The government has permitted companies to channel Corporate Social Responsibility funds through Social Stock Exchange instruments. The move is expected to create a new funding route for eligible non-profit organisations while broadening the role of the Social Stock Exchange.
Companies in India can now deploy Corporate Social Responsibility (CSR) funds through instruments listed on the Social Stock Exchange (SSE) after the Ministry of Corporate Affairs amended Schedule VII of the Companies Act, 2013.
The amendment permits CSR spending through Zero Coupon Zero Principal (ZCZP) instruments issued by eligible non-profit organisations and listed on the SSE.
The notification integrates the Social Stock Exchange into India's CSR framework, creating a new channel for companies to support registered non-profit organisations through a regulated fundraising platform.
Launched under the Securities and Exchange Board of India (SEBI), the SSE was established to facilitate fundraising by non-profit organisations and social enterprises. ZCZP instruments do not provide interest payments or return of principal and are designed exclusively for social impact fundraising.
Under the Companies Act, eligible companies are required to spend at least 2% of their average net profits from the preceding three financial years on CSR activities. These funds are typically directed towards sectors such as education, healthcare, environmental sustainability, rural development and livelihood generation.
The amendment allows companies to meet part of their CSR obligations through SSE-listed instruments, subject to applicable regulations. Non-profit organisations seeking to raise funds through the platform must comply with SEBI's eligibility, disclosure and reporting requirements.
The move comes as regulators seek to expand financing options for the social sector. According to SEBI data, the SSE has seen a gradual increase in registrations by non-profit organisations since its launch, although fundraising activity remains at an early stage.
The inclusion of ZCZP instruments within the CSR framework is expected to increase the range of funding sources available to eligible organisations. It also places greater emphasis on disclosure-based fundraising mechanisms within the non-profit sector.
India introduced mandatory CSR spending in 2014, making it one of the first countries to require qualifying companies to allocate a portion of profits towards social and environmental initiatives. Since then, CSR expenditure has supported projects across education, health, sanitation, skill development and environmental conservation.
The latest amendment adds Social Stock Exchange instruments to the list of eligible CSR spending avenues under the Companies Act.
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