CSR Rules 2026: MCA Allows Companies To Use Zero Coupon Zero Principal Instruments Via Social Stock Exchange

The Ministry of Corporate Affairs (MCA) has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026, enabling companies to undertake Corporate Social Responsibility (CSR) activities through “Zero Coupon Zero Principal Instruments” (ZCZP Instruments) listed on Social Stock Exchanges.

The amendments came into force on May 27, 2026, the date of their publication in the Official Gazette.

CSR Framework Expansion Via Social Stock Exchange

The move is aimed at expanding the scope of CSR implementation by allowing companies to channel funds through market-linked social instruments issued by Not for Profit Organisations (NPOs). The notification marks a significant step toward integrating CSR funding with the Social Stock Exchange ecosystem, which is regulated under the Securities and Exchange Board of India (SEBI).

Under the amended rules, a “Not for Profit Organisation” (NPO) will have the same meaning as assigned under Regulation 292A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Introduction Of Zero Coupon Zero Principal Instruments

The notification also introduces a definition for “Zero Coupon Zero Principal Instrument”, describing it as a security issued by an NPO registered with the Social Stock Exchange segment of a recognised stock exchange in accordance with SEBI regulations.

The newly inserted Rule 4A allows companies to implement CSR projects through such instruments. However, expenditure on Zero Coupon Zero Principal Instruments cannot exceed 10 per cent of a company’s total CSR expenditure for the relevant financial year.

Compliance, Limits, And Safeguards

The amendment further provides that companies subscribing to these instruments will be exempt from conducting impact assessments for projects funded through them.

According to the notification, NPOs issuing Zero Coupon Zero Principal Instruments must undertake projects with a duration not exceeding three succeeding financial years from the date of issue. In addition, upon termination of the instrument’s listing, any unspent amount must be transferred to a fund specified under Schedule VII of the Companies Act, 2013, and a compliance report must be submitted to the Securities and Exchange Board of India (SEBI).

The notification also clarified that the provisions of Rule 4 of the CSR Rules, except sub-rules (5) and (6), will apply to CSR implementation through Zero Coupon Zero Principal Instruments.

Objective Of The Amendment

The amendment seeks to facilitate greater participation of companies in social sector projects through Social Stock Exchange-listed instruments while establishing safeguards regarding utilisation of funds and project timelines.