Fast track merger if not wholly owned subsidiary

633 views 1 replies

Dear Respected Members,

This is a query on fast track merger of companies where company A is holding and B is a subsidiary. A has 87% shareholding in Company B. Now, as per the criterion for FTM under section 233 of Comp. Act. both companies should be small-scale and in the case of a subsidiary company it should be wholly owned.

In our case company, both are actually micro-scale and company B is not a wholly owned subsidiary (limited to 87% shareholding only), my query is if we can go with Fast Track Merger or not.

NOTE - None of the companies are important to the Public interest, have No debt, and No Creditors.

Please send a response as soon as possible.

Replies (1)

Hi Kamal,

Regarding your query on Fast Track Merger (FTM) under Section 233 of the Companies Act, 2013, here’s a clear response:


Key Points from Section 233 (Fast Track Merger)

  • Fast Track Merger is allowed only if:

    1. Both companies are small companies (now micro, small, or medium as per definitions, but the Act specifically mentions small companies).

    2. In case of a merger involving a holding company and its subsidiary, the subsidiary company must be wholly owned by the holding company.


Your Situation:

  • Company A holds 87% shares in Company B → Not a wholly owned subsidiary.

  • Both companies are micro-scale.

  • No public interest, no debt, no creditors.


Can You Opt for Fast Track Merger?

  • Unfortunately, since Company B is not a wholly owned subsidiary, the condition for fast track merger under Section 233 is not fulfilled.

  • The provision requires 100% shareholding for a holding-subsidiary fast track merger.

  • Micro or small scale status of companies is not enough to override this condition.


Alternative Options:

  • You may pursue a normal merger under sections 230-232 of Companies Act, following the standard process with NCLT approval.

  • Or consider other restructuring options depending on your business needs.


Summary:

Condition Your Case FTM Allowed?
Subsidiary must be wholly owned 87% ownership only No
Both companies micro/small Yes Condition met
Public interest, creditors etc. None Favorable but not enough

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
13 July 2026
AVP / VP - PCG Advisory

Workforce Connect

Mumbai

MBA

View Details
Company
ARTICLESHIP 16 July 2026
CA Article

Pipara & Co. LLP.

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 15 July 2026
CA Articles

Kinjal H Shah & Co.

Mumbai

CA Foundation

View Details
Company
29 June 2026
ACCOUNTANT

SANDEEP AASHISH & CO

Araria

B.Com

View Details
Company
Featured 18 July 2026
CA Articleship

apricus india

Mumbai

CA Inter

View Details
Company
06 July 2026
Accountant

Agarwal Anoop and Associates

Noida

CA Final

View Details
Company
ARTICLESHIP 11 July 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
21 July 2026
Chartered Accountant

Keshri & Associates

Thiruvananthapuram

CA

View Details