Feb 24, 2023
ETMarkets.comNSE has received final approval from market regulator Sebi to launch a social stock exchange (SSE) on Thursday. It will function as a separate segment of the NSE.
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In 2020, Sebi came out with a framework for social stock exchange so that social enterprises can get more avenues to raise funds.
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Social enterprises are non-governmental organisations and are of two types — non-profit organisations (NPOs) and for-profit social enterprises (FPEs). An NPO is a charitable trust or a charitable society not operating for profit, whereas an FPE is a company or corporate body in the social space, operating for profit.
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No, the listing mechanism is not the same for NPOs and FPEs. NPOs have to register on the social exchange to raise funds.
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According to Sebi, a non-profit organisation has to be at least 3 years old. The organisation must have a valid income tax certificate. It must spend at least Rs 50 lakh annually and a minimum Rs 10 lakh of that fund last year. The SSEs can ask for additional information or may seek other requirements for registration.
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Social enterprises raise funds through issuance of instruments like Zero Coupon Zero Principal (ZCZP), donations through mutual fund schemes or other means specified by Sebi. SSE will act as a medium between social enterprises and fund providers. Investors can choose entities that are creating measurable social impact and can provide funds only to them.
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FPEs can raise funds through issue of equity shares on the main board, SME Platform or innovators growth platform of stock exchange. They can also raise funds through equity issue to an Alternative Investment Fund (AIF), including social impact or issue of debt instruments.
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