MCA lets companies route up to 10% of CSR spending via Social Stock Exchange
Key points
- Companies may now carry out CSR through zero coupon zero principal instruments issued by not-for-profits registered on a Social Stock Exchange segment.
- Spending through these instruments is capped at 10% of a company's total CSR expenditure for the year and needs no impact assessment.
- The rules, G.S.R. 415(E) dated 27 May 2026, took effect on publication in the Official Gazette.
The Ministry of Corporate Affairs (MCA) has amended the corporate social responsibility (CSR) rules so that companies can meet part of their CSR spending by subscribing to zero coupon zero principal instruments issued by not-for-profit organisations on the Social Stock Exchange. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 were notified as G.S.R. 415(E) dated 27 May 2026 and came into force on their publication in the Official Gazette.
What has changed
The amendment adds two definitions to rule 2(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014:
- Not for Profit Organization has the same meaning as in clause (e) of regulation 292A of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.
- Zero coupon zero principal instrument means an instrument declared as a security that is issued by a Not for Profit Organization registered with the Social Stock Exchange segment of a recognised stock exchange, in accordance with SEBI regulations.
It also inserts a new rule 4A on CSR through these instruments:
| Provision | What it says |
|---|---|
| Rule 4A(1) | A company may carry out CSR activities through a zero coupon zero principal instrument. Expenditure on such instruments must not exceed 10% of the company’s total CSR expenditure for that financial year. |
| Rule 4A(2) | A company that subscribes is exempt from undertaking an impact assessment of any project funded by the instrument. |
| Rule 4A(3)(a) | The issuing organisation must undertake a project lasting not more than three succeeding financial years from the issue of the instrument. |
| Rule 4A(3)(b) | When the instrument’s listing ends, the organisation must transfer the unspent amount to a fund included in Schedule VII to the Companies Act, 2013 and submit a compliance report to SEBI. |
| Rule 4A(4) | Rule 4 of the CSR Rules applies to CSR through these instruments, except its sub-rules (5) and (6). |
A companion notification of the same date, G.S.R. 416(E), adds item (xiii) to Schedule VII of the Companies Act, 2013: “Subscription to zero coupon zero principal instruments on Social Stock Exchange.”
Who is affected
The new route is open to companies that must spend on CSR under section 135 of the Companies Act, 2013, and is relevant to their boards and CSR committees. It also affects not-for-profit organisations registered with a Social Stock Exchange segment that raise funds through these instruments, since rule 4A(3) places the project-duration and unspent-amount obligations on them. The amendment does not change which companies must spend on CSR or how much they must spend.
What this means for businesses
In practice, this gives CSR committees a listed, SEBI-regulated channel for a limited part of the annual CSR budget. If a company’s total CSR expenditure for the year is ₹1 crore, no more than ₹10 lakh of it can go through these instruments.
Points to keep in mind:
- The exemption from impact assessment covers only projects funded by the instrument, not the rest of the company’s CSR programme.
- The three-year project limit and the transfer of unspent amounts on delisting are obligations of the issuing organisation, not the subscribing company.
- Rule 4 continues to apply, except sub-rules (5) and (6). The notification does not restate what rule 4 requires, so companies should check its implementation conditions with their advisers before subscribing.
- The notification is silent on how a subscription should be reported in the company’s annual CSR reporting or accounted for. Companies may want to confirm these points with their auditors.
Key dates
- 27 May 2026: G.S.R. 415(E) and G.S.R. 416(E) issued; both came into force on publication in the Official Gazette.
- Each financial year: the 10% cap applies to the company’s total CSR expenditure for that year.
This update was written with AI from the official source above and automatically fact-checked against it before publishing. It is general information, not professional advice. Check the source, or talk to a Chartered Accountant, before acting on it.