CSR and Social Governance · Social Stock Exchange

How to Raise Funds on the Social Stock Exchange

Updated 11 October 2026 · Fact-checked

Fundraising on the Social Stock Exchange means a non-profit organisation (NPO) or for-profit social enterprise (FPE) raising money for social impact. NPOs raise funds through zero coupon zero principal bonds on the SSE and can also receive ordinary donations. FPEs use equity and debt. Answer by naming the entity, instrument, issue route, size limits and listing conditions.

Understand Fundraising on the Social Stock Exchange

The Social Stock Exchange (SSE) is a separate segment of a recognised stock exchange. It lets social enterprises raise money from the public and from institutions, with disclosure and impact reporting. SEBI regulates it through a special chapter in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR).

Two kinds of entity can raise funds. A Not-for-Profit Organisation (NPO) is a charitable trust, society, Section 8 company or another non-profit form that SEBI's definition accepts. A For-Profit Social Enterprise (FPE) is a company or similar body that SEBI's definition accepts. It is set up with a primary social objective of serving underserved people or eligible social causes, even though it earns a profit. Being a company is not enough. SEBI excludes certain entities from being social enterprises at all, such as corporate foundations, political or religious organisations, professional or trade associations, and infrastructure and housing companies (except affordable housing). An entity that is not eligible under the ICDR is also out. To raise funds through the SSE route, an entity must first be identified as a social enterprise and registered on the SSE. This covers issuing and listing ZCZP bonds, and an FPE's SSE fundraising. An NPO that does not register can still receive ordinary donations outside the SSE.

The instruments follow the nature of the entity. An NPO has no owners and pays no return, so it cannot sell equity. Its main SSE instrument is the Zero Coupon Zero Principal (ZCZP) bond. It pays no interest (zero coupon) and returns no principal (zero principal). The investor is really a donor. The instrument is issued by the NPO and can be listed on the SSE, which gives the gift a transparent, regulated form. ZCZP is not the only instrument. Besides ZCZP bonds, an NPO's fundraising can also include donations routed through the SSE and funds from social impact funds. An NPO also receives plain donations outside the SSE. An NPO does not issue mutual fund units. Funds can reach it through social impact funds or social venture funds, and mutual fund schemes may donate to NPOs.

An FPE looks more like an ordinary issuer. It can raise capital by issuing equity shares or debt, and social venture funds and other social impact funds can invest in it. It must meet the usual ICDR conditions for its chosen route, plus the social-enterprise conditions. The main one is the primary social objective test. An FPE must establish primary social intent by meeting at least one of the criteria that SEBI specifies. One such criterion is at least 67% of its revenue, expenditure or customer base attributable to eligible activities for underserved or less privileged populations or regions. Alternatively, the FPE may satisfy another criterion from SEBI's list. It must also carry on an eligible activity from SEBI's list, not fall in an excluded category, and meet the disclosure and impact-reporting conditions.

Two more points matter. A public issue of ZCZP bonds is not open to every registered NPO. The NPO must meet the eligibility conditions the ICDR prescribes for a public issue, such as a minimum track record of operation, minimum annual expenditure, minimum funds raised and a minimum donor base. The issue must also meet the minimum issue size, minimum application size and listing conditions. SEBI has revised these figures more than once, so quote them as prescribed in the ICDR. SSE registration is necessary but does not by itself make a public issue possible. Listing also brings continuing duties, especially the annual impact report and a social audit. In the exam, link money raised to impact reported.

Key rules to remember

ZCZP bond: Coupon = 0; Principal repayment = 0; Issued only by an NPO registered on the SSE. It can be placed privately. A public issue is possible only if the NPO also meets the ICDR eligibility conditions for a public issue. The investor gets no financial return. The return is social impact. ZCZP is one of the NPO's routes, not the only one.
Who raises what: NPO: ZCZP bonds on the SSE; donations (through the SSE or outside it); funds from social impact funds | FPE: equity, debt; social venture/impact funds may invest; Use this split to start any answer. An NPO cannot issue equity shares or mutual fund units.
Entry condition: Entity not in an excluded category + registration/identification as social enterprise on SSE → then SSE fundraising (ZCZP issue, listing) is possible; No registration, no SSE fundraising. Registration alone does not make a public issue possible, because the ICDR eligibility conditions for a public issue must also be met. An NPO can still receive ordinary donations without SSE registration.
Excluded entities: Not eligible as a social enterprise: corporate foundations; political or religious organisations; professional or trade associations; infrastructure and housing companies (except affordable housing); any entity not eligible under the ICDR; Check this before the activity or 67% test. A company with a social activity can still be ineligible if it falls in one of these categories.
FPE eligibility test: Primary social intent: meet at least one of the criteria specified by SEBI. One criterion: at least 67% of revenue, expenditure or customer base attributable to eligible activities for underserved or less privileged populations or regions; The 67% criterion is only one of the alternative routes. The FPE may meet another criterion in SEBI's list instead. It must also carry on an eligible activity from SEBI's list, not be an excluded entity, and meet the disclosure and impact-reporting conditions.
Public issue rule: Public issue of ZCZP: NPO must meet the ICDR eligibility conditions for a public issue + minimum issue size + minimum application size; SEBI has revised these amounts and conditions. Quote the figures from your latest study material and say they are as per ICDR. Do not say registration on the SSE alone is enough.
Post-listing duty: Annual impact report + social audit by a social auditor; Raising funds and reporting impact go together. Mention both.

