Ministry of Corporate Affairs (MCA) has added a new entry (Entry No. xiii) in Sch. VII of the Companies Act 2013, allowing ‘Subscriptions to Zero Coupon Zero Principal (ZCZP) instruments listed on Social Stock segment of various stock exchanges’[1].
[2]The above subscriptions are subjected to following conditions:
- MCA has limited that maximum amount that a company can invest through ZCZP is 10% of the total CSR Expenditure for that FY.
- The NPO can issue ZCZP Bonds for a project, which will not be for a period more than the three years plus year in which introduced.
- At the end of the project, NPO would need to transfer any unspent amount to any of the Sch VII listed funds, thus no need to transfer back unspent funds to the company at the end of the Financial Year.
- Company management is not responsible for giving UC for such a project, that means, subscription amount to such Bonds will be treated as CSR expenditure for reporting by the company.
- Company management is not responsible for monitoring of such projects, presumably as SSE requires such NGOs to submit annual and project-end evaluation reports to SSE portal.
For any further information on above topic, watch out for further post.
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Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008
[1]GSR 416(E) dt 27-5-2026
[2]GSR 415(E) dt 27-5-2026
Are companies in the business of running their business activities or should they undertake social activities ? Since introduction of CSR in 2014, increasingly companies in their Board rooms are spending time discussing CSR related activities and developing capacities of their CSR Depts. Question arises, should the companies be focussing on what they are good at, i.e., their business activities, or should they be focussing on CSR activities.
I feel, while ultimately they may do it, but their heart will not be in the activity, why such development of projects and their implementation be not left to experts, i.e. social scientists & development experts, why companies should invest in developing expertise in the domains which are not part of their business activities. We have seen in past when Govt gets into development activities, it always is a beuracratic approach. Once I compared two public drinking water projects, one being implementing by a specialised development agency, and another under (erstwhile) Swajaldhara. Scenario at the two projects, could not be more contrasting. At the development agency, the project was in place and running successfully, community was fully in control of the project, as they had been trained in managing the project. The committee knew each and every person who was drawing water from the public taps, they charged extra O&M charges from one family, which ran a dairy using the water from public system. Under Swajaldhara, no one knew why Drinking Water Project was not progrssing. The contractor had paid 10% community charges (to satisfy the Sarpanch, who had made an election promise to provide drinking water facility, without inital 10% community contribution), but since Sarpanch lost election, contractor lost interest, community was not even aware that Project had been approved by Govt, and money was just lying idle at Panchayat.
Thus the recent changes in CSR rules, where Govt now is allowing the companies to invest in projects developed by NPOs, I hope will take away requirements of project design, monitoring and impact assesssment from the company, however factors for success would be builtin the system where Social Stock Exchange requires regular disclosure from NPOs. I feel this approach, ultimately will help all – companies, who can focus on their business, NPOs who will get money if they implement successful projects. Hope Social Stock Exchanges, will also develop the concept of bringing in elements of social audits in the impact assessment, so the community provides its feedback on the quality and success of social projects. Such a situation will be win-win for all.
Loook forward to comments from others.