Social Stock Exchange (SSE) is an idea launched by the federal government in 2019 to offer a platform for social enterprises and voluntary organisations to lift capital.
It is a platform that enables social enterprises to entry capital markets and lift funds from traders who’re keen on investing in organisations which have a social influence.
Background
Creation of SSE was proposed by union minister of finance and company affairs, Nirmala Sitharaman, whereas presenting the Union Budget 2019-20.
It was proposed to provoke steps in the direction of making a social inventory change, below the regulatory ambit of Securities and Exchange Board of India, for itemizing social enterprise and voluntary organisations.
The finance minister stated that it’s time to take capital markets nearer to the lots and meet numerous social welfare goals associated to inclusive progress and monetary inclusion.
“I suggest to provoke steps in the direction of creating an digital fund elevating platform, a social inventory change – below the regulatory ambit of Securities and Exchange Board of India (SEBI) for itemizing social enterprises and voluntary organisations working for the realisation of a social welfare goal in order that they will elevate capital as fairness, debt or as models like a mutual fund,” FM had stated.
What is the Social Stock Exchange (SSE)?
SSE is 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.
Sebi has granted approval for introducing SSE as a separate segment on BSE and NSE.
Which entity can identify itself as a social enterprise?
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
What is a not-for-profit organisation in the context of the Social Stock Exchange?
A not for profit organisation is an entity which meets the criteria to be identified as a social enterprise and is any of the following entities:
1. A charitable trust registered under the public trust statute of the relevant state;
2. A charitable society registered under the Societies Registration Act, 1860 (21 of 1860);
3. A company incorporated under section 8 of the Companies Act, 2013 (18 of 2013);
4. Any other entity as may be specified by SEBI
Which entity can be identified as a for profit social enterprise in the context of Social Stock Exchange?
A for profit social enterprise is an entity which meets the criteria to be identified as a social enterprise and is any of the following entities:
1. A company under the Companies Act, 2013, operating for profit and does not include a company incorporated under section 8 of the Companies Act, 2013 (18 of 2013);
2. A body corporate operating for profit
Is this meant for Indian entities only or international NPOs can also get registered?
Only Indian entities can register in the Social Stock Exchange.
Will foreign investors like FII’s, FPI’s or NRI investors be allowed to invest in NPOs fund raising?
Foreign investors like FII’s, FPI’s or NRI investors, will not be allowed to invest in NPOs fund raising.
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