Reason for Cancellation of FCRA Registration

Any ‘Person’ defined in FCRA 2010 can receive foreign contribution subject to having a definite cultural, economic, educational, religious or social programme and It must obtain the FCRA registration/prior permission from the Central Government

* In terms of FCRA, 2010 “person” includes

 (i) an individual;

 (ii) a Hindu undivided family;

(iii) an association;

(iv)a company registered under section 25 of the Companies Act,1956 (now Section 8 of Companies Act, 2013)

The following are prohibited to receive foreign contribution:

 (a) candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;

(c) Public Servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;

(d) member of any legislature;

(e) political party or office bearer thereof;

(f) organization of a political nature

(g) association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication;

 (h) correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (g).

 (i) Individuals or associations who have been prohibited from receiving foreign contribution.

So from the above, we can see that it is mandatory to have FCRA Registration for specified person to take Foreign Fund and please note that FCRA Registration is Valid for a period of Five Years thereafter it is required to be renew before 6 Months of expiry validity date.

While due to pandemic situation, The Ministry of Home Affairs (Foreign Division) has issued public Notice dated 12^th January 2021 in respect of Extension of the validity of the Registration certificates issued under FCRA ACT 2010 Expiring during the period between 29^th Sep 2020 and 31^st May 2021 up to 31^st May 2021.

Apart from the above Ministry of Home Affairs (Foreign Division) also issues list of Registered Associations and Registered Associations whose Registration has been cancelled. Following pie chart represent data as per the dashboard of “FCRAONLINE” as on July 2021

Active Registration:- Active Registration means valid FCRA Associations Registered entity till date

Cancelled Registration:- Cancelled Registration here means Registration cancelled by the department.

Deemed Expired:-. 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 the period of five years from the date of the grant of certificate of registration.

From the statistics we can see 20,673 Registration has been cancelled which means approx. 50% Registration has been cancelled overed the Registration granted.

Reasons for Cancellation of FCRA Registration

If the Ministry of Home Affairs (Foreign Division)  observed that mandatorily compliances have not followed then it shall make order for cancellation of Registered Associations. Following are reason that can leads to cancellation of FCRA Registration

Non Filing of Annual Return:- Every Registered FCRA Association required to file Annual Return in FC-4 within stipulated period and not filing of annual Return is a violation of Section 18 of the Act read with Rule 17 of the Foreign Contribution (Regulation) Rules, 2011 and hence in exercise of the power conferred by section 14 of the Act, the Central govt hereby can give Order for cancellation of registration of Registered Associations.

NOTE:- Once FCRA has been cancelled shall not be eligible for registration or grant of prior permission for a period of three years from the date of cancellation of such certificate.

Not working in Public Interest :- Registered FCRA Association has to work for the public interest. As cultural, economic, educational, religious or social programme is define object to taking FCRA Registration from Central Government and said object should be in public Interest. So not working in public interest can leads to cancellation of FCRA Registration and other penal provision also applicable.

Not maintaining proper FCRA Account- it is mandatory to opened their bank account, as mandated under section 17 of the FCRA, 2010 in one or more banks who have integrated their system with public Financial Management System (PFMS). If it has been observed by the central Government that Registered Association has not complied with the said requirement then they can issue order against the Association for Cancellation of certificate.

Utilization of Foreign Contribution for administrative Purpose :- Main object to raise fund from Foreign by the registered organisation is to fulfil the core area of the NGO which should related with  cultural, economic, educational, religious or social programme. Avoid as far as possible more than 50% of foreign contribution, received in a particular financial year to administrative expenses. As this can become a reason of cancellation of certificate.

Acceptance of Foreign contribution in undisclosed bank Account:- Foreign contribution should be received in Foreign contribution designated account only and Registered Association should not have more than one foreign designated account. Further Hiding of  amount, source and manner in which the foreign contribution/remittance was received can leads to cancellation of certificate.

Making of False Statement, declaration or delivering false accounts:-  if association/NGO/Society knowingly gives false intimation under clause (c) of section 9 or section 18 or seeks prior permission or registration by means of fraud, false representation or concealment of material fact then that can also leads to cancellation of certificate.

Note:- Certificate of Registration is valid for five years from the date of granted. Further An application for renewal of the certificate of registration shall be made to the Central Government in electronic form in Form FC-3C before 6 months from the date of validity of certificate.

Renewal of FCRA Registration

Every person seeking renewal of the certificate of registration under section 16 of the Act shall open an FCRA Account and mention details of the account in his application for renewal of registration.

Before seeking renewal of Registrations. The associations must have filed all previous ARs, Darpan ID and designated “FCRA Account” in SBI, Main Branch New Delhi. Filing of AR is mandatory for even ‘NIL’ FC receipt.

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DISCLAIMER: The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, the author assumes no responsibility therefore. Users of this information agrees that the information is not a professional advice and is subject to change without notice. The author assumes no responsibility for the consequences of use of this information. IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.

THE AUTHOR – CS MONIKA MALHOTRA (PRACTICING COMPANY SECRETARY) CAN BE REACHED AT csmonikamalhotra26@gmail.com or +91-9599561517