BSE gets SEBI nod for social stock exchange as separate segment

BSE gets SEBI nod for social stock exchange as separate segment: The Securities and Exchange Board of India (SEBI), the capital market regulator, has given stock exchange BSE its in-principle approval for the social stock exchange to operate as a separate section. To give social entrepreneurs another way to raise money, SEBI published the Social Stock Exchange (SSE) guidelines.

News Highlights

• The Social Stock Exchange (SSE) guidelines were announced by the regulator to give social entrepreneurs another way to obtain money. Entities, non-profit organizations, and for-profit social businesses are all eligible to participate in the SSE as social enterprises (SEs). According to the new regulations, SSE will be a distinct division of the current stock exchanges.
• Corporate foundations, political or religious organizations or activities, professional or trade groups, infrastructure corporations, and housing companies—except those providing affordable housing—will not be qualified to receive the designation of social enterprise.
• The regulator outlined the minimal requirements that a NPO must satisfy in order to register with the SSE, as well as the disclosure requirements for NPOs that raise money by issuing zero-coupon, zero-principal instruments. The regulator also established annual disclosure requirements for NPOs that must be made on such exchanges.
• According to SEBI, a NPO must be registered as a charity trust, have been registered for at least three years, spend at least Rs 50 lakh per year on operations, and receive at least Rs 10 lakh in funding during the previous fiscal year in order to meet the minimum requirements.
• Non-profit organizations and for-profit social enterprises that are involved in 15 general social activities that have been approved by the market regulator can be listed on the social stock exchange.

What do you mean by Social Stock Exchange?

The SSE is a stock exchange designed to assist the business and non-profit sectors in raising money by way of the exchange. SSEs are already common in many nations, including the UK, Canada, and Brazil.  These nations permit businesses engaged in the health, environment, and transportation industries to raise risk capital. Both not-for-profit organizations (NPOs) and for-profit social enterprises are able to take part in the SSE. The SSE will be a distinct area of the stock exchanges in accordance with the SEBI’s regulations.

The project aims to assist social and voluntary organizations that support social causes in raising cash in the form of stock, debt, or a mutual fund unit. It offers new and less expensive sources of funding for social welfare programs.