Fast track mergers in India are a streamlined process established under the Companies Act of 2013, specifically designed to expedite the merger and amalgamation of small companies and startups. This process allows companies to bypass the lengthy procedures associated with the National Company Law Tribunal (NCLT) by delegating approval power to the Regional Director. The key benefit of this framework is that it simplifies the legal requirements and reduces the time taken to finalize mergers, making it an attractive option for smaller entities looking to grow or diversify their operations.

The fast track merger process is available to several types of companies, including multiple small companies merging together, a holding company with its wholly-owned subsidiary, and two or more startup companies. Additionally, mergers between unlisted companies with outstanding loans not exceeding INR 200 crore are allowed, provided there are no repayment defaults. This eligibility has been broadened to include various combinations, enhancing opportunities for smaller firms and startups to utilize this efficient merger mechanism.

Under Section 2(85) of the Companies Act, a small company is defined as a private entity that has a paid-up share capital not exceeding INR 4 crore and a turnover not exceeding INR 40 crore in the preceding financial year. It’s important to note that certain entities, like holding or subsidiary companies and those governed by specific regulations, do not qualify as small companies, regardless of their financial metrics. This classification is crucial when determining eligibility for the fast track merger process.

To initiate a fast track merger, companies should follow several essential steps: First, ensure that the Articles of Association (AOA) of both the transferor and transferee companies permit mergers; amend the AOA if needed. Second, confirm that both companies are solvent, meaning their assets exceed their liabilities. Next, appoint a registered valuer to assess the companies' shares and determine the Share Exchange Ratio, although this step is waived for mergers involving a holding company and its wholly-owned subsidiary without new shares. Lastly, prepare a detailed draft scheme of the merger outlining all terms and conditions.

Recent updates to the fast track merger guidelines, specifically from the Ministry of Corporate Affairs on September 4, 2025, have expanded the eligibility criteria for companies seeking to utilize this expedited process. These changes allow more small entities and startups to merge efficiently, including provisions for unlisted companies with limited outstanding loans and cross-border mergers involving foreign holding companies and their Indian subsidiaries. This aim is to encourage more mergers and streamline the process for companies facing a backlog of cases at the NCLT.

Yes, there are specific restrictions on who can utilize the fast track merger process. For instance, the process is not available for publicly traded companies when one of the merging entities is a listed transferor. Additionally, holding and subsidiary companies can merge, but the transferor must not be publicly traded. Other restrictions include ensuring that the merger does not involve insolvent companies, and for unlisted companies, their outstanding loans must not exceed INR 200 crore with no repayment defaults within the prior 30 days.