The Ministry of Corporate Affairs (MCA) has introduced the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 w.e.f 27th May, 2026.
Through this amendment the MCA has introduced the concept of making Corporate social responsibility (CSR) expenditure by investment in “Zero Coupon Zero Principal” (ZCZP) instruments issued by Non Profit Organisations (NGO) registered on Social Stock Exchanges. The Social Stock Exchange (SSE) was introduced by SEBI in 2022 as a platform for NPOs and for-profit social enterprises to raise funds from the public and institutional investors.
SSE and ZCZP – NGOs, organisations carrying out CSR Activities and having prescribed track record can get themselves registered on the Social stock exchanges for better visibility and attracting donations from Companies. Such NGOs registered with social stock exchanges can issue “Zero Coupon Zero Principal” (ZCZP) instruments.
What is ZCZP instrument – Zero coupon zero principal instrument are unique financial instruments where investors do not expect financial returns and the principal is never repaid. ZCZP instruments do not provide fixed interest or repayment returns, but they do promise a social return to the funder. These instruments act as a regulated donation as against regular donations to NGOs.
Key highlights of the CSR Amendment, 2026
- The Companies can now fulfil CSR obligations by subscribing to ZCZP instruments issued by social stock exchange registered NPOs. This is permissible CSR expenditure.
- Investment made in ZCZP instrument by a Company shall not exceed 10 % of the total Corporate Social Responsibility expenditure of the Company for that financial year.
- It can only be issued for a specific project or activity that qualifies as one of the eligible activities outlined in Regulation 292E of SEBI (ICDR) Regulations, 2018, and must adhere to a designated project duration.
- The project undertaken by a NGO by raising funds through issuing ZCZP shall be with a duration not more than 3 succeeding financial years from the issue of such ZCZP instrument.
- The company that has subscribed in a ZCZP instrument shall be exempted from undertaking impact assessment of any project funded by such an instrument.
- On termination of listing of such ZCZP instrument, NGO to transfer the unspent amount to any fund included in Schedule VII to the Companies Act, 2013 and submit its compliance report to the SEBI.
- Rule 4(5) and 4(6) are not applicable to CSR through ZCZP instruments. Rule 4(5) relates to funds utilisation in proper way and CFO certification to that effect and Rule 4(6) deals with ongoing project monitoring.