Not for Profit Organisation

A Not for Profit Organisation (NPO) is an organisation whose surplus goes back into its mission instead of to owners. It cannot pay dividends, so it cannot offer investors a financial return.

In everyday Indian usage, NPO and NGO cover a huge universe. The workbook cites the Central Statistical Institute of India: at least 33 lakh NPOs, about one for every 400 Indians.

For the Social Stock Exchange the term is narrower. Under Regulation 292A(e) of the SEBI ICDR Regulations, an NPO is a social enterprise that is one of these:

1. a charitable trust registered under the Indian Trusts Act, 1882;
2. a charitable trust registered under the public trust statute of the relevant State;
3. a trust registered under the Indian Registration Act, 1908 with the Sub-Registrar, in States that have not enacted a public trust law;
4. a charitable society registered under the Societies Registration Act, 1860;
5. a charitable society registered under the relevant State's Societies Registration Act;
6. a company registered under Section 8 of the Companies Act, 2013, including one registered under Section 25 of the repealed 1956 Act;
7. any other entity SEBI specifies.

The phrase "a social enterprise which is" matters. A trust that fails the primacy-of-social-intent test is not an NPO for SSE purposes, whatever its registration says.

Mandatory criteria to register on an SSE (Chapter 3, Table 3.1, read with Regulation 292F):

Why register without listing. Chapter 3 gives a three-fold purpose. Registration puts NPOs on a common legal platform, pushes a cultural shift towards disclosure-driven fundraising, and lets smaller NPOs signal quality. The benefit is called reputation value.

How an NPO raises money on the SSE (Chapter 2, 2.3.1.3): ZCZP instruments issued to eligible investors, donations through mutual fund schemes, and other means SEBI specifies. A Section 8 company can also issue equity or debt.

The funding problem it solves. About 70% of NPO funding comes from four sources: individual donations, FCRA contributions, CSR grants and government scheme grants. As of 2018 only 1.8 lakh institutions had registered and claimed tax exemption; about 12% had FCRA funding and 11% CSR funding. Institutional donations typically fund programmes only, which creates the starvation cycle of unfunded overheads.

Ongoing obligations (Regulation 91C of LODR). Financial disclosures are due by October 31 or the income-tax return due date, whichever is later. Non-financial disclosures are due within 60 days of the financial year end.

Illustrative figures tested against the workbook's thresholds.

Three NPOs apply to register on BSE SSE in May 2026.

Udaan is the instructive one. It is the largest of the three, and it still fails because its exemption certificate is not valid for the next 12 months. It must renew first.

Sahyog registers. For the next two years it may stay registered without raising money. The workbook cites the April 15, 2026 circular for this window, extendable by one more year with the exchange's approval. It must still file a self-certified Annual Impact Report every year.

Chapter 1 gives the ICDR definition, Chapter 2 (2.2.2) the funding landscape and Chapter 3 the mandatory registration criteria, which are among the most number-dense tables in the paper. Chapter 9 covers the annual disclosures and Chapter 10 the tax framework. Chapter 3's sample questions ask who prescribed the minimum registration requirements (SEBI) and which entities qualify. Chapter 3's third sample question lists "a charitable trust registered under the Societies Registration Act, 1860" as an option to reject, because societies, not trusts, register under that Act.

• ₹50 lakh is spending; ₹10 lakh is funding. Swapping them is the classic error.
• Minimum age is 3 years; the certificate must be valid for the next 12 months. Two different time tests.
• Trusts register under the Indian Trusts Act, 1882 or a State public trust law; societies under the Societies Registration Act, 1860. A "trust registered under the Societies Registration Act" is a planted wrong option.
• A Section 8 company is an NPO, and can issue equity, though its shares carry no claim on profits.
• The workbook names the registration section three ways. Chapter 2 (2.2.2) says all NPOs must be registered under Section 12A. Chapter 10 (10.1, 10.3) says Section 12AB, and that 12AA entities must re-register under 12AB. Table 3.1 prints "12A/12AA/12B" in one column and "12AB" in the next. For current law, take 12AB.
• Stale statute. The workbook cites the Income Tax Act, 1961 throughout. That Act was replaced by the Income-tax Act, 2025 from 1 April 2026, which renumbers these provisions. Answer the exam in the workbook's section numbers.
• The no-raise window is worded two ways. Chapter 9 (Regulation 91E proviso) says a maximum of two years. Chapter 3 and the Chapter 9 footnote add that it may be extended by one year with the exchange's approval. After the window the NPO must have at least one listed project or cease to be registered.