The Ministry of Corporate Affairs notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, on September 4, 2025, marking a watershed moment in India’s corporate restructuring framework. This comprehensive amendment significantly expands the scope of fast-track mergers under Section 233 of the Companies Act, 2013, addressing long-standing limitations that restricted corporate reorganization opportunities for mid-sized and unlisted companies. The amendment represents the culmination of the government’s commitment announced in the Union Budget 2025-26, where Finance Minister Nirmala Sitharaman emphasized the need to rationalize and widen the scope of fast-track mergers to promote ease of doing business.
The evolution of fast-track mergers began in 2016 with the introduction of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, which aimed to provide an alternative to the cumbersome National Company Law Tribunal route for specific categories of companies. The fast-track mechanism was designed to reduce tribunal caseloads and provide a streamlined approval process through Regional Directors, significantly reducing both time and compliance costs. Initially, the mechanism was restricted to mergers between small companies, holding companies with their wholly-owned subsidiaries, and later expanded to include startup companies in 2021 and foreign holding companies with Indian wholly-owned subsidiaries in 2024.
Expanded Eligibility Framework
The 2025 amendment introduces a paradigmatic shift by substantially broadening the categories of eligible entities under Rule 25. The most significant addition is the inclusion of unlisted companies with aggregate outstanding loans, debentures, or deposits not exceeding ₹200 crores, provided they have no defaults in repayment. This threshold represents a substantial increase from the initially proposed ₹50 crores limit during the public consultation process, demonstrating the government’s responsiveness to industry feedback and commitment to accommodating a broader range of corporate entities.
The amendment removes the restrictive requirement that subsidiaries must be wholly-owned to qualify for fast-track mergers with their holding companies. Under the new provisions, a holding company (whether listed or unlisted) can merge with its unlisted subsidiaries even where minority shareholders exist, provided the transferor company is not listed. This change addresses practical challenges faced by corporate groups where minority stakes prevented efficient internal restructuring through the fast-track route.
Fellow subsidiaries of the same holding company are now eligible for fast-track mergers, creating opportunities for streamlined group restructuring without tribunal intervention. This provision is particularly beneficial for large conglomerates seeking to consolidate operations, eliminate redundancies, or optimize their corporate structure through internal reorganization. The requirement that the transferor company must be unlisted ensures adequate protection for public shareholders while enabling private group restructuring.
Foreign holding companies incorporated outside India can now merge with their Indian wholly-owned subsidiaries through the fast-track route, facilitating reverse flipping transactions and international corporate restructuring. This provision addresses the growing trend of Indian companies restructuring their global operations and enables smoother cross-border corporate reorganizations without lengthy tribunal processes.
This blog is a part of our The Essential Guide to Shareholders’ Agreements blogpost & Mergers and Acquisitions Services.
Recognition of Fast-Track Demergers
One of the most significant conceptual changes introduced by the 2025 amendment is the formal recognition of demergers within the fast-track framework. While Section 233(12) of the Companies Act, 2013, already provided for the application of fast-track procedures to division or transfer of undertakings, the practical implementation remained unclear. The amendment explicitly clarifies that the fast-track route applies mutatis mutandis to schemes of division or transfer of undertaking under Section 232(1)(b) of the Act, eliminating interpretational ambiguity and providing statutory clarity for demerger transactions.
This recognition of fast-track demergers creates substantial opportunities for corporate groups seeking to divest non-core assets, spin-off business divisions, or implement strategic separations without the complexities of tribunal proceedings. The availability of a streamlined demerger process is expected to encourage more corporate restructuring activities, particularly among unlisted companies seeking operational efficiency and strategic focus.
Enhanced Procedural Framework and Compliance Requirements
The 2025 amendment introduces a comprehensive revision of procedural requirements, replacing existing forms with updated versions that reflect the expanded scope of eligible transactions. The new forms include CAA-9 for notifying proposed schemes and inviting objections, CAA-10 for declaration of solvency, CAA-11 for filing approved schemes with meeting results and valuation reports, and CAA-12 for government confirmation orders. Most significantly, the amendment introduces Form CAA-10A, requiring an auditor’s certificate confirming that unlisted companies meet the prescribed financial criteria, including the ₹200 crore borrowing threshold and absence of defaults.
The amendment mandates enhanced regulatory coordination by requiring companies to notify sectoral regulators including the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, and Pension Fund Regulatory and Development Authority. Listed companies must additionally notify relevant stock exchanges, ensuring comprehensive regulatory awareness of proposed transactions. This enhanced notification framework balances the streamlined approval process with adequate regulatory oversight.
The filing timeline has been extended from 7 days to 15 days after the conclusion of shareholder and creditor meetings, providing companies additional time to complete documentation and ensure compliance with all procedural requirements. This extension acknowledges the increased complexity of documentation required under the expanded framework while maintaining the overall efficiency of the fast-track route.
