A Drastic Change in the M&A Landscape - What Businesses Must Know
Mergers and Acquisitions (M&A) are powerful tools for companies to grow, join forces, or restructure. But in India, the process has often been slow, expensive, and heavily dependent on the National Company Law Tribunal (NCLT).
Now, with the Ministry of Corporate Affairs (MCA) notification dated 4th September 2025, there has been a major breakthrough. The government has expanded the powers of Regional Directors (RDs), reducing the dependency on NCLT for several categories of mergers. This is a game-changer for businesses of all sizes.
The Journey of These Changes
The Old Rules
Earlier, only a few companies could use the fast-track merger route via RDs:
- Two or more small companies merging together
- A holding company merging with its wholly-owned subsidiary
The 2021 Update
On 1st February 2021, the scope was expanded to include:
- Two or more start-ups merging
- One or more start-ups merging with one or more small companies
This was a big relief for start-ups that needed to merge quickly to survive or scale.
The Latest 2025 Update
Now, with the MCA Notification of 4th Sept 2025, the rules are even broader:
- Unlisted companies with borrowings up to ₹200 crores (as long as they haven’t defaulted)
- Holding company and its subsidiaries (if the merging company is not listed)
- Two or more subsidiaries of the same holding company (if the merging company is not listed)
- A foreign holding company merging with its wholly-owned Indian subsidiary
This means many more companies can now restructure easily, without waiting months in NCLT.
Why This Matters for Businesses
Here’s why this notification is such a big deal:
- Faster Mergers → Approvals can be handled by RDs instead of going through lengthy NCLT processes.
- Lower Costs → Less paperwork, reduced legal fees, and quicker implementation.
- Encourages Innovation → Start-ups and small businesses can merge quickly to build stronger ventures.
- Boost to Global Investment → The inclusion of foreign holding companies merging with Indian subsidiaries makes India more business-friendly.
Example: Imagine two Indian subsidiaries of the same multinational company want to merge. Earlier, this could take months. Now, it can be done smoothly under the RD route.
Impact on Start-ups, SMEs, and Global Businesses
- For Start-ups → Easier collaborations, joint ventures, and survival strategies during tough markets.
- For SMEs & Unlisted Companies → Faster restructuring, smoother growth, and better access to funding.
- For Global Firms → Simplifies cross-border restructuring, especially when a foreign parent wants to align operations in India.
Human Angle – What It Means for Entrepreneurs
Think of this like a school project: earlier, if two teams wanted to merge their work, they had to wait for the head principal (NCLT) to approve. Now, the local teacher (RD) can approve it directly – saving time and energy.
This change reduces red tape, gives more control to businesses, and helps them focus on growth instead of paperwork.
ASB Growth Ventures’ Perspective
At ASB Growth Ventures, we believe this reform will reshape India’s M&A ecosystem. By giving more power to RDs, the MCA has created a simpler, faster, and cost-effective way for companies to restructure.
We regularly work with start-ups, SMEs, and large corporates to navigate M&A deals. With these new rules, we can help businesses:
- Understand whether they qualify for the fast-track route
- Structure their mergers in line with compliance requirements
- Ensure smooth execution without unnecessary delays
If your business is considering a merger, acquisition, or restructuring, now is the perfect time to act.
Frequently Asked Questions (FAQs)
Q1. Why did MCA make this change? To reduce the burden on NCLT, cut down delays, and make India’s corporate restructuring faster and more efficient.
Q2. Which companies benefit the most? Start-ups, unlisted companies with borrowings under ₹200 crores, subsidiaries, and foreign holding companies with Indian subsidiaries.
Q3. Does this mean listed companies are included too? No. The notification clearly excludes listed companies in these fast-track merger categories.
Q4. How does this help foreign companies? For the first time, foreign holding companies can merge with their Indian subsidiaries under a simpler route – making cross-border restructuring much easier.
Q5. Will this change reduce costs for businesses? Yes, because companies won’t have to spend as much time and money on lengthy NCLT approvals.
Final Word
This MCA reform is not just a legal update – it’s a growth opportunity for Indian businesses. It opens the doors for faster mergers, cost savings, and global integration.
At ASB Growth Ventures, we are ready to guide you through this new era of corporate restructuring in India. Whether you are a start-up, SME, or multinational company, these new rules can help unlock your true growth potential.