MCA Updates CSR Rules to Include Social Stock Exchange Funding
MCA amends CSR rules, allows funding via Social Stock Exchange tools
Image: Asianet Newsable
The Ministry of Corporate Affairs (MCA) has amended CSR rules to allow companies to fund social projects via 'Zero Coupon Zero Principal Instruments' listed on Social Stock Exchanges. Effective from May 27, 2026, the changes aim to enhance corporate participation in social initiatives while ensuring fund utilization safeguards.
- 01The amendment allows companies to use 'Zero Coupon Zero Principal Instruments' for CSR activities.
- 02Expenditure on these instruments is capped at 10% of the total CSR expenditure for the financial year.
- 03NPOs must complete projects funded through these instruments within three financial years.
- 04Companies using these instruments are exempt from impact assessments for funded projects.
- 05Unspent funds must be transferred to a specified fund under the Companies Act upon termination of the instrument's listing.
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The Ministry of Corporate Affairs (MCA) has introduced amendments to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026, which enable companies to engage in Corporate Social Responsibility (CSR) activities through 'Zero Coupon Zero Principal Instruments' (ZCZP Instruments) listed on Social Stock Exchanges. These amendments, effective from May 27, 2026, define 'Not for Profit Organisation' (NPO) and outline the characteristics of ZCZP Instruments, which are securities issued by NPOs registered with recognized stock exchanges. Companies can allocate up to 10% of their total CSR budget to these instruments without needing to conduct impact assessments. NPOs must ensure that projects funded through ZCZP Instruments are completed within three financial years. Additionally, any unspent funds must be redirected to a designated fund under the Companies Act, 2013, upon the termination of the instrument's listing. This initiative aims to boost corporate involvement in social projects while maintaining oversight on fund usage and project timelines.
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The amendment encourages companies to invest in social initiatives, potentially increasing funding for social projects.
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