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12 September 2025

MCA Widens The Scope Of Mergers That Can Be Handled By The Central Government

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The Ministry of Corporate Affairs (MCA), vide its notification dated 4 September 2025, has issued the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (Amendment Rules).
India Corporate/Commercial Law
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The Ministry of Corporate Affairs (MCA), vide its notification dated 4 September 2025, has issued the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (Amendment Rules). The Amendment Rules shall come into force on the date of their publication in the Official Gazette.

The Amendment Rules have the following effects:

  1. Require sending notices to sectoral regulators.
  2. Change procedural requirements with a view to refining the process.
  3. Expressly provide that the provisions of merger under section 233 are also applicable to schemes of demerger or division.
  4. More importantly, widen the categories of mergers that can be undertaken with Central Government approval instead of making an application to the National Company Law Tribunal (NCLT). The Amendment Rules accordingly include the following extended categories:
    • Mergers between unlisted companies (other than section 8 companies) where aggregate borrowings including loans, debentures, and deposits do not exceed INR 200 billion and there is no default, subject to filing an auditor's certificate in new Form CAA-10A.
    • Mergers between a holding company (listed or unlisted) and its subsidiary (listed or unlisted), except where the transferor company is listed.
    • Mergers between subsidiaries of the same holding company, provided the transferor companies are not listed.
    • Mergers of a foreign holding company with its wholly owned subsidiary incorporated in India (reverse flip).

Our Comments

In the budget, the Hon'ble Finance Minister had announced widening the scope of categories of mergers that can be undertaken with Central Government approval (popularly called "fast-track merger"). This proposal was aimed at simplifying the process and reducing the burden on NCLTs. The Amendment Rules seek to implement this announcement and have expanded the class of companies eligible for the fast-track merger route instead of going through the NCLT process.

Earlier, only small companies, start-ups, and mergers between a holding company and its wholly owned subsidiary were eligible for fast-track merger. The Amendment Rules now extend these provisions to a broader set of companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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