India’s Social Stock Exchange (SSE) has been introduced to create a structured platform where social enterprises can connect with investors and donors. The initiative allows organisations working toward measurable social outcomes to access funding through the stock exchange system.
Both not-for-profit organisations (NPOs) and for-profit social enterprises (FPEs) may participate, although the fundraising mechanisms and registration requirements differ for each type of entity.
Understanding who can raise funds on the Social Stock Exchange and the criteria involved helps organisations determine whether they are eligible to participate in this emerging funding ecosystem.
Key Takeaways
- The Social Stock Exchange is a dedicated segment of stock exchanges for social enterprises.
- Both NPOs and for-profit enterprises can participate under the SSE framework.
- NPOs must register with SSE before raising funds.
- For-profit enterprises can raise capital through equity or debt instruments.
- Organisations must demonstrate measurable social impact to qualify.
What is the Social Stock Exchange (SSE)?
The Social Stock Exchange is a separate segment within existing stock exchanges designed to support organisations that create measurable social impact. It functions as a platform connecting social enterprises with investors, donors and philanthropic institutions.
Through SSE, organisations engaged in social welfare activities can access funding while providing transparent disclosures on their social impact and operations. The framework is regulated to ensure accountability and improve confidence among contributors who support social initiatives.
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What is a Not-for-Profit Organisation (NPO) Under SSE?
Within the SSE framework, a not-for-profit organisation refers to an entity that qualifies as a social enterprise and operates primarily for charitable or social purposes.
Examples of eligible NPO structures include:
- Charitable trusts registered under the Indian Trusts Act, 1882
- Charitable trusts registered under applicable state public trust laws
- Trusts registered under the Registration Act, 1908, where applicable
- Societies registered under the Societies Registration Act, 1860 or relevant state laws
- Companies incorporated under Section 8 of the Companies Act, 2013, including companies registered under Section 25 of the Companies Act, 1956"
NPOs must register with the Social Stock Exchange before they can raise funds through this platform. To qualify for registration, they must generally have existed for at least 3 years, have annual spending of at least ₹50 lakh, and have received annual funding of at least ₹10 lakh.
What is a For-Profit Social Enterprise (FPE)?
A for-profit social enterprise refers to an organisation that operates as a commercial entity while delivering measurable social impact.
Entities that can qualify as FPEs include:
- Companies incorporated under the Companies Act, 2013, operating for profit (excluding Section 8 companies)
- Body corporates functioning with a profit motive
Unlike NPOs, for-profit enterprises do not necessarily need to register with the SSE before listing securities. However, they must meet the criteria required to be recognised as social enterprises.
Not-for-Profit Organisations (NPOs) vs For-Profit Social Enterprises (FPEs)
| Feature | NPO (Not-for-Profit Organisation) | FPE (For-Profit Social Enterprise) |
| Nature of Entity | Operates primarily for charitable or social purposes. | Operates as a commercial entity with a profit motive while creating social impact. |
| Typical Structures | Charitable trusts, societies, Section 8 companies, or other recognised non-profit entities. | Companies incorporated under the Companies Act, 2013 (excluding Section 8 companies) or other profit-oriented body corporates. |
| Profit Motive | Does not operate for profit; surplus funds are used for social activities. | Generates profits while also delivering measurable social outcomes. |
| SSE Registration Requirement | Mandatory registration with the Social Stock Exchange before raising funds. | Registration with the SSE is mandatory for NPOs seeking to raise funds. For-profit social enterprises must comply with the applicable eligibility, disclosure and listing requirements prescribed under the SSE framework. |
| Purpose on SSE | Raise funds or donations for social initiatives and disclose social impact regularly. | Raise capital through market instruments while pursuing socially impactful business activities. |
Eligibility Criteria for Social Enterprises
To be recognised as a social enterprise under the SSE framework, organisations must demonstrate that their activities primarily serve a defined target population.
To qualify as a social enterprise, an organisation must demonstrate social intent and satisfy at least one of the prescribed 67% tests relating to revenue, expenditure or beneficiaries. This requirement can be measured using one of the following indicators:
- Revenue Criteria
At least 67% of the average revenue over the previous 3 years must come from activities serving the target population.
- Expenditure Criteria
At least 67% of the average expenditure over the previous 3 years must be directed toward eligible social activities.
- Beneficiary Criteria
Members of the target population should represent at least 67% of the organisation’s total beneficiaries or customer base over the preceding 3 years.
These benchmarks help ensure that organisations participating in SSE remain focused on social impact.
Key Benefits of the Social Stock Exchange
- Improved Access to Funding
SSE provides a structured platform where social enterprises can connect with investors and donors interested in supporting social impact initiatives.
- Alignment of Social Goals
The platform enables organisations and investors with similar social objectives to collaborate more effectively.
- Performance-Oriented Philanthropy
Social enterprises participating in the SSE framework are subject to disclosure and impact-reporting requirements, helping donors and investors assess measurable social outcomes.
- Lower Registration Costs
Registration and listing fees are designed to remain relatively low, making it easier for smaller organisations to access the platform.
- Additional Funding Channel
SSE offers an alternative funding route beyond government grants and donations, helping social enterprises expand their activities.
- Additional CSR Funding Opportunities
The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 permit eligible companies to undertake certain CSR activities through Zero Coupon Zero Principal (ZCZP) instruments issued by registered NPOs, creating an additional funding channel for social enterprises.
Conclusion
India’s Social Stock Exchange aims to expand funding opportunities for organisations working toward measurable social outcomes. By enabling both not-for-profit organisations and for-profit enterprises to participate under structured guidelines, SSE seeks to bridge the gap between social initiatives and capital markets.
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