defaults in respect of such liabilities
Compliance with these thresholds must be certified through an Auditor’s Certificate in Form CAA-10A.
Holding–Subsidiary Mergers
The earlier requirement that said that the subsidiary should be “wholly-owned” has now been removed. A holding company, whether listed or unlisted, may now merge with any subsidiary, whether listed or unlisted, provided the transferor company is unlisted. Accordingly, a listed parent may incorporate an unlisted subsidiary with a partial shareholding without approaching the NCLT.
Fellow Subsidiary Mergers
Mergers between subsidiaries of the same holding company are now expressly covered under Section 233, removing earlier legal uncertainty pertaining to them.
B. Deemed Approval Mechanism Section 233(5) T/W Rule 25
The 2025 amendments introduce a mandatory statutory timeline governing the role of the Regional Director in fast-track mergers. Upon receipt of the merger scheme, the Regional Director is required to either issue a confirmation order or send it to the NCLT within a period of 60 days.
Where no confirmation order is passed and no reference is made within this prescribed period of 60 days, the merger scheme is deemed to have been approved by operation of law. To Strengthenthe validity of this mechanism, the Ministry of Corporate Affairs has directed that, in the absence of objections, the Regional Director must issue the formal confirmation order immediately upon the expiry of the 60-day period.
This deemed approval framework ensures certainty, limits administrative delay, and strengthens the effectiveness of the fast-track merger process by preventing prolonged waiting at the administrative level.
C. Procedural Relief Rule 25(4)
The 2025 amendments also make the filing process more practical. Earlier, the transferee company had only 7 days after the shareholder’s meeting to file the approved merger scheme with the Regional Director. This short deadline often created undue burden and led to mistakes while preparing documents.
The revised rules now extend this timeline to 15 days. This gives companies sufficient time to collect resolutions, finalize paperwork, and complete filings carefully. As a result, the risk of clerical errors and technical rejections is significantly reduced, making the overall process smoother and more efficient.
The Internal Restructuring Angle: Holding Companies & Unlisted Subsidiaries
One of the most significant benefits of the 2025 amendments is that holding companies can now merge with unlisted subsidiaries, even if they do not fully own them which earlier was barred. This change is a game-changer for corporate India, making internal restructuring faster, cheaper, and less dependent on the NCLT.
ILLUSTRATION: Conglomerate X, a company listed on a recognized stock exchange, currently holds a 60% equity stake in Sub Y, which is an unlisted subsidiary. The management of Conglomerate X intends to consolidate Sub Y into the parent company as a strategic move to streamline the overall balance sheet, improve their operational efficiency and reduce administrative complexity.
Earlier they couldn’t do the same but after the amendment and the CAA Rules now its possible, here is a comparison between the old rules and new amendments.
| Feature | Pre-2025: NCLT Route | Post-2025: Regional Director Route |
| Applicable Law | Sections 230–232 of Companies Act, 2013 | Section 233 read with amended CAA Rules, 2025 |
| Approval Required | Mandatory NCLT approval | Board + 90% Shareholder approval |
| Filing Authority | National Company Law Tribunal (NCLT) | Regional Director (RD) |
| Process Steps | Two hearings (First Motion & Second Motion) | File approved scheme with RD |
| Deemed Approval | Not available | If RD is silent for 60 days, scheme is automatically approved |
| Timeframe | 12–18 months | 3–4 months (end to end) |
| Cost | High (legal fees, court fees, professional charges) | Significantly lower (administrative filing costs only) |
| Scope of Mergers | Wholly-owned subsidiaries only | Any unlisted subsidiary (even partially owned) |
| Practical Impact | Slow, expensive, burdensome | Faster, cost-effective, enables both vertical and horizontal consolidation |
NCLT vs. Regional Director: A Quick Comparative Analysis
Before 2025, mergers under Sections 230–232 went through the NCLT, which meant a prolonged judicial process. After the 2025 amendments, the fast-track route under Section 233 allows mergers to be handled by the Regional Director (RD), shifting the process to administrative rather than judicial. Eligibility has become more focused. Earlier, all companies could use the NCLT route, but now the fast-track process is for small companies, startups, and holding-subsidiary structures, including unlisted subsidiaries with debt below ₹200 crore.
Approval requirements are stricter in the fast-track system. Shareholders must give 90% approval by number and value, and creditors must approve 90% by value, compared to the NCLT’s simple majority and 75% requirement but this approach is actually speedy.
Regulatory compliance are simplified too. Companies now send notices directly to authorities like the RoC, OL, IT, and RBI, and objections are handled by the RD, with NCLT intervention only if public interest is at risk.
Finally, the fast-track route is faster and cheaper. NCLT mergers used to take upto 8 to 18 months and were costly, while on the other hand RD mergers finish in 3 to 4 months with automatic approval if the RD does not act within 60 days of filing the request, and at a fraction of the cost.
The RD route is theoretically faster and cheaper, but the entry barrier (90% approval) is significantly higher than the NCLT’s 75%. This makes the Fast-Track route unsuitable for companies with hostile minority shareholders or fragmented creditor bases.
Acceleration or Stalemate: Is Progress Really Happening
While the Deemed Approval mechanism accelerates mergers, legal experts caution that structural and administrative bottlenecks still remain.
Key Bottlenecks:
- 90% Consent Requirement: Section 233 requires 90% approval from shareholders and creditors. For companies with dispersed holdings or dissenting minorities, the fast-track route may be unavailable, making the NCLT route (75% threshold) necessary.
- Sectoral Regulator Objections: Even with deemed approval, notices must be issued to the RoC, Official Liquidator, and Income Tax Department. Any objection, including generic tax issues, blocks the 60-day timeline and may force NCLT intervention .
- Public Interest Clause: Section 233(5) allows the RD to refer the scheme to NCLT if “not in public interest.” The 2025 rules narrow this discretion to specific, material objections, but some risk remains.
Is it Actually Faster?
Yes, for clean cases. For a Holding Company merging with a compliant, debt-light subsidiary where 90% shareholder consent is a given which is common in closely held groups, the new timeline is real. The “Deemed Approval” forces the RD’s hand, preventing files from gathering dust. The timeline has been effectively compressed from 12 months to ~100 days.
However, for companies with complex debt structures or active tax disputes, the RD route remains a gamble. The moment an objection is raised by a statutory authority, the “Fast Track” loops back to the NCLT, often taking longer than if the company had approached the Tribunal originally.
Conclusion
The late 2025 amendments to Section 233 are a practical move to make doing business easier. By removing the “wholly-owned” restriction and introducing the Deemed Approval mechanism, the MCA has made Fast-Track Mergers a real option for companies looking to restructure internally.
For holding companies wanting to merge with unlisted subsidiaries, the path is now simpler, cheaper, and legally sound. However, the requirement for 90% approval from shareholders and creditors means this route is mostly suited to closely held groups or financially strong companies. In short, the fast-track process is genuinely faster but only if all documents are in order and stakeholder consent is near- undivided.
Contributed By: Siddharth Bankal (Intern)