How to solve Fundraising on the Social Stock Exchange questions

Fundraising questions are usually case-based. Use the same structure every time: provision, facts, conclusion.

1Identify the entity: NPO or FPE. Check that it is not an excluded entity such as a corporate foundation, political or religious organisation, professional or trade association, or infrastructure and housing company (except affordable housing). Check whether it is already registered on the SSE, if it wants to use the SSE route.
2Check eligibility. Does its main activity fall in the eligible social activities? For an FPE, does it meet at least one of SEBI's primary social intent criteria (for example, 67% of revenue, expenditure or customer base from eligible activities for underserved populations), and is its activity in SEBI's list?
3Match the instrument to the entity: ZCZP bonds on the SSE, donations or social impact fund support for an NPO; equity or debt for an FPE.
4Decide the route: private placement or public issue. For a public issue of ZCZP, test whether the NPO meets the ICDR eligibility conditions for a public issue, and then the minimum issue size, minimum application size and listing requirements.
5State the listing consequence. A listed ZCZP is traded on the SSE segment. An FPE equity issue must also meet the main board or SME conditions.
6Add continuing obligations: annual impact report, social audit and disclosures.
7Conclude clearly: what the entity may do, what it cannot, and what it should do next.

Quickest way: Entity, Instrument, Route, Reporting

When to use it: When time is short and the question asks which instrument or route an entity should use.

Write NPO or FPE at the top.
Write the instrument: ZCZP bonds (on the SSE) or ordinary donations for an NPO; equity or debt for an FPE.
Write the route: private placement or public issue, with the size limits in the ICDR.
Write listing plus impact report plus social audit as the closing line.
If the figure is not certain, state the rule and say the limits are as per the ICDR.

Common mistakes in Fundraising on the Social Stock Exchange

Saying a ZCZP bond pays interest or returns principal.
Students treat it like a normal bond.
Fix: Remember zero coupon and zero principal. The investor gets no money back and no interest. The benefit is the impact the NPO achieves.
Letting an NPO issue equity shares or mutual fund units.
The word 'fundraising' makes students think of shares or fund units.
Fix: An NPO has no shareholders. Give it ZCZP bonds on the SSE, donations or social impact fund support. Equity is for FPEs. Funds can reach an NPO through social impact funds or mutual fund scheme donations, but the NPO does not issue units.
Ignoring SSE registration.
Students jump to the instrument and skip the pre-condition.
Fix: For any SSE fundraising, begin with registration or identification as a social enterprise on the SSE. Ordinary donations to an NPO do not need it.
Assuming a registered NPO can always make a public issue of ZCZP bonds.
Students treat SSE registration as the only condition.
Fix: Registration is only the first step. For a public issue the NPO must also meet the ICDR eligibility conditions for a public issue, as prescribed, along with the issue size and application size rules.
Writing issue size or application size amounts from memory without a source.
SEBI has changed these figures, so old notes differ.
Fix: Learn the amounts from the latest ICDR text. In a doubt, state the rule and say the amounts are as prescribed in the ICDR.
Forgetting impact reporting after the fundraising.
The question seems to end once the money is raised.
Fix: Add a closing line on the annual impact report and social audit. It shows you understand the SSE purpose.
Treating every for-profit company with a CSR programme as an FPE.
Students link social activity with eligibility automatically.
Fix: An FPE must establish primary social intent by meeting at least one of SEBI's specified criteria (for example, 67% of revenue, expenditure or customer base from eligible activities for underserved populations) and carry on an eligible activity from SEBI's list. A CSR programme alone is not enough.
Treating any company or non-profit body as eligible once it shows social intent.
Students forget that SEBI excludes some entity types outright.
Fix: Check the exclusions first. Corporate foundations, political or religious organisations, professional or trade associations, and infrastructure and housing companies (except affordable housing) cannot be social enterprises, whatever their activity.

Worked examples

Example 1

Asha Seva Trust, a registered charitable trust in Pune running a rural education programme, wants to raise funds on the SSE. Advise on the instruments available and the nature of the return to its investors.

Show the solution

Entity: Asha Seva Trust is a charitable trust, so it is an NPO. Nothing in the facts puts it in an excluded category such as a corporate foundation or a political or religious organisation. To raise funds through the SSE route, it must first register on the SSE.
Eligibility: rural education is a social activity of the kind eligible under the SSE framework, so the trust can seek registration.
Instruments: as an NPO it can issue ZCZP bonds on the SSE. Its fundraising can also include donations through the SSE and funds from social impact funds. It can receive ordinary donations outside the SSE, which do not need SSE registration. It cannot issue equity shares, because it has no owners, and it does not issue mutual fund units.
Return: a ZCZP bond carries no coupon and no principal repayment. Investors are in substance donors. Their return is the education outcome reported by the trust.
Route and listing: the trust may use private placement. A public issue is available only if the trust also meets the ICDR eligibility conditions for a public issue and the issue size and application size rules. SSE registration alone is not enough. A listed ZCZP is traded on the SSE.
Compliance: after raising, the trust must give the annual impact report and obtain a social audit.

