In the dynamic world of business, efficiency is king. When it comes to corporate restructuring, the traditional merger process can be long, complex, and costly, often requiring exhaustive court proceedings. Recognizing this challenge, the Indian government introduced a game-changer: the Fast-Track Merger (FTM) route under Section 233 of the Companies Act, 2013.
The FTM is a simplified, non-NCLT (National Company Law Tribunal) monitored process designed to make mergers and amalgamations quicker, more cost-effective, and less administratively burdensome for certain eligible companies. It’s a strategic tool for businesses seeking swift consolidation and streamlined operations.
Who is Eligible for a Fast-Track Merger?
The FTM route is not universally available, but the Ministry of Corporate Affairs (MCA) has progressively expanded its scope to promote the ‘Ease of Doing Business’. Currently, the key eligible classes of companies include:-
• Small Companies: Two or more small companies.
• Holding and Subsidiary: A holding company and its wholly-owned subsidiary (WOS).
• Start-Up Companies: Two or more start-ups, or a start-up with a small company.
• Unlisted Companies (New Additions): Recently, the scope has been widened to include:
• Two or more unlisted companies (other than Section 8 companies) subject to prescribed thresholds for loans, debentures, and deposits.
• Merger between a holding company (listed or unlisted) and one or more of its unlisted subsidiaries (even if not wholly-owned).
• Merger between two or more fellow subsidiaries under a common holding company, provided the transferor company is unlisted.
• Reverse mergers involving a foreign holding company into its wholly-owned Indian subsidiary.
Key Benefits: Why Choose the Fast-Track Route?
The core appeal of the FTM lies in bypassing the often lengthy traditional route under Sections 230–232, which involves mandatory NCLT approval and multiple hearings.
Speed & Time Savings: The process is significantly faster, typically completing the cycle in just 60–90 days, compared to the 6–12 months or more required for an NCLT-monitored merger.
Cost-Effectiveness: Reduced litigation, fewer regulatory filings, and the elimination of NCLT hearings lead to substantial cost savings.
Simplified Procedure: The process involves approval from the Regional Director (RD) instead of the NCLT, requiring a simpler set of documentation and fewer procedural formalities.
No Public Advertisement: Unlike the traditional route, the fast-track process generally does not require issuing public advertisements for the proposed merger scheme.
Less Administrative Burden: Avoiding the mandatory convening of court-monitored meetings and a series of NCLT hearings drastically reduces the administrative effort
The Simplified Process in a Snapshot
The FTM process involves key steps governed by Section 233 of the Companies Act, 2013
Board Approval: The Board of Directors of both the transferor (merging) and transferee (merged into) companies approve the draft scheme
Notice to Regulators: A notice is sent to the Registrar of Companies (ROC), the Official Liquidator (OL), and other relevant sectoral regulators (like SEBI, RBI, etc.) to invite objections or suggestions within 30 days.
Declaration of Solvency: The companies file a declaration of solvency (Form CAA-10) with the ROC
Filing with RD: The scheme, along with the results of the stakeholder meetings/consents, is filed with the Regional Director (RD) and the RO