MCA Enables CSR Spending Through ZCZP Instruments on SSE

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CSR Spending Through ZCZP Instruments

Notification No. G.S.R. 415(E). and 416(E)., Dated 27.05.2026

The Ministry of Corporate Affairs (MCA), vide G.S.R. 415(E) and G.S.R. 416(E) dated 27 May 2026, has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Schedule VII of the Companies Act, 2013 to facilitate implementation of Corporate Social Responsibility (CSR) activities through Zero Coupon Zero Principal (ZCZP) Instruments.

As part of the amendments, the CSR Rules now define a “Not for Profit Organisation” and a “Zero Coupon Zero Principal Instrument”. A ZCZP Instrument means an instrument declared as a security that is issued by a Not-for-Profit Organisation registered with the Social Stock Exchange segment of a recognised Stock Exchange in accordance with the regulations made by SEBI.

A new Rule 4A has been inserted to provide for Corporate Social Responsibility implementation through ZCZP Instruments. A company may carry out CSR activities through a ZCZP Instrument, subject to the condition that expenditure incurred on such instrument shall not exceed ten per cent of the total CSR expenditure of the company for the relevant financial year.

The amendment further provides that a company subscribing to a ZCZP Instrument shall be exempted from undertaking an impact assessment of any project funded through such an instrument.

The not-for-profit organisation issuing the ZCZP Instrument and raising funds therefrom shall undertake a project with a duration not exceeding three succeeding financial years from the issue of such instrument. Further, upon termination of listing of the ZCZP Instrument, any unspent amount shall be transferred to a fund included in Schedule VII to the Companies Act, 2013, and a compliance report shall be submitted to SEBI.

The provisions of Rule 4 of the CSR Rules, except sub-rules (5) and (6), shall apply to the implementation of CSR through ZCZP Instruments.

Correspondingly, MCA has amended Schedule VII of the Companies Act, 2013 to insert a new item recognising “Subscription to Zero Coupon Zero Principal Instruments on Social Stock Exchange” as an eligible CSR activity.

Click Here To Read The Full Notification

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied