Following the notification of the Foreign Contribution (Regulation) Amendment Act, 2020 (the “Act”) with effect from 29 September 2020 (refer update below), the Ministry of Home Affairs has notified the Foreign Contribution (Regulation) (Amendment) Rules, 2020, with effect from 10 November 2020. The said Rules make several important amendments with respect to the conditions for registration and/or prior permission for receipt of foreign contribution, among others, as under:

• Conditions for registration: A person seeking registration for receipt of foreign contribution is required to fulfil the following conditions, namely:

• • it shall be in existence for three years and have spent a minimum amount of rupees fifteen lakh on its core activities for the benefit of society during the last three financial years. Provided that the Central Government, in exceptional cases or in cases where a person is controlled by the Central Government or a State Government, may waive the conditions;
• • if the person wants to include its existing capital investment in assets like land, building, other permanent structures, vehicles, equipment, in the computation of its spending during the last three years, then, the chief functionary shall give an undertaking that the assets shall be vested henceforth with the person till the validity of the certificate and they shall be utilised only for the activities covered under the Act and the rules and shall not be diverted for any other purpose till the validity of its certificate of registration.

• Criteria for grant of prior permission:  A person seeking prior permission for receipt of specific amount from a specific donor for carrying out specific activities or projects shall meet the following criteria, namely:
  • submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given;
  • where the Indian recipient persons and foreign donor organisations having common members, prior permission shall be granted to the person subject to it satisfying the following conditions, namely:
    • the chief functionary of the recipient person shall not be a part of the donor organisation;
    • seventy-five per cent of the office-bearers or members of the governing body of the person shall not be members or employees of the foreign donor organisation;
    • in case of foreign donor organisation being a single individual that individual shall not be the chief functionary or office bearer of the recipient person; and
    • in case of a single foreign donor, seventy-five per cent of the office bearers or members of the governing body of the recipient person shall not be the family members or close relatives of the donor.

• Receipt of contribution in instalments/proof of 75% utilisation: A new Rule 9A provides that if the value of foreign contribution on the date of final disposal of an application for obtaining prior permission is over rupees one crore, the Central Government may permit receipt of foreign contribution in such instalments, as it may deem fit. Provided that the second and subsequent instalment shall be released after submission of proof of utilisation of seventy five per cent of the foreign contribution received in the previous instalment and after field inquiry of the utilisation of foreign contribution.

• Renewal of registration/bar on using funds: If no application for renewal of registration is received or the application is not accompanied by requisite fee before the expiry of the validity of the certificate of registration, the validity of the certificate of registration shall be deemed to have ceased from the date of completion of a period of five years from the date of the grant of certificate of registration. Further, the applicant shall neither receive nor utilise the foreign contribution until the certificate of registration is renewed. The amount of foreign contribution lying unutilised in the FCRA Account and utilisation account of a person whose certificate of registration is deemed to have ceased and assets, if any, created out of the foreign contribution, shall vest with the prescribed authority until the certificate is renewed or fresh registration is granted by the Central Government.

• Custody of foreign contribution where certificate has been cancelled: If the certificate of registration of a person who has opened an FCRA Account is cancelled, the amount of foreign contribution lying unutilised in that Account shall vest with the prescribed authority.

• FCRA account : Any person making an application for registration for acceptance of foreign contribution must have an FCRA Account. Every application for registration and for prior permission  made before the commencement of these rules but not disposed of shall be considered only after furnishing the details of such FCRA Account.

To refer to the Foreign Contribution (Regulation) (Amendment) Rules, 2020, click here.