Recently the Securities Exchange Board of India (SEBI) has prepared the framework of Social Stock Exchanges (SSEs).
The proposal to set up Social Stock Exchanges (SSEs) was first presented during the Union Budget in the year 2019.
SSE acts as a regulated financing platform. The platform allows for-profit social enterprises (FPEs) and not-for-profit organizations (NPOs) to raise funds for a social purpose.
Some of the most prominent SSEs are: United Kingdom (Social Stock Exchange), Canada (Social Venture Connection), Singapore (Impact Investment Exchange) etc.
Requirement of SSEs:
- Providing better access to markets to raise capital for enterprises striving to bring about a positive change in society.
- To reduce the burden on the government in achieving developmental goals by leveraging private sector participation.
- Better project implementation, as the performance of SSE listed enterprises will be closely monitored.
- SEBI has also announced a framework for setting up a gold exchange. This exchange will provide protection to the investors in the form of Electronic Gold Receipt (EGR).
- EGR can be traded, cleared and settled like any other securities. Also, it will help in fair and transparent price discovery, investment liquidity and quality assurance of gold.
Frameworks for SSE include:
The SSE will function as a separate segment of the existing stock exchanges under the regulatory purview of SEBI.
Based on 15 broad eligible social activities approved by SEBI, Non-Profit Organizations (NGOs) engaged in those activities can raise finance through equity, zero-coupon zero principal bonds, mutual funds etc. after registration with SSE.
SEBI will set up a capacity building fund with a corpus of Rs 100 crore in association with the National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and stock exchanges.
Social audit will be mandatory for social enterprises registered/fund raising enterprises in SSE.
Source – The Hindu