The Securities and Exchange Board of India (Sebi) on Monday released an extensive structure for a social stock exchanges, defining the minimum requirements for an Not-for-Profit Organisation (NPO) for joining the bourse and the disclosure obligations.
This is after the regulator for capital markets in July issued guidelines for Social Stock Exchange (SSE) to give social enterprises an additional way to raise money.
According to PTI’s reports, SSE is a novel concept in India and an exchange is designed to assist the non-profit and private sectors by directing more capital to them .
The concept that SSE was first proposed by the Finance Minister, Nirmala Sitharaman during her budget speech of the year 2019-20.
The regulator in its Circular set out the minimum requirements that must be met by an NPO to be registered with SSE as well as the disclosure requirement for NPOs seeking to
raise funds through the issuance of zero-coupon principal instruments and set in the law annual disclosure requirements which are required by NPOs participating in such exchanges.
The listed NPO must provide a report on the use of the funds SSE according to Sebi’s rules , within 45 days of the end of the quarter.
In addition, Sebi has asked social companies that raise funds through SSE to publish an the Annual Impact Report (AIR) within 90 days of the conclusion of their financial year.
The report will include both the qualitative and quantitative elements of social impact created by the organization and,
if appropriate the impact produced by the solution or project that has been obtained through SSE.
The rules state that SSE is a distinct section of the stock exchanges currently in operation.
Social enterprises that are eligible to be part of the SSE are entities -that are NPOs and social enterprises that are for-profit and that have a social mission with a positive impact on society as the main purpose.
In addition, the intent must be demonstrated by the focus it places on social objectives that benefit underserved or underprivileged people or regions.
It is vital to know that social enterprises need to be involved in a social venture from the 16 broad categories of activities outlined as regulated by regulators.
The eligible activities include ending malnutrition, hunger, poverty and inequity; promoting health and promoting education, employment and the ability to earn a living;
gender equality empowerment for women as well as LGBTQIA community members; as well as helping incubators for social enterprises.