The Ministry of Corporate Affairs (MCA) has introduced a significant amendment to the Companies (CSR Policy) Rules, 2014, vide notification dated 27 May 2026.
– New CSR Route:
Companies can now implement CSR by subscribing to “zero coupon zero principal instruments” issued by Not-for-Profit Organisations (NPOs) listed on the Social Stock Exchange (SSE).
* Key Highlights:
– 10% Cap: CSR spend via SSE instruments is limited to 10% of the company’s annual CSR outlay.
– Impact Assessment Exemption: Projects funded through these instruments are exempt from mandatory impact assessment.
– Safeguards: NPOs must complete projects within 3 years and transfer unspent funds to Schedule VII funds upon delisting.
– Integration: Existing CSR Rule 4 conditions apply, except sub-rules (5) & (6).
* Implications for Companies:
– Update CSR Policy to include SSE instruments as an optional route.
– Sensitise CSR Committees & Boards about advantages (regulated NPOs, compliance relief) and limitations (10% cap, no financial return).
– Evaluate SSE-listed NPOs aligned with CSR focus areas before the next cycle.
This amendment strengthens transparency, ensures time-bound utilisation of CSR funds, and integrates capital market mechanisms into CSR implementation.
At DTSM & Associates, we continue to track regulatory developments to help organisations align CSR strategies with evolving compliance frameworks.