Most founders assume that merging two group entities always means a trip to the NCLT, with months of hearings and legal fees stacking up along the way. For small companies and startups, that assumption is usually wrong. Section 233 of the Companies Act, 2013 offers a shorter, administrative route that keeps the Tribunal out of the picture entirely, and this guide walks through exactly how that route works, form by form and deadline by deadline.

Section 233 of the Companies Act, 2013, read with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, is the provision that lets certain classes of companies merge without approaching the National Company Law Tribunal. It was introduced with effect from 15th December 2016 specifically to reduce the time, cost and procedural burden that a full-fledged merger under Sections 230 to 232 usually involves.

For small companies and startups, this matters a great deal. Group restructuring - folding a dormant subsidiary into its parent, or combining two related entities into one operating company - is common as a business scales, and the fast track route was built with exactly this kind of restructuring in mind. Instead of Tribunal hearings, publication of notices in newspapers, and multiple rounds of objections, the scheme moves through the Registrar of Companies, the Official Liquidator and the Regional Director.

The Ministry of Corporate Affairs has amended Rule 25 more than once since 2016, most recently through the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, which widened eligibility and revised several of the CAA forms. This article focuses specifically on how small companies and startups can use Section 233, walking through eligibility and the complete procedure as it currently stands.

•      Section 233 of the Companies Act, 2013 permits two or more small companies, two or more startup companies, or a combination of startup and small companies, to merge without NCLT approval, subject to Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

•      A small company under Section 2(85) is a private company whose paid-up share capital does not exceed Rs. 10 crore and whose turnover does not exceed Rs. 100 crore, as per the thresholds notified with effect from 1st December 2025.

•      A startup company must be DPIIT-recognised, incorporated as a private company, and generally within 10 years of incorporation with turnover not exceeding Rs. 100 crore in any financial year since incorporation.

•      The process runs through the Registrar of Companies, the Official Liquidator and the Regional Director rather than the Tribunal, and typically concludes faster and at lower cost than a Section 230-232 merger.

•      Key filings include Form CAA-9 (notice inviting objections), Form CAA-10 (declaration of solvency), Form CAA-11 (filing the approved scheme with the Regional Director), Form CAA-12 (confirmation order) and Form INC-28 (registering the order with the ROC).

•      If the Registrar, Official Liquidator or Central Government has a sustainable objection, the Regional Director can refer the scheme to the NCLT in Form CAA-13, and the companies must then proceed under the regular Section 230-232 route.

•      Creditor approval requires consent of at least nine-tenths in value of creditors, which can be obtained in a meeting or through written consent without holding one.

A fast track merger is a simplified scheme of merger or amalgamation available under Section 233 of the Companies Act, 2013, to a limited set of eligible companies. Unlike mergers under Sections 230 to 232, which require the National Company Law Tribunal to convene meetings, hear objections and pass an order sanctioning the scheme, a Section 233 merger is approved administratively by the Central Government, whose powers in this regard stand delegated to the Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad, Hyderabad and Shillong.

The effect of a completed fast track merger is the same as any other merger. The transferor company's assets, liabilities, rights and obligations pass to the transferee company, and the transferor stands dissolved without being wound up. What changes is the route taken to get there - fewer hearings, fewer publication requirements, and generally a shorter overall timeline.

Rule 25(1) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 lists the categories of companies eligible for a Section 233 merger. For small companies and startups specifically, the eligible combinations are:

•      Two or more small companies merging with each other.

•      Two or more startup companies merging with each other.

•      One or more startup companies merging with one or more small companies.

Eligibility for Small Companies

Under Section 2(85) of the Companies Act, 2013, read with Rule 2(1)(t) of the Companies (Specification of Definitions Details) Rules, 2014, a small company is a private company (other than a holding company, subsidiary company, Section 8 company, or a company governed by a special Act) whose paid-up share capital does not exceed Rs. 10 crore and whose turnover, per the profit and loss account for the immediately preceding financial year, does not exceed Rs. 100 crore. These are the revised limits notified by the MCA with effect from 1st December 2025; both conditions must be satisfied together, and a company that crosses either threshold falls outside the definition even if it meets the other.

