The Ministry of Corporate Affairs (“MCA”) vide File No. 2/31/CAA/2013CL-VPART, dated April 04, 2025,[1] proposed an amendment to Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CA Rules”), thereby expanding the ambit of fast-track mergers under Section 233 of the Companies Act, 2013 (“CA Act”). MCA invites suggestions and feedback from stakeholders on the proposed amendments latest by May 05, 2025.
These draft amendments stem from the discussions held during the Post-Budget Seminar on March 04, 2025, where several stakeholders had suggested to widen the scope of fast-track mergers to cover more corporate structures.
The key proposed amendments are as follows:
(a) Currently, Section 233 of the CA Act permits a simplified merger process for specific classes of companies such as small companies and wholly-owned subsidiaries.
(b) However, the proposed amendment seeks to include additional categories of companies to facilitate ease of doing business and reduce procedural hurdles in corporate restructuring.
(c) As per the proposed amendment to Rule 25(1A)(ii) of the CA Rules, the term ‘small company’ is proposed to be substituted by:
- 1 (one) or more unlisted companies (excluding Section 8 companies) where every company involved in the merger meets the following criteria as on a day, not more than 30 (thirty) days before the date of notice referred to in Section 233(1)(a) of the CA Act:- a. the borrowing of the company from banks or financial institutions or any other body corporate is less than INR 50 crores (Indian Rupees Fifty Crores Only) and b. such a company has no default in repayment of such borrowings; or
- a holding company (listed or unlisted) and its one or more unlisted subsidiary company or companies; or
- one or more subsidiary company of a holding company with one or more other subsidiary company of the same holding company where the transferor company or companies are not listed;
- merger of the transferor foreign company incorporated outside India being a holding company with the transferee Indian company being its wholly owned subsidiary company incorporated in India referred to in sub-rule (5) of rule 25A;
[1] https://www.mca.gov.in/content/mca/global/en/econsultation/econsultation-documents-page.html