SEBI comes out with framework for social stock exchange
A thorough framework for social stock market was released on Monday by the Securities and Exchange Board of India (Sebi), including the minimal requirements for a Not-for-Profit Organization (NPO) to register with the bourse and disclosure standards.
This development follows the capital markets regulator’s notification of Social Stock Exchange (SSE) guidelines in July, which gave social firms another way to obtain money.
SSE, which is a novel idea in India, was first proposed by Finance Minister Nirmala Sitharaman in her Budget speech for the fiscal year 2019–20. This bourse is intended to serve the private and nonprofit sectors by channelling more capital to them.
In its circular, the regulator set forth the minimal standards that a NPO must meet in order to register with the SSE, the disclosure requirements for NPOs that raise money by issuing zero-coupon, zero-principal instruments, and established the annual disclosure requirements that NPOs must make on such exchanges.
According to Sebi regulations, listed NPO must file a statement of money utilization to SSE within 45 days after the end of the quarter. In addition, Sebi has mandated that social enterprises that raise money through SSE disclose their Annual Impact Reports (AIR) within 90 days of the end of the fiscal year. These AIRs must include both qualitative and quantitative information about the entity’s social impact as well as, where appropriate, information about the impact of the project or solution for which the money was raised through SSE.
According to the regulations, SSE will be a distinct division of the current stock exchanges. Entities – NPOs and for-profit social enterprises — with social intent and effect as their primary focus will be eligible to participate in the SSE.