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Report On Social Stock Exchanges

Report On Social Stock Exchanges:

A technical group on Social Stock Exchanges (SSEs), constituted by the Securities and Exchange Board of India (SEBI), has submitted its report.

  • SEBI set up the technical group in September 2020 under the chairmanship of Harsh Bhanwala, former chairman of NABARD.
  • Earlier, a Working Group (WG) on the SSE, chaired by Ishaat Hussain, submitted its report in June 2020.

About Social Stock Exchanges (SSEs):

  • The idea of the Social Stock Exchange (SSE) as a platform for listing social enterprise, voluntary and welfare organisations so that they can raise capital was mooted in the Union Budget 2019-20.
  • Social enterprise can be defined as a non-loss; non-dividend paying company created and designed to address a social problem.
  • It was proposed to be set up under the market regulator SEBI.
  • The aim of the initiative is to help social and voluntary organisations which work for social causes to raise capital as equity or debt or a unit of mutual fund.
  • SSE already exists in countries such as Singapore, UK, Canada among others. These countries allow firms operating in sectors such as health, environment and transportation to raise capital.

Recommendations of the Group:

  • Type of the Organisation: Political and religious organisations, trade organisations as well as corporate foundations should not be allowed to raise funds through SSEs.
  • Eligibility: For Profit Enterprise (FPE) and Not for Profit Organisation (NPO) will be eligible to tap the SSE if they are able to show their primary goals are social intent and impact.
  • Entities listed on SSE will have to disclose their social impact report on an annual basis covering aspects such as “strategic intent and planning, approach, impact score card”.
  • NPOs are usually structured as non-governmental organizations, Section 8 companies, trusts or societies. FPEs can be private limited companies, partnerships or sole proprietorships.