On 4-9-2025, the Ministry of Corporate Affairs (‘MCA’) notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, expanding the scope of fast-track mergers. It now allows mergers between unlisted companies, holding-subsidiary combinations, and subsidiaries of the same group, streamlining approvals through Regional Directors instead of tribunals. These Rules will be effective from 4-9-2025.
Background:
On 11-9-2025, the Ministry, through its notification, clarified the scope of mergers and amalgamations under Section 233 of the Companies Act, 2013, reaffirming its commitment to advancing corporate restructuring mechanisms.
Companies Act, 2013 regulates the incorporation, responsibilities, governance, and dissolution of companies in India. Section 233 of the Act provides for fast-track mergers between certain classes of companies, subject to approval by the Central Government, delegated to Regional Directors.
To simplify and expedite such restructuring processes, the MCA introduced the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (‘Companies CAA Rules’) to simplify and expedite corporate restructuring. It also aims to provide a streamlined process for mergers and amalgamations without requiring tribunal intervention.
Initially, the fast-track process was limited to mergers between two or more small companies and between a holding company and its wholly owned subsidiary. In 2021, to promote ease of doing business, the MCA amended the Companies CAA Rules to include start-up companies, allowing fast track mergers between start-ups or between a start-up and a small company.
In 2024, the scope was further expanded to permit reverse flipping, mergers of foreign holding companies with their Indian wholly owned subsidiaries, under the same simplified procedure.
As announced in Para 101 of the Union Budget Speech 2025—2026, the Government emphasized the need to further broaden the scope of such mergers. Following stakeholder consultations, the MCA introduced another Amendment to the Companies CAA Rules.
Key takeaways from the Companies CAA Rules 2025:
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Through this Amendment, the following additional classes of companies have been included under Rule 25 for availing the fast-track merger/demerger procedure:
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Two or more unlisted companies (excluding Section 8 companies) that meet prescribed thresholds of outstanding loans, debentures, or deposits.
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Holding company and its subsidiary, provided the transferor company is not listed.
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Two or more subsidiaries of the same holding company, again excluding cases where the transferor is a listed company.
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The Amendment replaces old forms and introduces new ones:
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CAA-9: For notifying the proposed scheme and inviting objections.
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CAA-10: Declaration of solvency.
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CAA-10A: Auditor’s certificate for financial compliance.
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CAA-11: Filing approved scheme with meeting results and valuation report.
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Companies availing the fast-track route under the new thresholds will be required to submit a certificate from their auditor in Form CAA-10A, confirming:
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No default in repayment of loans, debentures, or deposits.
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Outstanding amounts are within the ₹200 crore limit.
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If the company is regulated by authorities like Reserve Bank of India (‘RBI’), Securities and Exchange Board of India (‘SEBI’), Insurance Regulatory and Development Authority of India (‘IRDAI’), Pension Fund Regulatory and Development Authority (‘PFRDA’), or is listed, it will:
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Send the scheme notice to the relevant regulator and stock exchange.
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Address any objections or suggestions received.
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The transferee company will file:
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A copy of the approved scheme.
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Meeting results of shareholders and creditors.
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A valuation report in Form CAA-11, attached to Form RD-1.
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A statement explaining how objections were resolved (if applicable).
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The Amendment confirms applicability to schemes involving:
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Division or transfer of undertakings under Section 232(1)(b).
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The government can apply relevant provisions from Section 232(3)(a) to (j).
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A new format (Form CAA-12) has been introduced or issuing the government’s confirmation order of the scheme.
