The Securities and Exchange Board of India (Sebi) on September 19 issued a detailed framework for the Social Stock Exchange (SSE).
- SSE is a regulated structure that will facilitate an additional avenue for social enterprises to raise funds.
- Finance Minister Nirmala Sitharaman proposed the concept of an SSE in her speech for the 2019- 2020 Budget.
- The SSE is aimed at helping non-profit sectors to channel greater capital through the bourse. The market regulator notified regulations for the SSE in July 2022.
Key points of Framework
- A non-profit organisation (NPO) looking to register on the SSE must be registered for a minimum of three years as a charitable trust with a certificate valid at least for the next 12 months at the time of seeking registration.
- Listed NPO will have to submit a statement of utilisation of funds to SSE, as mandated under Sebi’s rules within 45 days from the end of quarter.
- Sebi has asked social enterprises raising funds using SSE to disclose Annual Impact Report (AIR) within 90 days from the end of financial year.
- Annual spending by the entity in the previous financial year must be at least Rs 50 lakh and it must have had funding of at least Rs 10 lakhs in the said FY.
- Interested entities must also have a valid PAN.
- The SSE will ensure that NPOs raising funds through the issuance of Zero Coupon Zero Principal Instruments (ZCZPI) disclose target segment, strategy, governance, compliances, and social impact.
- Under the rules, SSE will be a separate segment of the existing stock exchanges.
- Social enterprises eligible to participate in the SSE will be entities — NPOs and for-profit social enterprises — having social intent and impact as their primary goal.
- Such an intent should be demonstrated through its focus on eligible social objectives for the underserved or less privileged populations or regions.
- The social enterprises will have to engage in a social activity out of 16 broad activities listed by the regulator.
- The eligible activities include eradicating hunger, poverty, malnutrition and inequality; promoting healthcare, supporting education, employability and livelihoods; gender equality empowerment of women and LGBTQIA communities etc.
