SEBI Eases Social Stock Exchange Norms for NPOs

The Securities and Exchange Board of India (SEBI), in consultation with the Social Stock Exchange Advisory Committee (SSEAC), has issued a circular reviewing provisions governing the registration for Not-for-Profit Organizations (NPOs) on the Social Stock Exchange (SSE) and the minimum subscription requirements norms for the issuance of Zero Coupon Zero Principal (ZCZP) Instruments.

These changes operate within the broader framework established under the SEBI Master Circular dated January 19, 2026, which consolidates prior directions and situates the SSE within the wider regulatory ecosystem of the Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).

Key Takeaways

• The SSE framework has been made more accessible by SEBI to make fundraising more accessible for NPOs while preserving investor protection safeguards.
• The validity of NPO registration under Clause (1) of Regulation 292F of the SEBI ICDR Regulations has been extended to up to three years from two years after approval of SSE.
• The minimum subscription requirement for ZCZP instruments has been reduced from 75% to 50%, subject to due diligence by the SSE and taking in consideration the subscription scenarios, which are to be disclosed in the Fund-Raising Document.

Framework of Social Stock Exchange

• Minimum requirements for NPO for registration (Regulation 292F of the ICDR Regulations):

Under the SSE framework, an entity seeking registration must have a registration certificate valid for at least the next twelve months as an NPO at the time of seeking registration. It must be legally constituted in India as a charitable trust under the Indian Trusts Act, 1882, or a public trust statute of the relevant state, or a Trust under the Indian Registration Act, 1908 (16 of 1908), a charitable society under the Societies Registration Act, or a company registered under Section 8 of the companies Act, 2013.

The NPO must have valid registration under the Income Tax  Act, 1961 for entities registered under Sections 12A, 12AA, and 12AB (registration of charitable institutions for income tax exemption). The NPO must have a registration certificate of a minimum of three years, along with financial thresholds including annual spending of at least ₹50 lakh and funding of at least ₹10 lakh in the preceding financial year. NPOs must also be eligible to be a “Social Enterprise” under Regulation 292E of the ICDR Regulations.

• Procedure for issuance of Zero Coupon Zero Principal Instruments

A draft fund-raising document must be filed by the NPO for raising funds with the SSE and seek in-principle approval for listing. The draft document is made publicly available for at least 21 days to invite stakeholder comments. The SSE must provide observations within 30 days, which the NPO must incorporate before filing the final document and opening the issue.

The fund-raising document must contain all material information necessary for informed decision-making, and the SSE can mandate additional requirements regarding the document.

• Conditions related to ZCZP issuance

ZCZP instruments must be issued in dematerialized form and remain non-transferable until maturity. The minimum issue size is ₹50 lakh, with a minimum application size of ₹1,000. Ordinarily, a minimum subscription of 75% is required, failing which funds must be refunded.

However, according to the recent circular, fundraising has been reduced to 50%. As per news reports, the relaxation would apply only to projects where costs and outcomes can be implemented on a clearly identifiable per-unit basis, ensuring that partial subscription does not adversely affect project execution. In cases of under-subscription, NPOs are required to disclose how they intend to bridge funding gaps and the potential impact on their social objectives, ensuring transparency.

• Disclosure Requirements (Regulation 292K, ICDR Regulations)

NPOs raising funds through ZCZP instruments are subject to disclosure requirements. These include the organization’s vision, strategy, target segment, governance management, operations, finance, compliance and credibility. Financial disclosures must include audited financial statements for the past three years in accordance with ICAI norms.

The framework also mandates disclosure of compliance status, key legal documents, past social impact metrics such as beneficiary reach and cost efficiency, and risk factors along with mitigation strategies.

• Annual Disclosures (Regulation 91C, LODR Regulations)

NPOs registered or listed on the SSE must comply with periodic disclosure requirements. Within 60 days of the end of the financial year, disclosures on general aspects must be made that include general organizational details and governance-related information such as board structure, risk management, and grievance redressal mechanisms.

Further disclosures, to be made by October 31 or the income tax filing deadline, include outreach data, top donors and programs, related party transactions, and compliance certifications. Financial disclosures must include audited statements, auditor reports, and program-wise fund utilization.

• Annual impact report (Regulation 91E of LODR Regulations)

The Annual Impact Report (AIR) must capture the qualitative and quantitative aspects of the social impact that is generated by the entity. NPOs must disclose the problem addressed, target segment, implementation strategy, and alignment with Sustainable Development Goals or national priorities. If an NPO is registered on the SSE but has not listed any security, it can submit a self-reported Annual Impact Report (AIR).

The report must cover its key activities, programs, or projects during the year and explain how it determined which ones are “significant.” Any activity linked to a listed security will automatically be treated as significant. Additionally, the AIR must account for at least 67% of the organization’s total program expenditure for the previous financial year.

• Utilization of funds (Regulation 91F, LODR Regulations)

Listed NPOs are required to submit quarterly statements of utilization of funds within 45 days from the end of each quarter. This ensures continuous monitoring and accountability in the deployment of funds raised through the SSE.

Further, constitution of the Social Stock Exchange Governing Council (SGC) has been mandated under Regulation 292D of the ICDR Regulations. The SGC comprises representatives from diverse stakeholder groups, including NPOs, donors, investors, and social auditors, and is tasked with providing oversight on registration, fundraising, disclosures, and overall development of the SSE ecosystem.

Additionally, the Master Circular recognizes Self-Regulatory Organizations (SROs) for Social Impact Assessors under Regulation 292A(f), including ICAI, ICMAI SAO, and ICSI ISA. These bodies play a key role in standardizing and ensuring the credibility of impact assessment.

The framework is further supported by guidance notes aimed at standardizing disclosures and ensuring consistency and comparability in reporting across NPOs.