Companies can now allocate up to 10% of their annual Corporate Social Responsibility (CSR) spending through instruments listed on Social Stock Exchanges (SSEs), a development anticipated to enhance funding for non-profit organizations and to promote social financing via regulated capital market platforms. This follows a recent notification from the Ministry of Corporate Affairs (MCA), which amended the Companies (Corporate Social Responsibility Policy) Rules, 2026, permitting companies to engage in CSR activities through Zero Coupon Zero Principal (ZCZP) Instruments listed on these exchanges.
The National Stock Exchange (NSE) welcomed this amendment, noting that it would enable corporations to direct their CSR contributions to eligible non-profit organizations (NPOs) registered on the Social Stock Exchange through these ZCZP instruments. The NSE asserted that this change is expected to enhance the credibility, transparency, and scale of social financing in India, allowing companies to support impact-focused organizations on a regulated and disclosure-driven platform.
Sriram Krishnan, Chief Business Development Officer at NSE, emphasized that this is a significant advancement for India’s social sector, allowing businesses to deploy CSR funds through a transparent and regulated platform, thereby enhancing trust, accountability, and access to capital for social enterprises.
The MCA notification, effective from May 27, allows corporations to invest in ZCZP Instruments issued by NPOs registered on recognized stock exchanges’ Social Stock Exchange segments. Under the revised regulations, expenditures through such instruments are capped at 10% of a company’s total CSR spending for the relevant financial year.
Additionally, companies are exempt from conducting impact assessments for projects funded through ZCZP instruments. The regulations require NPOs issuing these instruments to manage projects that do not extend beyond three consecutive financial years from the issue date. Any unused funds post-termination of the instrument’s listing must be redirected to a fund specified under Schedule VII of the Companies Act, 2013, and a compliance report must be submitted to the Securities and Exchange Board of India (SEBI).
The NSE pointed out that including ZCZP instruments as eligible CSR activities allows corporations to incorporate Social Stock Exchange participation into their CSR strategies, fostering structured giving, accountability, long-term engagement, and impact measurement.
According to the exchange, the amendment is set to benefit both corporations and the social sector by broadening access to funding for credible and verified NPOs. It aims to strengthen governance and disclosure standards, promote outcome-driven philanthropy, and build greater trust within the social impact ecosystem.
The concept of a Social Stock Exchange was initially proposed by Finance Minister Nirmala Sitharaman during the Union Budget 2019 as a means to direct capital market participation toward social welfare initiatives and inclusive growth. The MCA notification took immediate effect upon its publication in the Official Gazette.
Published on May 31, 2026.