Answer: Asha Seva Trust is an NPO. After SSE registration it can issue ZCZP bonds, and its fundraising can also include donations through the SSE and funds from social impact funds. It can receive donations even outside the SSE, but it cannot issue equity or mutual fund units. Investors in ZCZP bonds receive no interest and no principal, only social impact. It can go for a public issue only if it meets the ICDR eligibility, size and listing conditions, and it must report impact annually.

Example 2

GreenLight Solar Pvt Ltd is a company that sells low-cost solar lamps to off-grid rural households. Most of its revenue comes from these households. It wants to raise capital through the SSE. Is it eligible, and what instruments can it use?

Show the solution

Entity: GreenLight is a for-profit company, so the relevant category is FPE, not NPO. Nothing in the facts suggests it is a corporate foundation, a political or religious body, a trade association, or an infrastructure or housing company, so it is not excluded on those grounds.
Primary social intent: an FPE must meet at least one of the criteria SEBI specifies. One criterion is at least 67% of revenue, expenditure or customer base attributable to eligible activities for underserved or less privileged populations or regions. The facts say most of its revenue comes from off-grid rural households. 'Most' only means more than half, so you must confirm that the share meets the 67% threshold. If it does not, GreenLight may still qualify by meeting another criterion in SEBI's list.
Other conditions: GreenLight must also carry on an eligible activity from SEBI's list and meet the disclosure and impact-reporting conditions.
Conclusion on eligibility: if GreenLight meets at least one primary social intent criterion (for example, the 67% test), carries on an eligible activity and satisfies the other conditions, it can be identified as a social enterprise and registered on the SSE. If it meets no criterion, it cannot.
Instruments: an FPE can raise capital by issuing equity or debt, and social venture or impact funds can invest in it. It cannot use ZCZP bonds, which are for NPOs.
Conditions: the issue must also meet the ICDR conditions for the chosen route, such as main board or SME eligibility, along with the social-enterprise disclosures.
Compliance: GreenLight must give impact reporting and social audit after listing.

Answer: GreenLight is an FPE. It is not in an excluded category on the given facts. It is eligible for the SSE only if it meets at least one of SEBI's primary social intent criteria (for example, 67% of revenue, expenditure or customer base from eligible activities for underserved populations, which the facts do not yet confirm), carries on an eligible activity from SEBI's list, meets the disclosure and impact-reporting conditions and registers. It can then issue equity or debt, subject to ICDR conditions, and impact funds can invest in it. It cannot issue ZCZP bonds. It must report impact annually.

Exam tips

Start with a one-line comparison of NPO and FPE. Examiners reward the split between ZCZP for NPOs and equity or debt for FPEs.
For a 'discuss' question, cover instrument, route, listing and reporting. These four headings fetch most of the marks.
Say plainly that the ZCZP investor gets no interest and no principal. This is the point students lose marks on.
If you do not remember the exact issue size or application size, give the rule and say the limits are as per the ICDR. Do not guess a figure.
Use the facts in the question. Name the entity, check eligibility and give a firm conclusion in the last line.

Practice questions from Social Stock Exchange

Fundraising on the Social Stock Exchange: frequently asked questions

What is a zero coupon zero principal bond on the SSE?

It is an instrument issued by an NPO registered on the SSE. It pays no interest and returns no principal. The investor is in effect a donor, and the benefit is the social impact the NPO delivers. It can be placed privately, or issued to the public if the NPO meets the ICDR conditions for a public issue, and it can be listed on the SSE. It is not the NPO's only source of funds, since donations through the SSE and funds from social impact funds are also available.

Can a for-profit company raise funds on the Social Stock Exchange?

Yes, if it qualifies as a for-profit social enterprise and is not an excluded entity. SEBI excludes corporate foundations, political or religious organisations, professional or trade associations, and infrastructure and housing companies (except affordable housing). The company must establish primary social intent by meeting at least one of the criteria SEBI specifies. One criterion is at least 67% of revenue, expenditure or customer base attributable to eligible activities for underserved or less privileged populations or regions. It must also carry on an eligible activity from SEBI's list, meet the disclosure and impact-reporting conditions and register on the SSE. It can then raise capital through equity or debt, subject to the ICDR conditions.

What is the minimum issue size for an NPO public issue on the SSE?

The ICDR sets a minimum issue size and a minimum application size for public issues of ZCZP bonds. It also sets eligibility conditions the NPO must meet before it can make a public issue, and SSE registration alone does not satisfy them. SEBI has revised these figures over time. Use the amounts in your latest study material and note that they are as per the ICDR.

What happens after an NPO or FPE raises funds on the SSE?

It must keep reporting. This includes an annual impact report and a social audit, along with the disclosures required of listed entities. The idea is that investors and donors can see what the money achieved.