What Is Social Stock Exchange(SSE)?

What Is Social Stock Exchange(SSE)?

In This Article, ”What Is Social Stock Exchange(SSE)?”, We Will Discuss: Context Of Social Stock Exchange(SSE), What Is Social Stock Exchange(SSE)?, Eligibility For Registering Under SSE?, etc.

Social Stock Exchange Framework

Context Of Social Stock Exchange(SSE)

In News

Recently, SEBI has granted approval for introducing Social Stock Exchange(SSE) as a separate segment on BSE and NSE.

Background

• When Proposed? Creation of SSE was proposed by union minister of finance and corporate affairs, Nirmala Sitharaman, while presenting the Union Budget 2019-20.
• Why Proposed? SSE was proposed to initiate steps towards creating a social stock exchange, under the regulatory ambit of Securities and Exchange Board of India, for listing social enterprise and voluntary organisations.

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What is the Social Stock Exchange (SSE)?

• SSE will work as a separate segment of the existing stock exchange that can help social enterprise(s) to raise funds from the public through the stock exchange mechanism.
• SSE will act as a medium between social enterprises and fund providers and that can help them to select those entities that are creating measurable social impact and reporting such impact.
• Certain type of social enterprises i.e. not-for-profit organisations (NPOs) that meet the registration criteria can register on SSE and undertake to make continuous disclosures on their social impact.
• Such NPOs may or may not choose to raise funds through SSE, however, would continue to make disclosures including on social impact to stock exchanges.
• Social Stock Exchange identifies the following two forms of social enterprises that are engaging in the activity of creating positive social impact and that meets the primacy of their social intent.
  1. Not-for-profit organisation
  2. For profit social enterprise

Eligibility For Registering Under SSE?

• Any non-profit organisation (NPO) or for-profit social enterprise (FPSEs) that establishes the primacy of social intent would be recognised as a social enterprise (SE), which will make it eligible to be registered or listed on the SSE.
• The seventeen plausible criteria as listed under Regulations 292E of SEBI’s ICDR (Issue of Capital and Disclosure Requirements) Regulations, 2018 entail that enterprises must be:
  • Serving to eradicate either hunger, poverty, malnutrition and inequality;
  • Promoting education, employability, equality, empowerment of women and LGBTQIA+ communities;
  • Working towards environmental sustainability;
  • Protection of national heritage and art or bridging the digital divide, among other things.
• At least 67% of their activities must be directed towards attaining the stated objective.

Is SSE meant for Indian entities only or international NPOs can also get registered?

Only Indian entities can register in the Social Stock Exchange. Foreign investors like FII’s, FPI’s or NRI investors, will not be allowed to invest in NPOs fund raising.

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