MCA permits companies to undertake CSR activities through SSE-listed zero coupon instruments issued by NPOs.
Meetu Kumari | May 30, 2026 |
MCA Permits CSR Spending Through Social Stock Exchange Zero Coupon Instruments.
The Ministry of Corporate Affairs has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014 through the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026, notified on 27 May 2026. The amendment introduces a new mechanism allowing companies to undertake CSR activities through subscription to “zero coupon zero principal instruments” issued by eligible Not for Profit Organisations (NPOs) registered on the Social Stock Exchange.
The notification inserts definitions of “Not for Profit Organization” and “zero coupon zero principal instrument” into Rule 2 of the CSR Rules. The term NPO adopts the meaning provided under Regulation 292A of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The amendment also defines a zero coupon zero principal instrument as a security issued by an NPO registered with the Social Stock Exchange segment of a recognised stock exchange in accordance with SEBI regulations.
A new Rule 4A has been inserted permitting companies to carry out CSR activities through such instruments. However, the amount invested through these instruments cannot exceed 10% of the company’s total CSR expenditure for the relevant financial year.
The amendment further provides that companies subscribing to these instruments will not be required to undertake impact assessment for projects funded through such investments. This relaxes the compliance burden otherwise applicable to certain CSR projects under the CSR framework.
The rules also impose specific obligations on the NPO issuing the instrument. The NPO must utilise the funds for projects having a duration of not more than three succeeding financial years from the date of issue of the instrument. Additionally, upon termination of listing of the instrument, 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 SEBI.
Further, the amendment clarifies that the provisions of Rule 4 relating to CSR implementation agencies will apply to CSR implementation through zero coupon zero principal instruments, except sub-rules (5) and (6).
The amendment has come into force from the date of its publication in the Official Gazette,27 May 2026.
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