Comparative Analysis: Earlier Position vs. 2025 Amendment
The contrast between the pre-2025 framework and the new provisions reveals the transformative nature of these amendments. Under the earlier regime, fast-track mergers were limited to small companies defined by restrictive thresholds of paid-up capital not exceeding ₹4 crores and turnover not exceeding ₹40 crores. This limitation excluded a vast majority of operational companies that, while not meeting small company criteria, remained unlisted and sought efficient merger processes.
The wholly-owned subsidiary requirement under the previous framework created significant practical challenges for corporate groups where even minimal minority holdings prevented access to the fast-track route. The 2025 amendment’s removal of this restriction enables more flexible group restructuring while maintaining appropriate safeguards through the requirement that transferor companies must be unlisted.
The exclusion of demergers from explicit recognition under the earlier framework created uncertainty and limited the scope of transactions that could benefit from streamlined procedures. The 2025 amendment’s formal inclusion of demergers expands the utility of the fast-track route beyond traditional merger transactions, enabling comprehensive corporate restructuring strategies.
Strategic Implications for Corporate India
The 2025 amendment creates unprecedented opportunities for corporate restructuring, particularly benefiting private equity and venture capital firms managing portfolio companies, family business groups seeking operational consolidation, and growth-stage companies requiring structural optimization. The expanded framework enables these entities to implement strategic restructuring without the time and cost burdens associated with tribunal processes.
Mid-sized unlisted companies, previously excluded from fast-track procedures due to their scale exceeding small company thresholds, now have access to efficient merger and demerger processes. This democratization of fast-track procedures is expected to encourage more corporate restructuring activities, potentially leading to improved operational efficiency and strategic focus across India’s unlisted corporate sector.
The enhanced provisions for cross-border transactions facilitate international corporate restructuring and may encourage foreign direct investment by simplifying the regulatory framework for global corporate reorganizations. Foreign holding companies can now implement Indian subsidiary restructuring more efficiently, supporting India’s position as an attractive destination for international business operations.
Continued Limitations and Safeguards
Despite the significant expansion, the amendment maintains important exclusions to protect stakeholder interests. Section 8 companies incorporated for charitable purposes remain excluded from the fast-track route, ensuring continued oversight of non-profit sector restructuring and protecting donor interests and charitable funds. This exclusion reflects the government’s commitment to maintaining enhanced transparency and accountability in the non-profit sector.
Listed transferor companies continue to be excluded from the fast-track route, protecting minority shareholder rights and ensuring adequate regulatory oversight of public company transactions. However, listed companies can serve as transferees in qualifying transactions, maintaining flexibility for certain types of corporate restructuring while preserving public investor protection.
The amendment maintains the exclusion of companies regulated by special statutes, ensuring that sectors requiring enhanced regulatory oversight continue to follow appropriate approval processes. This balanced approach preserves sector-specific regulatory frameworks while expanding opportunities for general corporate restructuring.
Implementation Timeline and Practical Considerations
The amendment became effective immediately upon notification on September 4, 2025, enabling companies to benefit from the expanded framework without transitional delays. However, companies seeking to utilize the new provisions must ensure compliance with enhanced documentation requirements, particularly the new auditor certification process for unlisted companies exceeding traditional small company thresholds.
Legal practitioners and corporate advisors must familiarize themselves with the revised forms and procedures, ensuring clients can effectively navigate the enhanced framework. The requirement for sectoral regulator notifications creates additional coordination requirements that must be factored into transaction planning and execution timelines.
The amendment represents a significant step toward India’s broader ease of doing business initiatives, reducing regulatory burden while maintaining appropriate oversight mechanisms. The expanded framework is expected to reduce NCLT caseloads, accelerate corporate restructuring activities, and enhance India’s attractiveness as a destination for both domestic and international corporate reorganizations.
The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, represent the most comprehensive expansion of India’s fast-track merger framework since its introduction in 2016. By broadening eligibility criteria to include unlisted companies with enhanced debt thresholds, removing restrictive wholly-owned subsidiary requirements, enabling fellow subsidiary mergers, and formally recognizing fast-track demergers, the amendment transforms India’s corporate restructuring landscape. The enhanced procedural framework, while introducing additional documentation requirements, maintains the fundamental efficiency advantages of the fast-track route over traditional tribunal processes. These changes position India’s corporate restructuring framework among the most progressive globally, supporting the government’s broader economic reform agenda while maintaining appropriate stakeholder protections. Corporate strategists, legal practitioners, and policy makers should recognize this amendment as a pivotal development that will shape India’s corporate restructuring practices for years to come, creating unprecedented opportunities for efficient, cost-effective corporate reorganization across India’s dynamic business landscape.
