What is a Social Stock Exchange

• SSE is an electronic fund-raising platform for Social Enterprises (both not for-profit and for-profit)
• A regulated platform that brings together social organizations and impact investors/donors.
• Facilitate funding and growth of social enterprises
• It is a separate segment on National Stock Exchange (NSE)
• It promotes timely disclosure and Impact assessment

Eligibility of Social Enterprises

• 17 Eligible areas have been identified for demonstrating social intent based on Schedule VII of the Companies Act, 2013, Sustainable Development Goals (SDGs) and priority areas identified by Niti Aayog.
• Shall target unserved or less privileged population segments or regions recording lower performance in the development priorities of central or state government.
• SE to have atleast 67% of its activities qualifying as eligible activities to the target population. To be established through immediately preceding three-year average of either revenue or expenditure or target population.

Eligible Activities

List of eligible activities for demonstrating primacy of social impact:

1. Eradicating hunger, poverty malnutrition and inequality
2. Promoting health care (including mental health) and sanitation; and making available safe drinking water
3. Promoting education, employability and livelihoods
4. Promoting gender equality, empowerment of women and LGBTQIA+ communities
5. Ensuring environmental sustainability, addressing climate change (mitigation and adaptation), forest and wildlife conservation
6. Protection of national heritage, art and culture
7. Training to promote rural sports, nationally recognized sports, Paralympic sports and Olympic sports
8. Supporting incubators of social enterprises
9. Supporting other platforms that strengthen the non-profit ecosystem in fundraising and capacity building
10. Promoting livelihoods for rural and urban poor, including enhancing income of small and marginal farmers and workers in the non-farm sector
11. Slum area development, affordable housing and other interventions to build sustainable and resilient cities
12. Disaster management, including relief, rehabilitation and reconstruction activities
13. Promotion of financial inclusion
14. Facilitating access to land and property assets for disadvantaged communities
15. Bridging the digital divide in internet and mobile phone access, addressing issues of misinformation and data protection
16. Promoting welfare of migrants and displaced persons
17. Any other area as identified by the Board or Government of India from time to time

Registration and Listing of NPO’s and FPE

The SSE framework enables Not for Profit Organisations (NPO) to register or list with recognised stock exchanges having nationwide terminal. In order to enable NPOs to raise fund, a new security Zero Coupon Zero Principal (ZCZP) has been notified by SEBI which is the first of its kind in the world and has been introduced to allow investors/donors wanting to contribute and create an impact in the Social sector.

Further, For Profit Enterprises (FPE) can also mobilise funds through the SSE framework upon fulfilment of existing exchange criteria as applicable to Mainboard/SME/Innovators Growth Platform (IGP) for startups. Exchange will provide distinct identifier to such companies and these companies have to additional submit an Annual Impact Report so that the investors are able to monitor their social and environmental returns along with traditional financial returns.

The launch of the SSE is seen as a significant milestone in India’s push towards a more sustainable and inclusive economy. It is expected to provide a fresh impetus to social entrepreneurship in India by attracting more investment in areas that addresses the need of the vulnerable sections.

Disclosure Requirement for Social Enterprises

Particulars	NPOs registered on SSE	NPOs with its securities listed on SSE	FPSEs registered with SSE
Annual Disclosures	Within 60 days from the end of FY (format to be specified by SEBI)		As applicable under Ch. IV/V of LODR
Quarterly Disclosures	Not applicable	Statement of utilization of the funds raised from the end of each quarter till such funds are utilized, in the manner: • Category-wise amount of money raised & utilized; • Amount remaining unutilized	As applicable under Ch. IV/V of LODR
Event based Disclosures	Not applicable	Any event that may have a material impact on the planned achievement of outputs or outcomes and steps being taken by the Social Enterprise to address the same, within 7 days from the occurrence of such event	As applicable under Ch. IV/V of LODR
Policy for determination of materiality	Not applicable	To frame policy for determination of materiality and disclose the same to Social Stock Exchange.	As applicable under Ch. IV/V of LODR
Annual Impact Report	Annual Impact Report audited by a Social Audit Firm employing Social Auditor, to SSE/ Stock Exchange (time period and format to be specified by SEBI)

NSE has recently launched its SSE segment with 19 NPOs (source www.nseindia.com) being registered successfully on the platform. The platform has garnered incredible interest from various stakeholders, including social entrepreneurs, investors, and regulators, who see it as a means of achieving the Sustainable Development Goals (SDGs) set by the United Nations. Being the largest Exchange in India, NSE is committed to facilitate the social enterprises to tap the potential of this new segment and has conducted various outreach programs to build the capacity of the NPO, create awareness and enable them to register on the segment. The detailed framework and FAQ’s regarding NSE SSE is available on NSE website.

The SSE framework is indeed a pioneering initiative that seeks to create a conducive ecosystem for Social Enterprises. However, to get these Social Enterprises an access to capital markets will require both market revolution along with some regulatory interventions. The ecosystem needs to be aware about the nuts and bolts of the SSE framework and will require assistance and hand holding not only from the Exchanges/SEBI but also from intermediary within them. Further, for this mechanism to flourish the investor/donors should get similar incentive akin to what they are getting today. While this step may be just the beginning to catalyze the growth of social enterprises in India, we are hopeful the entire ecosystem will evolve and become more amenable to address the needs of these enterprises.

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Author may be reached at: eboard@icai.in