Easing the Merger Pathway: Wider Access to the Fast-Track Route

Expansion of the FTM Route

The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, notified on 4 September 2025, have significantly widened the scope of the fast-track merger (FTM) process under Section 233 of the Companies Act, 2013.

The FTM route, often referred to as the “Regional Director route”, is designed to avoid the lengthy National Company Law Tribunal (NCLT) process. While NCLT-led schemes typically take 9–12 months, the FTM framework prescribes a 60-day approval timeline for Regional Directors, after which the scheme is deemed approved if no action is taken. This shift is intended to alleviate the NCLT’s caseload, which still stood at 14,961 pending cases as of March 2025, despite steady disposals.

Newly Eligible Transactions

The amendment expands eligibility well beyond the earlier limits of small companies, start-ups, and wholly-owned subsidiary mergers:

Unlisted company mergers/demergers: Now permissible where each company’s aggregate outstanding loans, debentures, and deposits do not exceed ₹200 crore, and an auditor certifies that there is no default (Form CAA-10A).

Holding–subsidiary mergers/demergers: Permitted even if the subsidiary is not wholly owned. The transferor must remain unlisted, though the transferee may be listed.

Fellow subsidiary mergers: Companies under the same holding entity may now merge through the FTM route, again subject to the condition that the transferor(s) are unlisted.

Demerger recognised: For the first time, the rules explicitly extend to division or transfer of undertakings, bringing demergers within the ambit of Section 233.

Practical Considerations and Regulatory Constraints

Despite the wider access, several compliance hurdles remain:

SEBI clearance for listed entities: Under Regulation 37 of the SEBI (LODR) Regulations, 2015, listed companies must still obtain a “No-Objection” letter from the stock exchange(s). The exemption for fast-track treatment applies only to wholly-owned subsidiaries merging with their parent.

Regulator consultations: Where parties are regulated entities (for example, NBFCs or insurers), notices must also be served on the RBI, SEBI, IRDAI, or PFRDA, as applicable. These regulators have a 30-day period to submit comments, which can extend timelines.

Administrative bottlenecks: India continues to have only seven Regional Director offices, New Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Shillong, and Hyderabad. With more categories of transactions now eligible for fast-track treatment, there is a risk of congestion at the RD level even as NCLT’s burden reduces.

Cross-border mergers: Under Regulation 9(1) of the FEMA Cross-Border Merger Regulations, 2018, cross-border mergers are deemed approved by the RBI if they comply with the regulations. However, the new framework still requires intimation to sectoral regulators, potentially slowing execution.

Key Takeaway

The 2025 amendments represent a structural reform in India’s corporate restructuring regime. By including unlisted company mergers subject to a ₹200 crore borrowing ceiling, enabling holding–subsidiary and fellow-subsidiary combinations, and expressly covering demergers, the government has created a more efficient pathway for corporate reorganisations.

If effectively implemented, the FTM route could reduce approval timelines by up to 75% compared to the NCLT route. However, the true success of this reform will depend on whether Regional Directors have the institutional capacity to manage the expected increase in filings, and whether sectoral regulators adopt a facilitative approach in their review process.