Stock exchange BSE on Friday said it has got an in-principle approval from the Securities and Exchange Board of India (Sebi) for the social stock exchange (SSE) as a separate segment. This comes after the markets regulator in July notified a framework for SSE to provide social enterprises with an additional avenue to raise funds.
“This is to inform that, Sebi has granted its in-principle approval to BSE for introducing SSE as a separate segment on BSE,” the BSE said in a statement.
The framework for the Social Stock Exchange (SSE), which was notified in July, was developed on the basis of the recommendations of a working group and technical group constituted by the regulator.
The social stock exchange is a novel concept in India and such a bourse is meant to serve the private and non-profit sectors by channelling greater capital to them. The idea of SSE was first floated by Finance Minister Nirmala Sitharaman in her Budget Speech 2019-20.
Under the new rules, SSE will be a separate segment of the existing stock exchanges, according to the three separate notifications issued by the Securities and Exchange Board of India (Sebi) in July.
Social enterprises (SEs) eligible to participate in the SSE will be entities—non-profit organisations (NPOs) and for-profit social enterprises—having social intent and impact as their primary goal. Also, such an intent should be demonstrated through its focus on eligible social objectives for the underserved or less privileged populations or regions.
Last month, Sebi came out with a detailed framework for social stock exchange, specifying minimum requirements for a Not-for-Profit Organisation (NPO) for registering with the bourse and disclosure requirements.
In its circular, the regulator specified minimum requirements to be met by a NPO for registration with SSE, disclosure requirement for NPOs raising funds through the issuance of zero-coupon zero principal instruments and put in place annual disclosure requirements that needs to be made by NPOs on such exchanges.
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.
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; and supporting incubators of social enterprise.
Corporate foundations, political or religious organisations or activities, professional or trade associations, infrastructure and housing companies, except affordable housing, will not be eligible to be identified as a social enterprise.
(With inputs from PTI)
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