Government of India has enabled companies to deploy up to 10% of their annual Corporate Social Responsibility (CSR) spending through instruments listed on the Social Stock Exchange (SSE). This follows a notification by Ministry of Corporate Affairs (MCA), which amended the Companies (Corporate Social Responsibility Policy) Rules, 2026, allowing CSR spending via Zero Coupon Zero Principal (ZCZP) instruments.
The move aims to boost funding for non-profit organisations (NPOs) and expand social financing through regulated capital market platforms.
Key Highlights
CSR via ZCZP Instruments
- Companies can now invest CSR funds through ZCZP instruments listed on SSE
- These instruments are issued by eligible NPOs registered on SSE
- Enables structured, accountable, and measurable CSR contributions
Spending Limit
- CSR expenditure via SSE instruments is capped at: 10% of total CSR spending in a financial year
Regulatory Provisions
- MCA notification came into force on May 27 (2026)
- Companies can subscribe to ZCZP instruments listed on recognized stock exchanges’ SSE segment
- Impact assessment is NOT required for such CSR-funded projects
Project Conditions for NPOs
- Projects funded through ZCZP instruments must be completed within 3 succeeding financial years from issuance
- Any unspent amount after termination of listing must:
- Be transferred to funds specified under Companies Act, 2013 (Schedule VII)
- A compliance report must be submitted to Securities and Exchange Board of India (SEBI)
Benefits of Amendment
- Enhances credibility and transparency of CSR funding
- Strengthens governance and disclosure standards
- Expands access to funding for verified NPOs
- Promotes outcome-driven philanthropy
- Builds long-term engagement between corporates and social sector
Social Stock Exchange (SSE)
- Proposed in Union Budget 2019 by Nirmala Sitharaman
- Objective: Channel capital market participation toward social welfare and inclusive growth
- Provides a regulated platform for:
- Fundraising by NPOs
- Transparent reporting and impact measurement