SOCIAL STOCK EXCHANGE

2. Eligible Investor: Retail investors are permitted to invest only in securities offered by
A. Social Stock Exchange (SSE): SSEs is a separate segment of the existing stock
FPEs under the main board. In all other cases, only institutional investors and non-
exchanges, that help a social enterprise(s) (“SE”) to raise funds from the public
institutional investors can invest in securities issued by SE.
through the stock exchange mechanism.
3. Reporting Requirements: A SE shall be required to submit an annual impact report
B. Legal Framework governing the SSE: Chapter X-A of the Securities and Exchange
(assessed by a social impact assessment firm employing social impact assessor(s)) to
Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018
the SSE.
provides a legal framework for the SSE. The key provisions are given below:
The aim behind using the aforementioned criteria is to select only those entities that
1. Social Enterprise: An entity fulfilling the following criteria qualifies to be recognised
create measurable social impact and report such impact.
as a ‘SE’: (i) The entity shall be engaged in one or more of the eligible activities
such as health care, education, environment etc.; (ii) the entity shall target
C. Utility Factor for NPOs and FPEs
underserved or less privileged population; and (iii) at least 67% of its activities
must benefit the target population, demonstrated by either one or more of: (a)
1. For NPOs:
revenue; (b) expenditure; and (c) customer base
 Issue of ZCZP: (i) suited to investors who are looking to create social impact and do
not wish to have their funds returned to them; (ii) No guarantee of creating social
impact; (iii) automatic delisting at the end of the maturity; and (iii) non-tradable,
hence no tax on transactions.

 Donations through MF: It is proposed that funds will be raised through close-ended
mutual funds whereby the investors will donate the returns earned on such mutual
funds to the NPOs.

2. FPEs: for fundraising, the FPEs have access to the capital markets through
conventional sources, viz., the main board, SME exchange, or debt segment. The
additional recognition of being a “SE” may benefit it in long-term value creation as
profit generation and social impact creation can be complementary to each other.

D. First Listing on SSE: A Bangalore-based NPO, SGBS Unnati Foundation (SUF) has
become the first entity to list ZCZP on the social SSE442. SUF raised an amount of Rs.
2 Crores for a tenure of 12 months.

As of today, 54 NPOs are registered with SSE, and it is expected that listing at SSEs
can provide visibility to SE thereby, helping them to approach the public for fundraise
at regular intervals if they can show good outcomes.