Securities and Exchange Board of India (Sebi) has notified a framework for the social stock exchange to provide social enterprises with an additional avenue to raise funds. The framework for the Social Stock Exchange (SSE) has been formulated on the basis of the recommendations of a working group and technical group constituted by the regulator.
The social stock exchange is a novel concept in India and such a stock exchange is meant to serve the private and nonprofit sectors by channelling greater capital to them. The idea of Social Stock Exchange was first floated by Finance Minister Nirmala Sitharaman in her Budget Speech 2019-20.
Under the new rules, Social Stock Exchange will be a separate segment of the existing stock exchanges, according to the three separate notifications issued by the Sebi on Monday. Social enterprises (SEs) eligible to participate in the SSE will be entities (nonprofit organisations (NPOs) and for-profit social enterprises having social intent and impact as their primary goal.
Also, such an intent should be demonstrated through its focus on eligible social objectives for the underserved or less privileged populations or regions. The social enterprises will have to engage in a social activity out of 16 broad activities listed by the regulator. The eligible activities include eradicating hunger, poverty, malnutrition and inequality; promoting healthcare, supporting education, employability and livelihoods; gender equality empowerment of women and LGBTQIA+ communities; and supporting incubators of social enterprise.
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