MCA facilitates Corporate Social Responsibility through Zero Coupon Zero Principal Instrument

• Dushyant Sharma
• 30 May 2026
• 132 Views

In alignment with the centre’s vision of Viksit Bharat @ 2047 (i.e., Developed India by 2047), the Ministry of Corporate Affairs has expanded the scope of Schedule VII of the Companies Act, 2013. For this, the Ministry has introduced a new item: (xiii) "Subscription to zero coupon zero principal instruments on Social Stock Exchange." The Ministry has facilitated Corporate Social Responsibility (CSR) initiatives through these Zero Coupon Zero Principal Instruments by broadening framework of Schedule VII of the Act.

Additionally, to support the CSR implementation using Zero Coupon Zero Principal Instruments, amendments have been made to CSR Policy Rules 2014 by the MCA. These amendments include new definitions for Not for Profit Organization and also for the Zero Coupon Zero Principal Instrument in Rule 2 as well as specific criteria for implementing CSR via these instruments as outlined in Rule 4A. 

This amendment intends to provide major ease of compliance to companies. Additionally, it will help Not for Profit Organisations to raise funding for public welfare projects in a manner that’s transparent as well as regulated. These NPOs will be able to issue Zero Coupon Zero Principal Instrument on the Social Stock Exchange (SSE) in accordance with the market watchdog Securities and Exchange Board of India's Regulations.

The expenditure that CSR-mandated companies incur for such instruments shall not exceed ten percent of their total CSR expenditure for that financial year. The legal framework for CSR is outlined in Section 135 of the Companies Act, 2013, along with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014. 

Schedule VII enumerates activities that can be undertaken as CSR. The schedule aligns such activities with national priorities so as to promote inclusive as well as sustainable development. The relevant amendment notifications (Gazette Notification no. G.S.R. 415 (E) and G.S.R. 416 (E) dated 27.05.2026) have been published on Ministry of Corporate Affairs website.

Source: Press Information Bureau (PIB)