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

Vikas Welfare Society's FCRA certificate was cancelled under section 14. It holds Rs 55 lakh of foreign contribution and a building bought from it. The Society's president wants to gift both to a sister trust before the authority acts. Later the Society is registered again under the Act. Which statement is correct?

The foreign contribution and assets created from it vest in the prescribed authority on cancellation of the certificate under section 14. If the Society is later registered under the Act, the authority must return them. A private gift to a sister trust is not a valid route, and there is no permanent forfeiture.

  1. AThe gift is valid because the certificate is already cancelled, so section 7 no longer applies
  2. BThe foreign contribution and assets vest in the prescribed authority, which must return them if the Society is subsequently registeredCorrect
  3. CThe assets pass automatically to the sister trust on cancellation
  4. DThe funds are forfeited permanently to the Central Government with no return

Explanation

Under section 15(1), foreign contribution and assets created out of it in the custody of a person whose certificate is cancelled vest in the prescribed authority. Section 15(3) requires the authority to return them if the person is subsequently registered. So the president cannot validly dispose of them, and they are not forfeited permanently.

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