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Section 22 FCRA 2010 - Disposal of Assets Created from Foreign Contribution

Section 22 of the Foreign Contribution (Regulation) Act, 2010 deals with the disposal of assets of a person permitted to accept foreign contribution when that person ceases to exist or becomes defunct. The provision links disposal first to the law under which the person was registered or incorporated and provides a Central Government mechanism where no such law governs disposal.

Text of Section 22 of the Foreign Contribution (Regulation) Act, 2010

22. Disposal of assets created out of foreign contribution.

Where any person who was permitted to accept foreign contribution under this Act, ceases to exist or has become defunct, all the assets of such person shall be disposed of in accordance with the provisions contained in any law for the time being in force under which the person was registered or incorporated, and in the absence of any such law, the Central Government may, having regard to the nature of assets created out of foreign contribution received under this Act, by notification, specify that all such assets shall be disposed off by such authority, as it may specify, in such manner and procedure as may be prescribed.

What Section 22 means

The section applies when a person that had permission under the FCRA to accept foreign contribution no longer exists or has become defunct. In that situation, assets connected with the person cannot simply be dealt with informally. Their disposal must follow the statutory route laid down in Section 22.

First rule: disposal is governed by the law under which the person was registered or incorporated, if that law contains applicable provisions.
Fallback rule: if there is no such governing law, the Central Government may issue a notification specifying the authority that will dispose of the assets.
Nature of assets: while acting under the fallback power, the Central Government may have regard to the nature of assets created out of foreign contribution received under the FCRA.
Procedure: disposal by the specified authority must follow the manner and procedure prescribed under the applicable legal framework.

Important expressions in Section 22

Person

The FCRA uses the expression "person" broadly. For applying Section 22, the legal form of the recipient and the law under which it was registered or incorporated are important because that law is the first reference point for disposal.

Foreign contribution

Foreign contribution is a defined expression under Section 2 of the FCRA. In practical terms, Section 22 is concerned with assets created out of foreign contribution received under the Act, rather than treating the assets as ordinary property disconnected from their FCRA source.

Ceases to exist or becomes defunct

Section 22 is triggered by the status of the FCRA recipient. Whether a particular entity has legally ceased to exist or has become defunct should be determined from its governing law, registration or incorporation records, and the relevant facts.

How disposal is determined

The provision establishes a sequence. The governing registration or incorporation law is examined first. If that law provides for disposal of the assets, its provisions apply. Only in the absence of such a law does Section 22 contemplate a Central Government notification specifying the authority and the prescribed manner and procedure for disposal.

Practical point: Before disposing of property acquired from foreign contribution, the organisation or person handling closure should identify the source of funds used to acquire the asset, verify the entity's legal status, review the law governing dissolution or winding up, and check current FCRA notifications, rules and directions.

Records relating to FCRA assets

FCRA compliance requires clear records concerning receipt and utilisation of foreign contribution. MHA guidance has also stated that fixed assets acquired out of foreign contribution should be held in the name of the association rather than an individual. Maintaining identifiable records of such assets is therefore important when Section 22 becomes relevant.

Official FCRA resources

For current forms, online services, rules, notifications and regulatory updates, consult the official Ministry of Home Affairs and FCRA Online resources. Because notifications and procedural requirements can change, the current official material should be checked before taking action involving disposal of FCRA-funded assets.