Friends,
You would know that Zero Coupon Zero Principal (ZCZP) instrument has been included in Schedule VII (eligible CSR activities) of Companies Act 2013. We have shared a post on that on Forum.
Government has notified Companies (CSR) Policy Rules 2026 dated 27th May 2026 to lay down the modalities for companies and NPOs for ZCZP instrument.
For Company under Section 135
- A company under Section 135 (CSR obligation) can subscribe to ZCZP with a cap of 10% of its total CSR expenditure in a financial year.
- A company which subscribes to ZCZP will not be required to:
- a. Undertake impact assessment for expenditure made through ZCZP
- b. CFO will not need to provide Utilization Certificate for such ZCZP amounts
- c. Board of the company will not monitor implementation of the project funded through ZCZP
For NPOs registered on SSE and raising funds and listing ZCZP instrument
- ZCZP should not be for a project with duration of more than 3 succeeding financial years from the year of issue. This means total duration including the year of issue of ZCZP is 4 financial years, similar to the timeframe for an ongoing project under CSR.
- Transfer unspent proceeds of ZCZP to Schedule VII funds (Swachh Bharat Kosh, PMCARES, PMNRF, Clean Ganga Fund) on termination of listing of ZCZP and submit compliance report to SEBI.
- Definition of NPO and ZCZP and compliances are as per the relevant Issue of Capital and Disclosure Regulations (ICDR) and Listing Obligation and Disclosure Regulations (LODR) regulations of SEBI.
The Official Gazette by MCA notifying Companies (CSR) Policy Rules 2026 is appended.
CS Sharad Bhargava
GSR-415-20260529.pdf (1.7 MB)