Social stock exchange

Social stock exchange

News: NSE received final approval from SEBI to set up the Social Stock Exchange (SSE).

What is SSE?
 The SSE would function as a separate segment within the existing stock exchange and help social enterprises raise funds from the public through its mechanism.
 It would serve as a medium for enterprises to seek finance for their social initiatives, acquire visibility and provide increased transparency about fund mobilisation and utilisation.
 Retail investors can only invest in securities offered by for-profit social enterprises (SEs) under the Main Board.
 In all other cases, only institutional investors and non-institutional investors can invest in securities issued by SEs.

What are eligibility criteria?
 Any non-profit organisation (NPO) or for-profit social enterprise (FPSEs) that establishes the primacy of social intent would be recognised as a SE, which will make it eligible to be registered or listed on the SSE.
 17 plausible criteria under SEBI’s ICDR Regulations, 2018 include serving to eradicate hunger, poverty, malnutrition, promoting education, employability, equality, and environmental sustainability etc.
 Corporate foundations, political or religious organisations, professional or trade associations, infrastructure and housing companies (except affordable housing) would not be identified as SE
 NPOs would be deemed ineligible if dependent on corporates for more than 50% of its funding.

How will NPO’s raise money?
 NPOs can raise money either through issuance of Zero Coupon Zero Principal (ZCZP) Instruments from private placement or public issue, or donations from mutual funds.
 Development Impact Bonds are available upon completion of a project and delivered on pre-agreed social metrics at pre-agreed costs/rates.

How can FPSE’s raise funds?
 FPEs need not register with SSE before raising funds through SSE.
 It can raise money through issue of equity shares or issuing equity shares to an Alternative Investment Fund including Social Impact Fund or issue of debt instruments.