What changed in May 2026
The Ministry of Corporate Affairs (MCA) notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 through gazette notification G.S.R. 415(E), in force from 27 May 2026. It adds a new eligible activity to Schedule VII of the Companies Act, 2013: subscription to Zero Coupon Zero Principal (ZCZP) instruments listed on a Social Stock Exchange (SSE).
A company can now count money it channels into eligible NPO projects, by subscribing to ZCZP instruments on the SSE, towards its CSR obligation. Until now CSR was typically met through direct grants or implementing agencies; this adds a regulated, market-based channel.
What is a ZCZP instrument?
A Zero Coupon Zero Principal (ZCZP) instrument is a security a registered NPO issues on the SSE to raise grant funding. "Zero coupon, zero principal" means it pays no interest and returns no principal: the subscriber is effectively donating, and the funds are used to deliver a defined social project. It is the main way NPOs raise money on the SSE.
How the CSR-to-ZCZP route works
Eligible spend: subscribing to ZCZP instruments issued by registered NPOs on the SSE now qualifies as CSR under Schedule VII.
Ceiling: the route is limited to 10% of the company's total CSR obligation for a given financial year.
Within existing rules: it sits inside the company's normal CSR obligation under Section 135 of the Companies Act, 2013. It is an additional route, not an increase in the obligation and not a replacement for it.
Example: if a company has a ₹1 crore CSR obligation for FY 2026-27, up to ₹10 lakh of it can be met by subscribing to eligible ZCZP instruments on the Social Stock Exchange, subject to the rules.
Why it matters for companies
Beyond meeting the obligation, the ZCZP route changes the compliance and effort profile of CSR for the portion routed this way:
No impact assessment to run or report: companies are exempt from carrying out the CSR impact assessment for projects funded through this ZCZP route. That removes the cost and the reporting burden that normally applies to larger CSR projects.
Accountability is built into the SSE: the issuing NPO is registered with the exchange and makes the SSE's disclosures, including annual impact reporting, so the social outcome is tracked through the exchange rather than by the company.
Less hands-on than direct delivery: the company subscribes to a listed instrument instead of selecting, contracting and supervising an implementing agency.
A verifiable, regulated channel: funds move through a SEBI-overseen mechanism with defined rules on how they are used and what happens to anything unspent (see below).
Direct CSR grant vs CSR through ZCZP on the SSE
Aspect | Direct CSR grant | CSR through ZCZP on the SSE |
|---|---|---|
How funds reach the project | Grant paid directly or via an implementing agency | Subscribe to a ZCZP instrument listed on the SSE |
Counts as CSR | Yes | Yes, up to 10% of annual CSR |
Impact assessment | Required for larger projects | Exempt for projects funded this way |
Accountability | Company tracks and reports | NPO discloses and reports through the SSE |
Who can receive | Eligible implementing agencies | NPOs registered on the SSE that issue ZCZP |
What the issuing NPO must do
Project timeline: the funded project must be completed within three succeeding financial years from the date the instrument is issued.
Unspent funds: on termination of the instrument's listing, any unspent amount must be transferred to a fund specified under Schedule VII, and a compliance report must be submitted to SEBI.
Eligibility: only NGOs registered on the SSE that can issue ZCZP instruments can receive CSR funds through this route.
The limits to keep in mind
The 10% cap applies per financial year, so the route can supplement but not replace a company's wider CSR programme.
It is optional. Companies can continue to meet CSR through their existing routes.
The rest of the CSR framework, including Section 135, the 2% spend rule, and board and disclosure requirements, continues to apply.
What to do next
For NGOs, the practical first step is to be registered on the SSE and ready to issue ZCZP instruments. Our CSR guidelines explainer covers how CSR money can flow into the sector, while raising funds on the SSE and SSE registration cover the issuing side.
FAQ
Can CSR money be routed through the Social Stock Exchange?
Yes. From 27 May 2026, the MCA's Companies (CSR Policy) Amendment Rules, 2026 (G.S.R. 415(E)) add subscription to ZCZP instruments on the SSE to Schedule VII, so a company can count this spend towards its CSR obligation.
What is the 10% CSR cap for ZCZP instruments?
The ZCZP route is limited to 10% of a company's total CSR obligation for a given financial year. It supplements the wider CSR programme rather than replacing it.
Is ZCZP treated as a donation?
A ZCZP instrument pays no interest and returns no principal, so the subscriber is effectively donating, and the funds are used to deliver a defined social project run by the issuing NPO.
Does the company still need an impact assessment?
No. Companies are exempt from carrying out the CSR impact assessment for projects funded through this ZCZP route. The issuing NPO makes the SSE's disclosures, including annual impact reporting, so the outcome is tracked through the exchange.
Which NGOs can receive CSR through the SSE?
Only NGOs registered on the SSE that can issue ZCZP instruments can receive CSR funds through this route. The funded project must be completed within three succeeding financial years, with any unspent amount transferred to a Schedule VII fund and a compliance report submitted to SEBI.
Sources
SEBI Master Circular for the framework on Social Stock Exchange (19 January 2026)
SEBI circular on NPO registration and minimum subscription for ZCZP instruments (15 April 2026)
This is a general explainer based on the MCA's Companies (CSR Policy) Amendment Rules, 2026 and SEBI's SSE framework, and is not legal or financial advice. Confirm the current position against the MCA notification (G.S.R. 415(E)) and SEBI's circulars before acting.