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What is a Social Stock Exchange?

Context:

Recently, the Unnati Foundation became the first entity to list on the social stock exchanges (SSE).

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. What is a Social Stock Exchange?
  2. Eligibility

What is a Social Stock Exchange?

  • 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.
Eligibility
  • Any non-profit organisation (NPO) or for-profit social enterprise (FPSEs) that establishes the primacy of social intent would be recognised as a social enterprise (SE), which will make it eligible to be registered or listed on the SSE.
  • The seventeen plausible criteria as listed under Regulations 292E of SEBI’s ICDR (Issue of Capital and Disclosure Requirements) Regulations, 2018 entail that enterprises must be serving to eradicate either hunger, poverty, malnutrition and inequality; promoting education, employability, equality, empowerment of women and LGBTQIA+ communities; working towards environmental sustainability; protection of national heritage and art or bridging the digital divide, among other things.
  • At least 67% of their activities must be directed towards attaining the stated objective. Corporate foundations, political or religious organisations or activities, professional or trade associations, infrastructure and housing companies (except affordable housing) would not be identified as an SE.

-Source: Indian Express


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