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The Ministry of Corporate Affairs (MCA) has amended Schedule VII of the Companies Act, 2013, to recognize investments in certain Social Stock Exchange instruments as eligible CSR activities. According to a Gazette Notification issued on May 27, 2026, "subscription to zero coupon zero principal instruments on Social Stock Exchange" has been added to the approved CSR activities list. This regulatory change allows companies to allocate up to 10% of their total annual CSR budget towards not-for-profit organizations registered on the Social Stock Exchange through Zero Coupon Zero Principal (ZCZP) instruments. The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 were notified on May 30, 2026, with the MCA notification coming into force immediately upon publication in the Official Gazette. As per The Economic Times, India spends thousands of crores annually on CSR activities, and by allowing a portion of these funds to flow through the Social Stock Exchange, policymakers aim to build a more structured social financing ecosystem.

Experts view the move as a potentially significant boost for the SSE ecosystem. Manpreet Singh, Partner and Sustainability Practice Leader at Grant Thornton Bharat, noted that "India Inc spends close to ₹35,000 crore annually on CSR, and even a modest share of that routed through a listed and regulated platform could create the kind of demand the exchange has lacked so far." Sandeepp Jhunjhunwala, Partner at Nangia Global Advisors, said the framework creates a more credible and governance-driven channel for CSR deployment. However, Singh pointed to two potential limitations: first, the rules exempt these instruments from independent impact assessment requirements on the assumption that exchange-mandated disclosures provide sufficient transparency, though boards may still want assurance that being listed is not necessarily the same as being independently verified. Second, the number of credible non-profit organisations currently listed on the Social Stock Exchange remains limited, raising questions about whether the supply of quality issuances can keep pace with the demand the new framework may generate.

The Social Stock Exchange (SSE) serves as a dedicated platform connecting social enterprises and NPOs with donors, investors and funding sources. Unlike conventional stock exchanges, the SSE is designed to facilitate measurable social impact rather than financial returns. According to the National Stock Exchange (NSE), the policy change could help scale up social financing in India by providing corporates with a regulated and disclosure-based channel to support impact-focused organizations. The platform requires periodic disclosures, impact reporting and compliance standards, helping donors and corporates track the utilisation of funds. Under the amended rules, expenditure through such instruments cannot exceed 10% of a company's total CSR expenditure for the relevant financial year, with NPOs required to undertake projects with a duration not exceeding three succeeding financial years from the date of issue. Contributions function as grants for social projects, with investors or donors supporting specific social causes rather than seeking financial returns.

The idea of a Social Stock Exchange was first outlined by Finance Minister Nirmala Sitharaman during the 2019 Budget, with the aim of bringing capital markets closer to the masses while advancing inclusive growth and financial inclusion. The decision comes nearly four years after ZCZP instruments were formally recognised as securities under the Securities Contracts (Regulation) Act, 1956. Under Section 135 of the Companies Act, firms with a net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of at least ₹5 crore in the immediately preceding financial year are required to spend a minimum of 2% of the average net profits of the preceding three financial years on CSR activities. Failure to comply can attract penalties of up to ₹1 crore. The amendment allows companies to incorporate SSE-based contributions into their CSR programmes through a structured and regulated mechanism, providing greater transparency in CSR spending, standardized disclosures and reporting, improved governance and accountability, access to a larger pool of corporate funding, enhanced credibility through SSE registration, greater visibility among donors and institutions, and long-term funding opportunities. The amendment also exempts companies from conducting impact assessments for projects funded through ZCZP instruments, while requiring any unspent amounts to be transferred to a fund specified under Schedule VII of the Companies Act, 2013, with compliance reports submitted to the Securities and Exchange Board of India (SEBI).

Sriram Krishnan, Chief Business Development Officer at NSE, described the amendment as a significant development for India's social sector. According to ANI, he stated that the provision would enable corporates to channel CSR funds through a transparent, regulated and impact-driven platform, helping improve trust, accountability and access to capital for social enterprises. The inclusion of ZCZP instruments as eligible CSR activities allows corporates to integrate Social Stock Exchange participation into their CSR strategies, creating opportunities for structured giving, impact measurement, accountability and long-term engagement. The amendment is expected to benefit both corporates and the social sector by expanding access to funding for credible and verified NPOs, strengthening governance and disclosure standards, encouraging outcome-driven philanthropy and building greater trust within the social impact ecosystem. As corporate India increasingly focuses on measurable social impact, the Social Stock Exchange could emerge as an important bridge between capital and social development, helping channel resources toward education, healthcare, livelihood generation, environmental sustainability and other public welfare initiatives.