Thursday, 20 August 2015

FCRA Renewal - To file or not to file now???

There is hardly a day at our office when we do not receive queries by e mail, phone or a personal visit, regarding FCRA renewal. Earlier this year we thought this was the flavour of a season. It would seem now that it may go down as the all dominating flavour of the year 2015!
At CAP, we, tongue firmly in cheek, consider ‘FCRA Renewal’ the Mother of all FAQs. Hence the necessity to provide this detailed analytical update. 

Is Renewal Mandatory?
Under FCRA 1976, registration once granted did not require any renewal unless specifically cancelled by the Ministry of Home Affairs.

However, under the new FCRA 2010 'Registration' is granted for a period of five years. Thus, all registrations granted under FCRA, 1976 shall remain valid for a period of 5 years from the date FCRA 2010 came into force i.e., 1st May, 2011.

Thus, validity of FCRA registration for associations granted registration prior to 1st May 2011 is 30th April, 2016.

In other words, associations registered under FCRA before 1st May 2011 must apply for renewal before 30th September 2015.

However, an Association granted registration under FCRA, 2010, i.e., after 1st May, 2011, may apply for renewal of registration six months before the date of expiry of the validity of its certificate of registration.

Have Associations implementing ongoing Multi-year projects missed the deadline?
The FC Rules state that associations implementing an ongoing Multi-year project should apply for renewal twelve months before the date of expiry of the certificate of registration.

In other words such associations should have applied for renewal by March 2015!
However, "Ongoing multi-year project" is nowhere stated in the FCRA 2010 let alone defined. It would simply mean projects that are funded in installments over a period of 3 to 5 years.

To reiterate, the requirement for "ongoing multi-year project" to apply for renewal 12 months before expiry has been referred to in the Rules. However, as per the Act all organisations (including those running "ongoing multi-year project") may also apply anytime six months before expiry of the registration. When there is a conflict between the Rules and the Act, the Act prevails.

Thus even associations implementing ongoing Multi-year projects may apply anytime before 30th September. They have NOT MISSED the deadline!

Have you registered for availing FCRA online services?
Ministry of Home Affairs in its latest circular dated 28th July 2015 has announced that it will be making all FCRA services online “in order to improve the existing services of FCRA, faster processing and disposal of cases and also to bring transparency”.
The circular adds that in order to avail the online services of FCRA with ease, all associations registered under FCRA are advised to update their latest information (particularly contact details, registration number and FCRA bank account) in the next 15 days at the link

The procedure is quite simple and the details asked for are quite basic. The process can be completed quite easily within a few minutes.
Renewal of FCRA Form FC 5 or the new (proposed) Form FC3?
Confusion, more confusion and confusion confounded!!!
We know of several large and small NGOs who wanting to play safe have already applied for renewal by downloading Form FC 5 and sending it several months ago by post along with the pay order / DD of Rs. 500/-. These envelops are lying unopened at the MHA’s office in New Delhi and the DDs remain enchased – some have even expired after three months. Many knew this was an exercise in futility, but, they did this “to play on the safer side”! It gave them some sense of comfort in complying with the law.
As most of us are aware Form FC 5 is not available for online submission as yet and in the meantime MHA has proposed replacing the current Foreign Contribution (Regulation) Rules (FCRR) 2011 with the new Foreign Contribution (Regulation) Amendment Rules 2015.
Currently the form for seeking Registration under FCRA is Form FC 3, for seeking Prior Permission to receive foreign contribution is FC 4 and for seeking renewal of registration is FC 5.

Under the proposed new Rules MHA has sought to integrate application for ‘Registration’, ‘Prior Permission’ & ‘Renewal’ all in one new integrated Form FC3.
Barely 6 weeks remain for that magical deadline of 30th September 2015 and neither Form FC 5 nor the new form FC 3 is available for online renewal.
Does it make sense bringing in this new form at a time when about 25,000 NGOs are expected to apply for renewal of FCRA registration? We think not!
Also, the proposed new rules require all applications be it registration, prior permission or renewal, to be digitally signed.
Supporting documents that need to go with the application can be sent as scanned copies. Processing Fees would also have to be paid online.
Tech evangelism is here whether we like it or not and whether we are ready for it or not!

NGOs which are registered as Section 8 (old Section 25) Companies are familiar with some of these process and procedure. But, this could prove challenging for grassroots NGOs which are not quite tech-savvy or struggling with internet connectivity in remote districts and villages.

Are NGOs ready for these changes?
Will MHA extend the deadline considering the inordinate delay on their part?
Hopefully, we will have the answers by the end of this month.

In the meantime:
1) Associations which have already applied by post should stay vigilant. In all likelihood they will be required to apply afresh using the online process.
2) Keep all data and information as required under Form FC 5 and the proposed new Form FC 3 ready.
3) Obtain Digital Signatures
4) Get tech-savvy or seek professional help from your statutory auditors.
5) Follow this Blog for further updates.

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