Fast Track Mergers and the Corporate Laws (Amendment) Bill 2026: Speed at the Cost of Scrutiny?

[Muskaan and Swarya are students at Jindal Global Law School.]

The first step of reform came through the 2025 rules, which expanded fast track merger eligibility beyond small companies and holding companies with wholly owned subsidiaries. The rules now permit mergers between holding companies and non wholly owned subsidiaries, mergers among other subsidiaries of the same holding company and certain classes of unlisted companies with borrowings below prescribed thresholds.

The Corporate Laws (Amendment) Bill of 2026 introduced a structural change. It resulted in a decrease in the required approval from 90% to 75% for fast track mergers based on member and creditor votes. This is meant to streamline corporate restructuring, but it also causes worry about protecting minority shareholders.

Why Minority Protection Matters

These two changes together create a system that needs much closer look than what it has gotten. The 2025 rules let partially-owned subsidiaries use a quicker approval process. The 2026 bill then lowered the permission level needed, which had been acting as a replacement for court checks. Read together these reforms amplify governance risks.

The original Section 233 of the Companies Act 2013 was built on a coherent premise. When a holding company merges with a wholly owned subsidiary, there is no conflict since there are no independent small shareholders. So, the idea was to bypass the National Company Law Tribunal (NCLT) and permit approval through the regional directors.

The 2025 rules altered the premise by making the partially owned subsidiaries eligible as well. Now, if a smaller shareholder owns part of a 70% owned subsidiary; a private equity investor, a minority financial stakeholder or an ESOP holder, they could get shifted around during a restructuring without independent judicial scrutiny of the share exchange ratio or overall fairness of the scheme.

The Regional Director's role was not designed to perform such a function. According to the Bombay High Court in Asset Auto India Private Limited v. Union of India (2024), the RD is not allowed to reject a fast-track scheme outright, even if it meets all the conditions in Section 233(1)-(4). If the Regional Director thinks the scheme is against public interest or creditors, they cannot just use their own fairness judgment either. Instead the RD must refer the matter to the NCLT under Section 233(5).

Therefore, minority protection review is beyond the RD’s mandate. 

The 2026 bill compounds this concern. Before, a 90% approval, based on total shares outstanding, was needed. A 10% minority block could then force a referral to the NCLT. However, now, the requirement is 75% of those present and voting. This new rule severely limits minorities' power to veto things.

In companies where shareholders are spread out or uninvolved, especially when many skip meetings, the practical capacity of minority shareholders to resist potentially prejudicial transactions is significantly diminished. Since quorums are easily controlled by the promoters, they meet the necessary thresholds effortlessly. Those two changes of expanding eligibility in 2025 and lowering the threshold in 2026, should not have gone through together without adding protections for the minority at the same time.

The Regional Director's Institutional Limitation

The governance gap is not just about voting thresholds; it is also about institutions. The RD's office was set up to make sure companies follow the law, not to settle valuation debates or check if minority shareholders are getting fair treatment. Since it does not have the processes the NCLT does, it cannot look into different valuation methods, examine expert evidence or figure out if minorities are being treated unfairly. So widening the scope of cases going through this system without adding more protection leads to accountability issues.

Lessons from Comparative Jurisdictions

The comparative position is instructive over here. Models for corporate law reform, like Delaware, the United Kingdom, and Singapore, let companies have simpler merger processes. But they still look out for small shareholders.

In Delaware, there are appraisal rights. The United Kingdom provides squeeze-out and sell-out rules, and Singapore has dissenter remedies too. These provide minority shareholders a fair shot at the value even if they cannot stop a deal.

India does not have such protections now. In India, a shareholder has limited remedies if it wants to challenge a Section 233 merger. They can object during the regulatory process, which is not set up to judge fairness, or they can try a later oppressive action under Section 241. Both choices are costly and incapable of providing an ex ante determination of fair value.

A Reform Worth Making, but Not Half Made

None of this suggests that the reform should be abandoned. India's NCLT backlog remains a serious obstacle to efficient corporate restructuring, and expanding the availability of fast-track mergers is a legitimate policy objective. Indeed, reducing procedural delays is essential if India seeks to maintain its attractiveness as an investment destination.

However, efficiency should not come at the expense of accountability. If Parliament wishes to broaden access to the Section 233 route, it should simultaneously introduce an appraisal remedy or statutory exit right for dissenting shareholders. The right to seek independent valuation or mandatory NCLT review (if a prescribed minority stake objects) would be limited and thereby protect legitimate stakeholder interests and preserve efficiency.