Eligibility for Start-up Companies

A startup company, for this purpose, is a private company incorporated under the Companies Act, 2013 (or the erstwhile Companies Act, 1956) that holds a valid recognition certificate from the Department for Promotion of Industry and Internal Trade (DPIIT). Broadly, DPIIT recognition requires the entity to be within ten years of incorporation, working towards innovation or improvement of products, processes or services, and to have an annual turnover not exceeding Rs. 100 crore in any financial year since incorporation. It is worth noting that DPIIT's guidelines specifically permit a merger under Section 233 involving two startups, or a startup and a small company, without disturbing the resultant company's startup recognition, subject to the norms in the DPIIT notification being met.

Example: Alpha Innovations Pvt. Ltd. and Beta Labs Pvt. Ltd. are both DPIIT-recognised startups, six years and four years old respectively, with turnover well under Rs. 100 crore. Alpha wants to absorb Beta to consolidate its product teams under one entity. Because both companies fall squarely within the startup category under Rule 25(1), they can use the Section 233 fast track route instead of filing a scheme under Sections 230-232.

The procedure below follows Section 233 read with Rule 25, as it currently applies to small companies and startups.

Step 1: Check the Power to Merge and Get Board Approval

Before anything else, check that the Memorandum of Association of both the transferor and transferee companies permits amalgamation. If it does not, the MOA needs to be amended first. Once that is in order, each company convenes a Board meeting, on at least seven days' notice, to approve the draft scheme of merger. Because Section 175 does not permit this particular approval by circular resolution, an actual Board meeting is required.

Step 2: Notice Inviting Objections - Form CAA-9

Both the transferor and transferee companies must issue a notice of the proposed scheme in Form CAA-9, inviting objections or suggestions from the jurisdictional Registrar of Companies and the Official Liquidator (or, where the transferor is being wound up, the liquidator appointed by the Tribunal). The notice also goes to any other person affected by the scheme, and, following the 2025 amendment to Rule 25, sectoral regulators where applicable. The Registrar and Official Liquidator have thirty days from receipt of the scheme to respond with objections or suggestions.

Step 3: Declaration of Solvency - Form CAA-10

Each company files a declaration of solvency in Form CAA-10 with the Registrar, confirming that the company is able to pay its debts as they fall due and is not likely to be rendered insolvent by the proposed merger. This declaration, along with a statement disclosing the details of the scheme, must accompany the notice sent for the general meeting.

Step 4: General Meeting for Member Approval

The scheme is placed before a general meeting of members, convened on at least twenty-one days' notice, together with the declaration of solvency and the statement of the scheme. Members approve the scheme by the majority required for a special resolution. The resolution is then filed in Form MGT-14.

Step 5: Creditor Approval

The scheme must separately be approved by creditors, or class of creditors, representing at least nine-tenths in value. This consent can be obtained either at a meeting convened for the purpose, on at least twenty-one days' notice, or in writing without holding a meeting at all - which in practice is the route most small companies and startups prefer, since it avoids an additional meeting.

Step 6: Filing the Scheme with the Regional Director - Form CAA-11

Once members and creditors have both approved the scheme, the transferee company files the approved scheme along with the results of the meetings in Form CAA-11, attached to Form RD-1, with the Regional Director. A copy also goes to the Registrar of Companies and to the Official Liquidator. This filing must be made within a stipulated window following conclusion of the members' or creditors' meeting; companies should confirm the current window against the Ministry's latest notified timeline before filing, since this period has been revised more than once.

Step 7: Confirmation Order by the Regional Director - Form CAA-12

If neither the Registrar nor the Official Liquidator has raised an objection within the thirty-day window, and the Regional Director is satisfied that the scheme is in the public interest or in the interest of creditors, a confirmation order is issued in Form CAA-12, generally within fifteen days after that thirty-day period expires.

Step 8: Filing the Order with the Registrar - Form INC-28

The confirmation order, once received, must be filed with the jurisdictional Registrar of Companies in Form INC-28 within thirty days of receipt. This filing formally records the merger, and the transferor company stands dissolved without winding up from the date specified in the order.

If the Registrar of Companies or the Official Liquidator raises an objection or suggestion that the Central Government considers sustainable, the Regional Director communicates this to the companies. Where the objection cannot be resolved administratively, the Regional Director may, within sixty days of receiving the scheme, file an application before the NCLT in Form CAA-13, stating that the scheme is not in the public interest or the interest of creditors. If the Tribunal agrees, the companies are directed to proceed under the regular merger process set out in Sections 230 to 232, effectively exiting the fast track route at that stage. This is a useful point to flag to clients at the outset - the fast track route is not a guarantee of a Tribunal-free process, only the default path unless a genuine objection surfaces.

