Companies Act fast-track merger amendment notified: 90-day NCLT-free route for wholly-owned subsidiaries from June 2026

The Ministry of Corporate Affairs notified an amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 on May 23, 2026, materially expanding the fast-track merger route under Section 233 of the Companies Act, 2013. The amendment, effective June 1, 2026, removes the upper-size restriction that previously limited fast-track eligibility to small companies and to wholly-owned subsidiaries below a defined paid-up capital threshold. Under the new framework, any holding company can merge with its wholly-owned subsidiary using the fast-track route regardless of size, and any two or more small companies can merge inter-se using the same route.

The 90-day completion timeline under the fast-track route is the principal commercial advantage. From board approval of the merger scheme, the sequence runs: 30 days for member and creditor consents (at least 90 percent by value of each class), 15 days for Regional Director and Registrar of Companies intimation, 30 days for RD approval (with deemed approval if no objection is received within 30 days), and 15 days for filing the order with RoC after RD approval. The 12-18 month timeline typical of NCLT-route mergers under Section 232 compresses to a quarter under fast-track, which is decisive for group restructuring transactions that need to close within a single financial year for tax-neutrality optimisation.

The compliance carve-outs from the NCLT route are substantial. The fast-track route does not require: filing of NCLT petition, the 1-month creditor notice through newspaper publication, the official liquidator report on the merger scheme, sectoral regulator (SEBI for listed entities, CCI for combinations exceeding the thresholds) prior approval where the merger does not independently trigger those filings, and the protection of dissenting shareholders provisions of Section 235 (since the small-company and wholly-owned subsidiary cases typically do not have dissenting public shareholders). The simplified procedure relies on board-level due diligence and Regional Director oversight rather than judicial supervision by NCLT.

For India-side group restructuring, the amendment is particularly significant. The most common use case is the consolidation of a multi-subsidiary structure into a single operating entity. Under the pre-amendment regime, mid-cap groups with subsidiaries above the size threshold had no choice but the NCLT route, and the 12-18 month timeline meant most group consolidation projects spanned two financial years with attendant tax-neutrality complexities under Section 47(vi) of the Income-Tax Act. The fast-track expansion enables these transactions to close in a single quarter, which simplifies the tax planning.

The Regional Director approval workflow is the operational pinch point. Each RD office (currently seven RDs covering the country) has its own filing turnaround pattern. The RDs at Mumbai, Delhi, and Hyderabad are reported to be processing fast-track filings within the 30-day window with high reliability. The Chennai, Kolkata, and Ahmedabad RDs have historically run on a longer cycle, and the deemed approval safety valve (no response within 30 days = deemed approval) is important for these jurisdictions but is rarely tested in practice as RDs typically issue at least a query within the window.

The board approval workpaper for a fast-track merger is more substantial under the amended regime. Boards must record their due diligence on creditor and member interest protection, the basis for the share exchange ratio (in subsidiary-to-holding mergers, this is typically a swap-out rather than an exchange ratio), and any contingent liabilities transferred. Independent directors' specific concurrence is required, and the resolution must specifically state the fast-track route is being availed under Section 233.

KAMRIT's secretarial and M&A desk handles fast-track merger structuring including the board workpaper, member/creditor consent administration, RD filing, and the RoC closing.