(Some of you may be aware of Social Stock Exchange (SSE) being introduced in India. Through this Series, we will cover major issues relating to SSE. In the first post, we give International Background of SSE and its Legal Framework in India.)
Finance Minister in her Budget speech in 2019 introduced the concept of Social Stock Exchange (SSE) in India, as a separate platform to enable non-profit sector to raise funds for itself.
International Scenario
Brazil was the first country to launch an SSE in the year 2003, followed by South Africa in 2006, Portugal – 2009, Canada, Singapore & UK – 2013 and Jamaica – 2019. However only SSE’s based in Canada, Singapore & Jamaica are active, indicating difficulties in sustaining SSEs.
Most of the international platforms have limited transactions, with limited opportunities, and mainly focussed on FPEs, rather than NPOs[1]. In contrast Indian SSE is working towards trading for equities issued by FPE and provides opportunities for NPOs to open up avenues for direct listing. It is also developing set of procedures to enable investors to identify those entities which have measurable social impact.
Legal Framework
We all are aware that SEBI provides an overarching regulatory mechanism for regulating securities market and protecting investors. SEBI was established through SEBI Act 0f 1992. In 2022, SEBI amended its various regulations to introduce overall a framework for Social Stock Exchange[2].
Under the proposed framework, SEBI offers following services under SSE:
- Recognition of a NPO as well as a For Profit Entity (FPE) to be recognised as a Social Enterprise
- Allows listing of a NPO without raising of funds
- Allows raising of funds by a NPO
(to be continued)
—
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008