There is no single statutory outer limit for the entire process, since it depends on how quickly each company convenes its meetings and how promptly the Regional Director acts. As a working estimate, though, most fast track mergers between small companies or startups run anywhere from roughly four to seven months from the first Board meeting to the filing of Form INC-28, assuming there are no objections along the way. The table below sets out the statutory timelines at each stage.

A few recurring errors show up repeatedly in fast track merger filings, and most of them are avoidable with basic diligence upfront.

•    Not checking the MOA for merger powers before starting the process, which forces a delay to first amend the MOA.

•  Assuming DPIIT startup status alone is sufficient without separately confirming the turnover and incorporation-age conditions on the date of filing, not just at some earlier point.

•  Treating the declaration of solvency (CAA-10) as a formality, when in practice the Regional Director's office does scrutinise it against the company's financial statements.

•      Missing the filing window for Form CAA-11 after the general meeting, which can force the companies to restart the meeting process.

•      Not confirming that all group companies involved genuinely meet the small company or startup thresholds on both trigger dates - when objections are invited, and again when the scheme is filed with the Central Government.

The choice between the two routes usually comes down to whether the merging companies actually qualify for Section 233 in the first place. Where eligibility exists, the practical differences are significant.

Can a public company use the fast track merger route as a small company or startup?

No. A small company under Section 2(85) specifically excludes public companies. A startup company under Rule 25(1) must also be incorporated as a private company. Public companies looking to merge must generally use the Section 230-232 route, unless they fall under one of the other eligible categories added by later amendments to Rule 25.

Does merging under Section 233 affect a startup's DPIIT recognition?

DPIIT's guidelines specifically carve out an exception for mergers under Section 233 between eligible startup and small companies, allowing the resultant company to retain startup recognition subject to the applicable norms being met. This is different from most other forms of restructuring, which typically disqualify an entity from startup recognition.

Is shareholder approval by postal ballot enough, or is a meeting mandatory?

Section 233 does not provide for obtaining member consent purely in writing. A general meeting of members must be convened to consider the scheme, along with any objections received from the Registrar or Official Liquidator. Creditor consent, by contrast, can be obtained in writing without a meeting.

What if the transferee company's Regional Director does not respond at all?

If the Central Government does not communicate an objection within sixty days of receiving the scheme, and does not issue a confirmation order, it is deemed to have no objection to the scheme, and the confirmation order is presumed to have been passed in the terms of the scheme.

Can a fast track merger be undertaken between a startup and its holding company?

Rule 25(1) treats mergers involving startups and small companies as a distinct category from the holding-subsidiary category. If the arrangement genuinely involves a holding company and its wholly-owned subsidiary, that falls under the separate holding-subsidiary eligibility, not the startup category, even if one of the entities happens to be DPIIT-recognised.

Who bears the cost of a fast track merger?

Government fees are payable on each of the CAA forms and on Form INC-28, in line with the Companies (Registration Offices and Fees) Rules, 2014. Beyond statutory fees, companies typically incur professional fees for drafting the scheme, valuation (where required), and coordination with the Registrar, Official Liquidator and Regional Director. These costs are generally lower than a Tribunal-route merger, largely because Tribunal hearings and newspaper publication are avoided.

What happens to pending litigation involving the transferor company after the merger?

On the merger taking effect, all legal proceedings by or against the transferor company continue against the transferee company, which steps into the transferor's shoes for that purpose. The confirmation order issued by the Regional Director carries the same legal effect as a Tribunal order sanctioning a scheme under Section 232 in this respect.

Do both merging companies need to be in the same state or jurisdiction?

No. The transferor and transferee can be registered with different Registrars of Companies in different states. Each company files its own set of forms with its jurisdictional Registrar and Official Liquidator, while the scheme itself is filed with the Regional Director having jurisdiction over the transferee company.

For small companies and DPIIT-recognised startups looking to restructure or consolidate, Section 233 remains one of the more efficient tools available under the Companies Act, 2013 - provided the eligibility conditions are checked carefully and each filing is made within its statutory window. The process rewards preparation: getting the MOA, board resolutions, solvency declaration and creditor consents right the first time avoids the kind of delay that erodes the very speed advantage the fast track route is meant to offer. Given that Rule 25 has been amended repeatedly in recent years, it is worth confirming the current form versions and timelines against the Ministry of Corporate Affairs website before initiating a scheme.

Have questions about structuring a fast track merger for your company? Explore more in-depth guides and expert commentary at TaxFlash.in.

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