Notification No. G.S.R. 603(E), Dated 04.09.2025
1.Introduction
The Ministry of Corporate Affairs (MCA) has notified amendments to Rule 25(1A) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, significantly broadening the scope of companies eligible for fast-track mergers under Section 233 of the Companies Act, 2013. Previously, the fast-track route was confined only to schemes between two or more start-ups, or between one or more start-ups and one or more small companies. With the amendment, several new classes of companies have now been brought within its ambit, offering greater flexibility and ease of doing business.
2. Expansion of Eligible Classes of Companies
The amendment allows mergers between unlisted companies (other than Section 8 companies), subject to certain financial thresholds and compliance with repayment obligations. It also permits fast-track mergers between a holding company and its subsidiary, provided the transferor is not listed, as well as between subsidiaries of the same holding company, facilitating intra-group restructuring. In addition, a notable inclusion is the allowance for a foreign holding company to merge with its wholly owned subsidiary incorporated in India, further liberalizing cross-border restructuring within multinational group structures.
3. Conditions and Compliance Framework
To ensure financial discipline and shareholder protection, the new provisions stipulate that unlisted companies availing the fast-track merger route must have outstanding loans, debentures, or deposits not exceeding Rs. 200 crores and must not have any default in repayment. The exclusion of listed transferor companies from certain provisions highlights a cautious regulatory stance to safeguard investor interests. This expanded framework encourages group-level consolidations and international parent-subsidiary mergers, while balancing risk management with ease of corporate restructuring.
4. Updated Forms and Conclusion
Alongside these amendments, the MCA has revised several procedural forms to align with the new regime. Form CAA.9, CAA.10, and CAA.11 have been updated with enhanced disclosure requirements, while a new Form CAA.10A has been introduced to mandate an auditor’s certificate for unlisted companies engaging in a merger. These updates ensure transparency by requiring detailed disclosures on company relationships and confirmation of legal compliance. Overall, the amendments to the Companies (CAA) Rules, 2016 mark a progressive step towards simplifying corporate restructuring, enabling faster mergers while maintaining robust checks to protect creditors and stakeholders.
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