MCA introduces new activity for CSR under Companies Act 2013

The Ministry of Corporate Affairs (“MCA”) has introduced a new activity, i.e. “Subscription to zero coupon zero principal instruments on Social Stock Exchange” to Schedule VII of the Companies Act 2013. It facilitates Corporate Social Responsibility (“CSR”) through Zero Coupon Zero Principal Instrument.

To facilitate implementation of CSR through Zero Coupon Zero Principal Instrument, the CSR Policy Rules 2014 has also been amended. The definition of Not-for-Profit Organization’ and ‘Zero Coupon Zero Principal Instrument’ has been introduced in Rule 2. Further, the criteria for CSR implementation through zero coupon zero principal instrument has been prescribed in Rule 4A. It is effective from 27th May 2026.

It aims to provide significant ease of compliance to the companies and helps Not for Profit Organisations (“NPOs”), to raise funding for public welfare projects in a transparent and regulated manner. The NPOs will be able to issue Zero Coupon Zero Principal Instrument on the Social Stock Exchange (“SSE”) in accordance with the Securities and Exchange Board of India’s Regulations.

Expenditure incurred by the CSR mandated companies for such instruments must not exceed 10% of the total CSR expenditure for that financial year.

Source: Ministry of Corporate Affairs