Restructuring and Growth: Mergers, Reorganisation and What Replaced Fast-track Insolvency
In September 2025 the fast-track merger route was widened to cover a large class of transactions that previously needed a tribunal. In May 2026 the fast-track insolvency route for start-ups was abolished outright and replaced with something quite different. Both changes are recent enough that most published Indian material still describes the old position.
- The fast-track merger route as widened in September 2025
- The tax trap that the company law liberalisation created
- The reverse flip: a foreign holding company merging into its Indian subsidiary
- What replaced fast-track insolvency for start-ups
A much larger route than it was
Section 233 of the Companies Act 2013 allows certain mergers to be approved by the Central Government, in practice the Regional Director, without a tribunal process. Historically it was confined to two small companies or a holding company and its wholly owned subsidiary, which made it a niche route. The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules 2025, notified as G.S.R. 603(E) on 4 September 2025 and operative on publication on 8 September 2025, added new categories to rule 25(1A) and widened it substantially.
| Newly eligible | Conditions |
|---|---|
| Two or more unlisted companies, other than section 8 companies | Aggregate outstanding loans, debentures and deposits of each company not exceeding ₹200 crore, with no default in repayment. Both conditions are tested twice: on a date within thirty days before the notice under section 233(1)(a), and again when the approved scheme is filed. Each company's auditor certifies compliance in Form CAA-10A, filed with the scheme. |
| A holding company and its subsidiary | Whether or not wholly owned, provided the transferor is unlisted. This is the change that opens the route to the largest number of groups. |
| Fellow subsidiaries of the same holding company | Transferor unlisted. |
| A foreign holding company merging into its Indian wholly owned subsidiary | Rule 25A(5)(i) requires prior approval of the Reserve Bank for both companies. In practice that is usually satisfied without a separate application: regulation 9 of the cross-border merger regulations deems approval given where the scheme complies with those regulations, and the amendment of 29 May 2026, in force from 5 June 2026, replaced the references to the tribunal with 'competent authority' so that the fast-track route is covered. What is filed is a compliance certificate from a managing or whole-time director with the company secretary, and the declaration in Form CAA-16, which states whether non-debt instrument approval is needed. CAA-16 is a declaration, not an application to the Reserve Bank. |
| Demergers | Formally brought within section 233, having previously sat outside it. |
The post-approval filing window also moved from seven days to fifteen.
The trap
The Income-tax Act 2025 treats a fast-track amalgamation and a fast-track demerger differently, and the difference is in the drafting. Section 2(35) defines a tax-recognised demerger by reference to a scheme under sections 230 to 232 of the Companies Act, so a demerger taken through the section 233 route falls outside that definition on the present wording, and the neutrality a qualifying demerger would have had may simply not be available. The definition of amalgamation in section 2(6) carries no equivalent restriction: it is drafted by reference to what the merger does, so a section 233 amalgamation can still qualify where the substantive conditions are met. Test the tax consequence before choosing the route. The company law liberalisation and the tax treatment now point in opposite directions for one half of it, and the procedural saving can cost the restructuring exemption.
Fast-track against the tribunal
| Section 233, fast-track | Sections 230 to 232, tribunal | |
|---|---|---|
| Approving authority | Central Government, in practice the Regional Director | National Company Law Tribunal |
| Typical timeline | Materially shorter, and more predictable | Longer, with hearing dates outside anyone's control |
| When it is required | Only if you fall within the eligibility rule | Listed transferors, schemes involving public shareholders, and anything outside the eligibility rule |
| Tax neutrality | Available for a qualifying amalgamation. Not available for a demerger taken through this route, on the present wording of the 2025 Act. | The established route, and the safe one where tax neutrality is essential |
Abolished, and what took its place
This one is stated plainly because a great deal of Indian advisory content still gets it wrong. Chapter IV of Part II of the Insolvency and Bankruptcy Code, sections 55 to 58, the fast-track corporate insolvency resolution process, was omitted by section 39 of the amending Act of 2026 with effect from 26 May 2026, notified by S.O. 2625(E) of 22 May 2026. Nearly every Indian advisory site still lists a ninety-day fast-track wind-down as a benefit of start-up recognition. Any adviser still offering one under those sections is offering something that no longer exists.
In its place the amending Act inserts Chapter IV-A, sections 58A to 58K, a creditor-initiated insolvency resolution process. It is started by a financial creditor from a notified class of financial institutions, with the approval of creditors of that class holding not less than 51 per cent in value of the debt due to them, after the company has been given at least thirty days to make representations. It then runs largely outside court for 150 days, extendable once by up to 45 days with 66 per cent of the committee of creditors and the adjudicating authority's approval, with existing management in possession under the oversight of a resolution professional, and it converts into the ordinary resolution process in specified circumstances, including where no plan is approved in time.
It is a materially different instrument: it is creditor-led rather than debtor-led, and it is not a wind-down route at all. It is also new, so the architecture is worth stating confidently and the practical experience of it is not.
Recognition changed, the tax benefit did not follow
The start-up recognition definition was replaced on 4 February 2026 by notification G.S.R. 108(E), superseding the 2019 notification. The general turnover ceiling moved from ₹100 crore to ₹200 crore and the age limit stayed at ten years. Eligible entity forms were extended to multi-state cooperative societies and to cooperative societies registered under state or union territory law. A separate deep technology category was created, running to twenty years and ₹300 crore, which an entity has to be recognised in on its own criteria rather than reach by being large: novel or proprietary technology, real scientific or engineering difficulty, and long development timelines.
This changed recognition only. The tax holiday is a separate provision in a separate statute with its own conditions, its own turnover ceiling and its own certification requirement, and recognition does not carry it. The Finance Act 2026 raised that separate ceiling in section 140 of the Income-tax Act 2025 from ₹100 crore to ₹300 crore with effect from 1 April 2026. The two tests are also different in kind: recognition looks at any financial year since incorporation, while the ₹300 crore is measured for the tax year in which the deduction is claimed. The incorporation window for the holiday now runs to before 1 April 2030.
Where to go next
Virtual CFO
Back to the main page: how the engagement is structured, who it suits, and how to reach us.
When You Need a CFO, and When You Need a Virtual One
What a finance lead actually does that a good accountant does not, the point in a business's life when the gap starts to cost money, and the statutory officer question that is often confused with this one.
Planning, Forecasting and the Numbers a Board Actually Reads
Building a forecast that survives contact with reality, the difference between a management pack and a report, the handful of measures worth putting in front of a board, and why cash is the only one that cannot be argued with.
Raising Capital: Instruments, Valuation and the Filings That Follow
Convertible instruments and what they are under Indian law, valuation requirements for resident and non-resident investors, the share premium charge that was abolished and the one that was not, and the filing deadlines that follow a round.
Tax and Structuring Decisions a Finance Lead Owns
Corporate rates and concessional regimes under both Acts, minimum alternate tax after the 2026 reduction, buybacks after two changes in eighteen months, employee share options, and the transfer pricing obligations that arrive with a foreign parent.
Send an enquiry
If you are contemplating a group reorganisation, the sequence that matters is company law route, then tax treatment, then timetable. Getting them in that order is most of the work.
This page is general information, not professional advice. Almost every rule a finance lead relies on in India moved between October 2024 and April 2026. The Income-tax Act 2025 renumbered every section from 1 April 2026, the treatment of share buybacks changed twice in eighteen months, the fast-track merger route was widened, the fast-track insolvency route for start-ups was abolished, and the recognition definition for start-ups was replaced. Nothing on this page is advice on your facts. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.