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Changing Key Functionaries

JOHN RAVINDRAN
JOHN RAVINDRANChartered Accountant
CA John Ravindran is a member of the Institute of Chartered Accountants of India for the last 25 years. His firm, John & Julian Chartered Accountants in Chennai, offers consultancy and auditing services to many organisations in the social sector.

    As per the original Rule, whenever there was any change involving replacement of 50 percent or more members of the Executive Committee or Governing council in the case of an organisation that was registered with the Ministry of Home Affairs, Foreigners Division, FCRA wing under Sec 11(1) of Foreign Contribution Regulation Act, 2010, the organisation was required to take prior permission for such a change. Further, the organisations undertook not to accept any foreign contribution till permission was received. In case of organisations that took prior permission to receive foreign contribution, they were required to intimate the Ministry of Home Affairs, Foreigners Division, FCRA wing of any change involving replacement of 50 percent or more members of the Executive Committee or Governing council. Thus, under Foreign Contribution Regulation Act, 2010 (FCRA), any change in the board members in excess of 50 percent shall be made with prior permission. This condition is a part of the undertaking provided by the applicant at the time of making application for ‘registration’ or ‘prior permission’. Therefore, even though it is not mentioned in the Act or the Rules, it becomes binding on all the organisations by virtue of the undertaking given at the time of making application for ‘registration’ or ‘prior permission’. But in the year 2015, Foreign Contribution Regulation Rules, 2011 was amended. Government has introduced Rule 17A to FCRR, 2011. Rule 17A reads as follows:

    Change of designated bank account, name, address, aims, objects or key members of the association

    A person who has been granted a certificate of registration or prior permission under Sec 11 of the Act shall intimate electronically online in Form FC-6, within 15 days of any change in the following, namely,
    ● Name of the association or its address within the state for which registration/prior permission has been granted under the Act.
    ● Its nature, aims and objects and registration with local/ relevant authorities.
    ● Bank and/or branch of the bank and/or designated foreign contribution account number.
    ● Key members of the association, if at any point of time such change causes replacement of 50 percent or more of original key members as reported in the application for grant of registration/prior permission/renewal of registration under the Act.

    Now, as per the new Rule, Associations registered with the Ministry of Home Affairs, or under prior permission under Sec 11(1) of FCRA, 2010 require to intimate electronically in Form FC-6E (Introduced vide FCR Rules amended in 2019) within 15 days of change. The inserted Rule requires that intimation to be filed at that point of time when there is a change of more than 50 percent of the original members as reported in the application for grant or registration/prior permission/ renewal of registration under FCRA, 2010.

    For example:  If there are 7 trustees in a Trust and that was reported in  the application of registration/prior permission/renewal,  and in the Trust meeting, four of the original trustees as  reported in the application are getting replaced, then we  need to report the change to the Ministry of Home Affairs.  In the same example, in an earlier meeting held a year  ago, two of the original trustees are replaced, now in this  year’s Trust meeting, two more of the original trustees  were being replaced, then we need to report all the  changes in the Form FC-6E.

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