CSR and Social Governance · Social Governance

Social Entrepreneurship and Social Stock Exchange in India

Updated 11 October 2026 · Fact-checked

A social enterprise earns or raises funds to achieve a social goal, not to maximise profit. The Social Stock Exchange (SSE) is a separate segment of a stock exchange, regulated by SEBI, where eligible non-profit organisations (NPOs) and for-profit social enterprises (FPEs) register, raise funds and disclose their social impact.

Understand Social Entrepreneurship and Social Stock Exchange

Social entrepreneurship means using business methods to solve a social problem such as poor health, weak education or lack of livelihood. The social entrepreneur measures success by the change created for people, and also keeps the venture financially sustainable.

A social enterprise is the organisation that does this work. It may be a non-profit (trust, society or Section 8 company) or a for-profit company with a clear social mission. This is the key difference from a typical NGO: an NGO depends mainly on grants and donations, while a social enterprise often also earns revenue from selling goods or services. Not every NGO is a social enterprise, and not every social enterprise is an NGO.

The Social Stock Exchange exists to connect such organisations with funders. It is not a separate exchange with its own licence. It is a separate segment within an existing recognised stock exchange (such as BSE or NSE). Its purpose is to give social enterprises visibility, a way to raise funds, and a standard of disclosure so that donors and investors can trust what they fund.

SEBI regulates it through the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, which contain a chapter on the Social Stock Exchange. Two kinds of entities may be registered or listed: non-profit organisations and for-profit social enterprises. An FPE must be a company that primarily serves eligible social objectives. Neither an NPO nor an FPE may fall in an excluded category. The excluded categories apply to both NPOs and FPEs, not only to FPEs, and include:

corporate foundations
political or religious organisations or activities
professional or trade associations
infrastructure and housing companies, except affordable housing
NBFCs, except NBFC-MFIs (microfinance institutions)

Read the current regulations for the full list. Eligible entities must show that they work towards listed social intent areas, for example eradicating hunger, poverty and malnutrition, promoting healthcare, education, livelihoods, gender equality, environmental sustainability, or supporting underserved groups.

Funding routes differ by type. NPOs can raise funds by issuing Zero Coupon Zero Principal (ZCZP) instruments, either by public issue or by private placement, and can also receive donations, including through mutual funds. Under ZCZP the donor gets no return and no principal back, so it is in effect a donation that is recorded on the exchange. Registering on the SSE is not the same as listing. An NPO's ZCZP can be listed only if the issue meets the minimum issue size and minimum subscriber thresholds in the regulations. These thresholds are not the same for a public issue and a private placement, so verify the exact figures in the current regulations before you state them. FPEs can raise funds through equity or debt, including an IPO or private placement, on the same footing as other issuers, with added social impact reporting.

Disclosures are central. An NPO that raises funds through the SSE must file an annual impact report. It must also have its impact audited by a social auditor, that is, a social audit professional or firm enrolled with the ICAI Social Auditors Organisation. An NPO that is only registered and has not raised funds does not have this duty. FPEs report their social impact as the ICDR Regulations require, and independent verification applies only to the specified categories. Exact thresholds and timelines should be read from the current regulations.

Key rules to remember

Entities on the SSE: Social enterprise = Non-profit organisation (NPO) or For-profit social enterprise (FPE); Both must show primary focus on eligible social intent. Do not call every NGO an FPE.
ZCZP instrument: Zero Coupon Zero Principal: no interest, no principal repayment; Used by NPOs to raise funds. It is a recorded donation and not an investment return.
Where the SSE sits: SSE = separate segment of a recognised stock exchange, regulated by SEBI; It is not a standalone exchange.
Funding routes by type: NPO: ZCZP (public issue or private placement), donations including through mutual funds. FPE: equity or debt issue as per ICDR; State the route that matches the type of entity. Registering on the SSE is not listing. Listing ZCZP needs the minimum issue size and subscriber thresholds in the regulations, which differ for public issue and private placement. Verify the exact figures in the current regulations.
Disclosure and assurance: NPO raising funds on the SSE: annual impact report + social audit by a social auditor enrolled with the ICAI Social Auditors Organisation; The report covers the social impact of funds raised and used. FPEs report impact as the ICDR requires. Verification applies only to the specified categories.

How to solve Social Entrepreneurship and Social Stock Exchange questions

Use this order for any question on social enterprises or the Social Stock Exchange. It keeps the answer in provision, analysis, conclusion form.

1Read the facts and identify the entity: trust, society, Section 8 company or ordinary company with a social mission.
2Classify it as NPO or FPE, and say why.
3Test eligibility: does its main activity fall within the recognised social intent areas, and does it serve the underserved?
4Name the funding route that fits the type: ZCZP or donations for NPOs, equity or debt for FPEs.
5State the disclosure duties: registration with the exchange, and for an NPO that raises funds, the annual impact report and social audit. For an FPE, state the impact reporting required under the ICDR.
6Note the regulator and the framework: SEBI, the ICDR chapter on the SSE, and the exchange's role.
7Conclude clearly in one sentence on what the entity can do and what it must comply with.
8 If asked to compare, draw the contrast on purpose, funding, profit distribution and disclosure.

