Saturday, August 20, 2016

Registration under Foreign Contribution Regulation Act

Many a times it has been observed that, there are various persons in our surroundings who are involved in social cause with no profit making objective in their mind. These kind of persons always deploy the funds raised by them into the noble cause, like cultural, economical, educational, religious, social or otherwise. There are various ways of raising funds by them, which can be by way of receipt of donation, charity or any other way. The another and the most important aspect of these activities are that they receive foreign contribution from the foreign source also, so that they can perform activities on a larger scale. But, indeed of their noble cause there are some restrictions and/or obligations which have been imposed by the Ministry of Home Affairs over the person and the registration is required to be obtained by the person supposing to accept foreign contribution.

In this Article, we will ascertain what are the obligations or eligibility criteria which are required to be fulfilled by the person receiving foreign contribution, what is the procedure and various other key points, by analysing the provisions made under the Foreign Contribution (Regulation) Act, 2010 (hereinafter referred to as the FCRA).


As per the provisions of clause (m) of Section 2 of the FCRA, “Person” includes-

(1) An individual

(2) A Hindu Undivided Family (HUF)

(3) An association

(4) A company registered under Section 8 of the Companies Act, 2013 or Section 25 of the Companies Act, 1956.

“Association” as per clause (a) of Section 2 of the FCRA means-

i. an association of individuals, irrespective of whether incorporated or not,

ii. society, whether registered under the Societies Registration Act, 1860.


As per the provisions of Section 11 of the FCRA, every person who is engaged in any cultural, economical, education, religious, social or like otherwise activities, and is expecting the contribution to be received by any foreign source, is required to attain registration with the Central Government, FCRA Wing of Ministry of Home Affairs (FCRA Wing) or have to attain prior permission of the FCRA Wing, before accepting any such kind of Foreign Contribution.


As per the provisions of sub-section (4) of Section 11 there are certain conditions which have been imposed by the Central Government, which is to be checked by the person before applying for Registration under FCRA or obtaining prior approval, which are as under-

a) The person is not fictitious or benami:

As per Black Law Dictionary- a person appearing as a claimant with no right to do so, OR

A person founded on a fiction; having the character of a fiction ; false, feigned,or pretended.

b) The person has not been prosecuted for engaging in activities which forcefully leads to conversion of religion, either directly or indirectly,

c) The person is not engaged in activities creating communal tension or disharmony,

d) The person shall not be guilty of mis-utilisation of its funds.

Example– An organisation is formed with an objective of promoting religious culture in the society, but it has started utilising the funds raised by them into any other line of activity which is not aligning with the objective of the organisation.

e) The person is not suppose to use the foreign contribution for the personal gain or for any purpose other than that for which the contribution has been taken,

f) The person has not contravenes any provisions of this Act, and

g) The person has not been barred by the Central Government for availing foreign contribution.

h) The person making an application for registration under the FCRA has undertaken reasonable activity for the benefit of the society at large, if the person is moving an application for prior approval for the acceptance of foreign contribution, then it must have prepared reasonable project for the benefit of society.

i) There should not be any kind of conviction or prosecution pending in any other law for the time being in force against the person or any of its office bearers,

j) The foreign contribution by the person shall not in any way make affect to the sovereignty, integrity of India, security, strategic, economic and scientific interest of the state, public interest, freedom of election or its fairness, and/or friendly relation amongst various states, and/or

k) The foreign contribution shall not lead to incitement of any offence or endanger anyone’s life or physical safety.


As per Rule 4 of the FCRA, there are two kinds of business/activities for which the foreign contribution is prohibited to be taken, which are as follows-

a) Any activity or investment which changes according to the market condition or force. In simple terms, stock market or any other platform as such. The activity which can lead to increase or decrease in the value of the Investment made, and/or

b) Any participation in any scheme or project which anticipates high return but is not directly linked 

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