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CS Professional · CSR and Social Governance · Foreign Funding to Non-Corporate Entities

Vidya Mandir Society, a registered FCRA entity, has its certificate cancelled under Section 14. It holds Rs 12 lakh of unspent foreign contribution and a school building created from foreign contribution. The trustees plan to give both to Shiksha Trust, another registered NGO, before any authority steps in. Applying the Act, which statement is correct?

The plan is wrong. Under Section 15, once a certificate is cancelled the foreign contribution and assets created from it vest in the prescribed authority, which may manage the activities and must return them if the society is later registered again. Handing them to another NGO is not permitted.

  1. AThe plan is valid because Shiksha Trust is registered
  2. BThe plan is valid if the transfer is completed before the cancellation order is communicated
  3. CThe plan is valid if Shiksha Trust uses the assets for education
  4. DThe plan is wrong because the foreign contribution and assets created from it vest in the authority prescribed, and the authority may manage the activities and later return them if the society is registered againCorrect

Explanation

Section 15(1) vests the foreign contribution and assets created out of it in the prescribed authority once the certificate is cancelled. The authority may manage the activities, use funds or dispose of assets if needed (15(2)), and must return them if the person is later registered (15(3)). A private handover to another NGO is not provided for, and it also conflicts with Section 7.

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