The Ministry of Corporate Affairs (MCA), on May 27, 2026, notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026, which came into force upon publication in the Official Gazette. The amendment introduces definitions for “Not for Profit Organization (NPO)”, aligned with the definition under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, and “Zero Coupon Zero Principal Instrument (ZCZP)”, a security issued by an NPO registered with the Social Stock Exchange segment of a recognised stock exchange.
The amendment inserts a new Rule 4A, permitting companies to undertake Corporate Social Responsibility (CSR) activities through investment in ZCZP instruments. However, expenditure on such instruments cannot exceed 10% of the company’s total CSR expenditure for a financial year. Companies subscribing to ZCZP instruments will also be exempt from the requirement of conducting impact assessments for projects funded through these instruments.
The rules further require NPOs issuing ZCZP instruments to utilise the funds for projects with a duration not exceeding three succeeding financial years from the date of issuance. Upon termination of the instrument’s listing, any unspent amount must be transferred to a fund specified under Schedule VII of the Companies Act, 2013, and a compliance report must be submitted to the Securities and Exchange Board of India (SEBI). The amendment also provides that most provisions governing CSR implementation through implementing agencies will apply to CSR activities carried out through ZCZP instruments.
[G.S.R. 415(E)]
