the Ministry of Corporate Affairs (MCA) has introduced zero coupon, zero principal instruments (the instrument) to help companies facilitate corporate social responsibility (CSR) compliance. A company that has subscribed to the instrument will be exempt from undertaking impact assessment for its projects.
The instrument’s value cannot be more than 10% of the total CSR expenditure of the company in a financial year.
A not-for-profit organisation (NPO), registered with the social stock exchange segment of a recognised stock exchange, can declare the instrument as security. NPOs issuing the instrument and raising funds can only undertake projects in the succeeding three financial years.This has been done through amendments to schedule VII of the Companies Act, 2013 and introducing rule 4A to the CSR Rules, 2014.
When the instrument is terminated, the unspent amount is to be transferred to any other fund under schedule VII and the related compliance report must be submitted to the Securities and Exchange Board of India. This is expected to help NPOs raise funds for public welfare projects in a transparent and regulated manner.
The gazette notifications were notified on 27 May 2026 and took effect the same day.
