Key Changes Introduced by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026
- Nivedita Krishna and Suneet Sanurag (intern)
- Jun 8
- 4 min read
On 27th May 2026, the Ministry of Corporate Affairs notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 (“the 2026 Amendment”). This edition of Pulse by Pacta explains what changed, why it matters, and what it means for non-profits considering the Social Stock Exchange route.
The Social Stock Exchange: Where Things Stand
India’s Social Stock Exchange (“SSE”), established under SEBI’s regulatory framework as a segment of both BSE and NSE was designed to connect donors and impact investors with non-profit organisations (NPOs) through a capital markets architecture.
As of May 2026, 92 NPOs are registered on BSE SSE and 84 NPOs on NSE SSE. Of these, only 11 NPOs have actually listed instruments (Zero Coupon Zero Principal instruments, or “ZCZPs”) and raised funds through the SSE.
The Companies (Corporate Social Responsibility Policy) Rules, 2014
The Companies (Corporate Social Responsibility Policy) Rules, 2014 (“the 2014 Rules”) govern how companies implement their CSR obligations under Section 135 of the Companies Act, 2013. They cover CSR expenditure thresholds, eligible activities (listed in Schedule VII of the Act), permissible implementing entities, and reporting requirements.
The SSE and ZCZP Instruments
The SSE operates as a segment of BSE and NSE, enabling NPOs to raise funds through the capital markets. Within this framework, SEBI introduced the Zero Coupon Zero Principal instrument (“ZCZP”): a security issued by NPOs that carries no interest (“zero coupon”) and returns no principal (“zero principal”). The contributor’s return is a social one of impact, not income.
ZCZP instruments must be issued for a specific project, listed on the SSE in dematerialised form, with a minimum issue size of Rs. 50 lakh, minimum application size of Rs.10,000, and a minimum subscription threshold of 75% before funds are released to the NPO.
What the 2026 Amendment Does
The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 makes two categories of changes:
1. New Definitions: NPO and ZCZP
NPO is now defined by cross-reference to Regulation 292A(e) of the SEBI (ICDR) Regulations, 2018. Under that definition, an NPO is a Social Enterprise that takes the form of a charitable trust, charitable society, Section 8 company, or any other entity specified by SEBI, provided it primarily pursues social objectives and serves disadvantaged populations.
ZCZP is now formally defined in CSR law as a security recognised under the Securities Contracts (Regulation) Act, 1956, issued by an NPO registered on the SSE segment of a recognised stock exchange, and governed by SEBI regulations.
2. CSR Can Now Be Fulfilled Through ZCZP
2.1 For Companies Subscribing to ZCZP
The 10% cap. A company’s subscription to ZCZP instruments cannot exceed 10% of its total CSR expenditure for that financial year. To illustrate: if XYZ Limited has a CSR obligation of Rs. 5 crore, its maximum ZCZP subscription is Rs. 50 lakh. The remaining Rs. 4.5 crore must be deployed through other permissible CSR activities. This cap prevents ZCZP from becoming a dominant CSR channel while still opening it as a meaningful option.
Impact assessment exemption. Currently, companies with CSR budgets above Rs.10 crore or projects above Rs.1 crore must commission independent impact assessments. Companies that subscribe to ZCZP instruments using CSR funds are exempt from conducting an independent impact assessment for those projects. The rationale is that the SSE’s own disclosure and impact reporting architecture, including the Annual Impact Report assessed by a Social Impact Assessor substitute for the company’s obligation. This removes a layer of compliance cost and is likely to make ZCZP a more attractive CSR deployment route for companies. However, the burden for Impact Assessment remains on the NPO.
2.2 For NPOs Issuing ZCZP Instruments
Three-year project limit. Any project funded through a ZCZP instrument must be completed within three succeeding financial years from the date of issue. If an NPO issues a ZCZP in FY 2026–27, the project must be delivered by the end of FY 2029–30. This is intended to prevent funds from remaining idle and to create a predictable timeline for social impact delivery.
Unspent funds must be returned. When a ZCZP instrument’s listing terminates either because the project is complete or its tenure has expired, any unspent funds must be transferred to a fund specified in Schedule VII of the Companies Act, 2013 (such as those relating to social welfare, education, or environment). The NPO must then submit a compliance report to SEBI confirming the transfer. This forecloses any possibility of diverting unutilised charitable funds.
Rule 4 of the 2014 Rules applies (with limited exceptions). When CSR is implemented through ZCZP subscription, the general implementation standards under Rule 4 of the 2014 Rules apply except sub-rules (5) and (6). Sub-rule (5) disqualifies activities that benefit only employees and their families; sub-rule (6) limits administrative and capacity-building expenditure. Their exclusion is sensible given that a company subscribing to a ZCZP is a passive contributor, not a project implementer.
Pacta Resources on the Social Stock Exchange
These amendments reflect a broader policy effort to integrate India’s CSR and social capital markets frameworks. Whether they translate into meaningful uptake will depend on how actively corporate CSR teams engage with the SSE — and how well-prepared NPOs are to issue instruments that meet the new conditions. Pacta will continue to track these developments.
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