Module: | Statutory Audit, NFRA & ICAI Standards
Q65: Consider the following statements regarding the expansion of the "Fast Track Merger" route under Section 233 of the Companies Act in September 2025:
1. The fast track merger process was explicitly expanded to include the merger of two or more subsidiaries of the same holding company.
2. Unlisted companies (other than Section 8 companies) that meet prescribed thresholds of outstanding loans, debentures, or deposits are now eligible for the fast track route.
3. Fast track mergers under Section 233 strictly require the final approval of the National Company Law Tribunal (NCLT) rather than the Central Government.
Which of the above statements is/are incorrect?
2. Unlisted companies (other than Section 8 companies) that meet prescribed thresholds of outstanding loans, debentures, or deposits are now eligible for the fast track route.
3. Fast track mergers under Section 233 strictly require the final approval of the National Company Law Tribunal (NCLT) rather than the Central Government.
Which of the above statements is/are incorrect?
✅ Correct Answer: C
🎯 Quick Answer:
C. Only 3 is incorrect.Structural Breakdown: Statement 1 is correct; the MCA amended the CAA Rules in September 2025 to allow sister subsidiaries to merge easily.
Statement 2 is correct; unlisted entities meeting specific financial thresholds were brought into the fold to promote ease of doing business.
Statement 3 is incorrect; the defining feature of a fast track merger is that it entirely bypasses the NCLT.
The approval authority is delegated to the Central Government (specifically, the Regional Directors). Historical/Related Context: Initially restricted mostly to small companies and holding-wholly owned subsidiary structures, the government steadily widened the net in 2021, 2024 (reverse flipping), and 2025 to help startups and conglomerates restructure their operations rapidly without clogging the courts.
Causal Reasoning: Forcing simple intra-group restructurings through the NCLT wastes judicial time.
Empowering the Regional Directors to approve these mergers drastically reduces corporate legal costs and completion timelines.