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The Ministry of Corporate Affairs (“MCA”) through Notification No. G.S.R. 415(E) dated 27.05.2026 has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 (“CSR Amendment Rules”) which amend the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Principal Rules”) to permit companies to undertake a portion of their CSR obligations through Zero Coupon Zero Principal (“ZCZP”) Instruments issued by eligible Not for Profit Organisations (“NPOs”) registered with the Social Stock Exchange (“SSE”).
By Notification No. G.S.R. 416(E) dated 27.05.2026, MCA has also amended Schedule VII of the CA 2013 to expressly include subscription to ZCZP Instruments issued by NPOs and listed on the SSE as an eligible corporate social responsibility activity.
The CSR Amendment Rules introduce the definitions of NPOs and ZCZP Instrument. An NPO has been defined to have the same meaning as assigned to it under clause (e) of Regulation 292A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018. A ZCZP Instrument has been defined to mean an instrument declared as a security that is issued by an NPO registered with the SSE segment of a recognised Stock Exchange in accordance with the regulations made by the SEBI.
A new Rule 4A has been inserted to regulate CSR implementation through ZCZP Instruments, as per this, companies may subscribe to such instruments and treat the corresponding expenditure as CSR spending. However, the amount deployed through ZCZP Instruments cannot exceed 10% (ten percent) of the company’s total CSR expenditure for the relevant financial year. The CSR Amendment Rules also provide a compliance relaxation by exempting companies that subscribe to ZCZP Instruments from undertaking an impact assessment of projects funded through such instruments.
Further, the CSR Amendment Rules impose certain obligations on NPOs issuing ZCZP Instruments. Such NPOs must utilise the funds for projects that are completed within a period not exceeding 3 (three) succeeding financial years from the date of issuance of the ZCZP Instruments. Upon termination of the listing of the instrument, any unspent amount must be transferred to a fund specified under Schedule VII of the CA 2013, and a compliance report must be submitted to SEBI.
The CSR Amendment Rules further clarify that the existing provisions relating to CSR implementation under Rule 4 of the CSR Principal Rules will continue to apply to CSR activities undertaken through ZCZP Instruments, except for sub-rules (5) and (6) thereof.
The CSR Amendment Rules came into force on the date of their publication in the Official Gazette, i.e., 29.05.2026.
* Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026.
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