MCA Amends Rules To Allow Companies To Undertake CSR Through Social Stock Exchange Instruments

The Ministry of Corporate Affairs (MCA) has notified amendments to the Corporate Social Responsibility (CSR) Rules allowing companies to carry out CSR activities through zero-coupon, zero-principal instruments issued by not-for-profit organisations registered with the Social Stock Exchange segment of a recognised stock exchange.

Under the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026, which came into force on May 27, expenditure incurred on such instruments cannot exceed 10% of a company's total CSR expenditure for the relevant financial year.

The amendment also exempts companies subscribing to such instruments from undertaking impact assessments of projects funded through them.

The rules prescribe conditions for not-for-profit organisations issuing the instruments and raising funds through them. Projects undertaken using funds raised through such instruments cannot have a duration exceeding three succeeding financial years from the date of issuance of the instrument.

Further, upon termination of the listing of the instrument, the issuing not-for-profit organisation must transfer any unspent amount to a fund included in Schedule VII to the Companies Act and submit a compliance report to the Securities and Exchange Board of India (SEBI).

The amended rules define a zero-coupon, zero-principal instrument as a security issued by a not-for-profit organisation registered with the Social Stock Exchange segment of a recognised stock exchange in accordance with SEBI regulations.

The notification states that most of the existing rules governing the implementation of CSR projects will also apply when companies undertake CSR activities through these instruments, except for certain specified requirements.