1. Rule 25(1A)(iii): Expanding Eligibility for Unlisted Companies
   The amendment expands Rule 25(1A)(iii) of the merger rules  to allow mergers and demergers between two or more unlisted companies, excluding those incorporated under Section 8 for non-profit purposes. This is subject to stringent conditions, including that each company must have aggregate outstanding loans, debentures or deposits not exceeding INR 200 crores and must not have defaulted on any repayment obligations. Increasing the debt threshold from INR 50 crore in the draft rules to INR 200 crores, the MCA has made the FTM route accessible to a mid-sized unlisted companies, such as private companies in manufacturing, retail or tech.

   For example, if ABC Pvt. Ltd. (textile manufacturer, INR 120 crore debt) merges with XYZ Pvt. Ltd. (garment exporter, INR 150 crore debt) for streamlining operations and cut costs up to 20-30%. Herein, both meet thresholds and bypass 12-18 month NCLT delays. However, if Skylines Automotive Pvt. Ltd. (INR 210 crore debt) will remain ineligible despite no defaults. This fosters resource optimisation for SMEs, boosting competitiveness through swift consolidations. The compliance requires submission of an auditor’s certificate in Form CAA-10A. While Form CAA-10’s integration with Form GNL-1 centralises filings, it adds a compliance layer: the verifications have two stages– within 30 days before inviting objections from regulatory authorities.

2. Rule 25(1A)(iv): Holding-Subsidiary Mergers
   The amendment made changes under Rule 25(1A)(iv) permitting mergers and demergers between a holding company, whether listed or unlisted, and its subsidiary without the requirement of wholly-owned subsidiary (‘WOS’) . The restriction states that the transferor company is unlisted. This ensures that the FTM route excludes listed transfers to avoid complex regulatory oversight, such as stock exchange approval under SEBI’s LODR Regulations 37. Further, removing the requirement for a WOS allows intra-group restructuring for partially owned subsidiaries, bypassing the lengthy procedure of the NCLT.

   For example, if Evergreen Holdings Pvt. Ltd. (75% owner) merges with non-WOS Green Build Infra Pvt. Ltd. (affordable housing). Approvals can be obtained through the RD in just 60 to 90 days. This reduces compliance costs in half by cutting legal formalities. It also allows conglomerates to consolidate within their groups.

3. Rule 25(1A)(v): Fellow Subsidiary Companies
   Rule 25(1A)(v) s deals with mergers of subsidiaries of a common holding company. It allows the merger of one or more unlisted subsidiaries of the same holding company to merge with an unlisted subsidiary of the holding company without the need for prior approval of the NCLT, making the transaction simpler. For example, if Company A has Companies B and C as its unlisted subsidiaries, Company B can merge into Company C through this fast-track method. This rule also applies to subsidiaries of subsidiaries as long as the merging companies are unlisted and streamlines group consolidation.
4. Rule 25(1A) (vi): Cross-Border Merger
   Rule 25(1A)(vi)  simplifies inbound cross-border mergers by allowing a foreign holding company (Transferor) to merge with its WOS in India (Transferee) without going through the NCLT. The merger carries forward the provisions that were previously captured under 25A(5), providing that the merger provisions are now treated on par with finality under Rule 25. Therefore, it would appear that the entire process, including, if required, specific approvals by the Reserve Bank of India (“RBI”), should adhere to the Foreign Exchange Management Act (“FEMA”) regime and the FEMA (Cross-Border Merger) Regulations 2018. This enables a smooth process for ‘reverse flips’ where foreign entities move their operations to India. Additionally, decreasing the period of these arrangements shall reduce costs and make India a lot more attractive for FDI.
5. Procedural Enhancement
   Furthermore, Rule 25(9) extends the FTM route to demerger of undertaking or divisions empowering the RD with tribunal like authority to oversee asset, liability and employee transfer without NCLT intervention. This obviates the involvement of NCLT and addresses a key bottleneck in pre-amendment, demergers under FTM were absent. This forced schemes into Section 230-232 with 12–24-month timelines but the RD oversight ensures continuity, . The filing deadline for approved schemes through Form CAA-11 with the RD, Registrar of Companies, and Official Liquidator is extended from 7 to 15 days post shareholder and creditor meetings under Rule 25(4)(a). This provides companies a better period for assessment submission of correct and accurate filings. Form CAA-9 also requires notices to sector regulators (RBI, SEBI, IRDAI, PFRDA) as well as stock exchanges for listed entities. This promotes wider scrutiny during the 30-day objection period and maintains regulatory oversight.

Despite the above benefits, the amendment does fall short in addressing key structural and practical challenges that may weaken its intended impact. A major concern that can arise is the straining of the administrative capacity of the RD offices. While it may ease the burden of the NCLT, it may lead to a surge of applications in the 7 RD offices in contrast with the 15 NCLT benches that were earlier handling them. This will thus require standardised procedures to prevent the numerous bottlenecks that may arise. Furthermore, the “majority trap” needs 90% approval from all shareholders and creditors, while the NCLT only required 75% of those present and voting. For instance, a listed company with a dispersed public shareholding of over 40% may find it virtually impossible to obtain 90% shareholder approval for a fast-track merger, even if the transaction is commercially sound. In contrast, the same scheme could have passed under the NCLT route with 75% approval of shareholders present and voting. This raises concerns of whether the  FTM route may be impractical for listed companies with diverse stakeholders.

Another key issue becomes the Income-tax Bill, 2025, which excludes FTM demergers from the benefits given to NCLT-sanctioned mergers. This could result in higher tax burdens and discourage demergers. Additionally, SEBI’s Takeover Regulations 10(1)(d)(ii) only exempts court-ordered schemes from open offer requirements. This puts FTM schemes with listed companies at risk if shareholding changes. Its scope is also limited to mergers and demergers and does not consider complex schemes like capital reorganisations or reductions under Section 66. Moreover, some RDs interpret Section 233(12) to extend FTM. However, this inconsistent application can only create more uncertainty. Globally countries such as Singapore, Delaware, & Canada tend to complete such intra-group mergers swiftly with very minimum approvals. In contrast, India’s approach seems starkly conservative and restrictive in nature, retaining high consent thresholds and regulatory oversight despite its expansion of scope.