Quickest way: Type, Intent, Route, Report

When to use it: Use this when you have limited time on a short-note or a case question about whether and how an entity can use the SSE.

Type: NPO or FPE.
Intent: eligible social objective and underserved target group.
Route: ZCZP or donation for NPO; equity or debt for FPE.
Report: NPO that raises funds files an annual impact report and gets a social audit; FPE reports impact as the ICDR requires.
Close with SEBI as regulator and the exchange segment as the platform.

Common mistakes in Social Entrepreneurship and Social Stock Exchange

Saying the Social Stock Exchange is a new, separate exchange.
The name sounds like an independent exchange.
Fix: Write that it is a separate segment within an existing recognised stock exchange, regulated by SEBI.
Saying only NGOs can be on the SSE.
Students link social work only with non-profits.
Fix: State that both NPOs and eligible for-profit social enterprises can participate.
Treating ZCZP as a bond that repays the investor.
The word 'instrument' suggests repayment.
Fix: Write that it carries no coupon and no principal repayment. It works as a donation recorded on the exchange.
Treating all NGOs as social enterprises.
Both pursue social goals.
Fix: Contrast them: a social enterprise runs on a sustainable model that may earn revenue, while a traditional NGO relies mainly on grants and donations.
Omitting the social audit and impact report.
Students focus on fundraising and forget disclosure.
Fix: Always add the annual impact report and, for an NPO that raises funds on the SSE, the social audit by an ICAI-enrolled social auditor, as it is the core of SSE credibility.

Worked examples

Example 1

Explain how a non-profit organisation registered as a trust can raise funds through the Social Stock Exchange and what disclosures it must make.

Show the solution

Provision: The SSE is a segment of a recognised stock exchange regulated by SEBI under the ICDR Regulations, 2018. A trust is a non-profit organisation and can register if its activities fall in the recognised social intent areas.
Analysis of funding: The NPO can issue Zero Coupon Zero Principal instruments, under which the investor receives no interest and no principal, so the money works as a donation. It can also receive donations through the permitted routes, including the mutual fund route.
Analysis of disclosure: Once the NPO raises funds through the SSE, it must file an annual impact report on how funds were used and the social outcomes achieved. The impact must be audited by a social auditor enrolled with the ICAI Social Auditors Organisation.
Conclusion: The trust may raise funds on the SSE through ZCZP instruments and donations, provided it registers, meets the eligibility test and, once it raises funds, keeps up annual impact reporting and social audit.

Answer: A trust, as an NPO, can register on the SSE and raise funds through ZCZP instruments and donations. Once it raises funds, it must make annual impact disclosures supported by a social audit.

Example 2

Distinguish a social enterprise from a traditional NGO.

Show the solution

Purpose: both aim at social benefit, but a social enterprise builds the goal into a business model.
Funding: a social enterprise earns revenue from goods or services and may also take investment, while an NGO relies mainly on grants and donations.
Legal form: a social enterprise can take any legal form, either an NPO form such as a trust, society or Section 8 company, or a for-profit company. An NGO in a trust, society or Section 8 company form is itself an NPO. The distinction lies in the revenue-led business model and profit distribution, not in mutually exclusive legal forms.
Profit: a for-profit social enterprise may distribute returns within its legal form while keeping social impact primary. A non-profit, whether an NGO or a social enterprise in an NPO form, cannot distribute surplus to members.
Disclosure and capital market access: an eligible social enterprise can use the SSE and must report impact. An NGO in trust, society or Section 8 company form is an NPO and can register on the SSE if it meets the eligibility test and is not an excluded entity.

Answer: A social enterprise combines a social mission with a revenue-earning model and can be non-profit or for-profit. A traditional NGO is mostly grant-funded and non-profit. Both can be on the SSE if eligible.

Exam tips

Define the terms first: social enterprise, NPO, FPE, ZCZP. Marks usually start with correct definitions.
For case questions, classify the entity before giving the funding route.
Use the contrast format for 'difference between' questions: purpose, funding, profit, disclosure.
Check the current SEBI regulations for exact eligibility and reporting thresholds, and state them only if you are certain.
End each answer with a one-line conclusion on what the entity may do and must comply with.

Practice questions from Social Governance

Social Entrepreneurship and Social Stock Exchange: frequently asked questions

What is the Social Stock Exchange in India?

It is a separate segment of a recognised stock exchange where eligible social enterprises can register, raise funds and disclose social impact. SEBI regulates it through the ICDR Regulations, 2018.

Who can be listed or registered on the Social Stock Exchange?

Eligible non-profit organisations and for-profit social enterprises can participate if they primarily work for recognised social objectives. Certain entities, such as those excluded by the regulations, cannot.

What is a ZCZP instrument?

It is a Zero Coupon Zero Principal instrument used by non-profits to raise funds. The investor gets no interest and no principal back, so it works like a recorded donation.

What is the difference between a social enterprise and an NGO?

A social enterprise uses a business model, often earning revenue, to meet a social goal, and may be for-profit or non-profit. An NGO is typically a non-profit that depends mainly on grants and donations.