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DAILY NEWS ANALYSIS

  • 08 March, 2023

  • 5 Min Read

Social Stock Exchange

Social Stock Exchange

  • SEBI gave final approval to National Stock Exchange of India to establish the Social Stock Exchange (SSE).

What is A social stock exchange?

  • The SSE would operate as a distinct division within the current stock exchange and assist social businesses in raising money from the general public through its mechanism.
  • It would act as a platform for businesses to get funding for their social activities, gain publicity, and offer greater transparency on the mobilisation and use of funds.
  • Securities sold by for-profit social enterprises (SEs) on the Main Board are the only ones in which retail investors may invest.
  • Only institutional and non-institutional investors are permitted to purchase securities issued by SEs in all other circumstances.

Eligibility:

  • Any non-profit organisation (NPO) or for-profit social enterprise (FPSEs) that demonstrates the importance of social intent will be recognised as a SE, making it possible for it to register with or be listed on the SSE.
  • In accordance with SEBI's ICDR Rules, 2018, among the 17 tenable criteria are those that contribute to eradicating hunger, poverty, malnutrition, and promoting education, employment, equality, and environmental sustainability.
  • Business foundations, political or religious organisations, professional or trade associations, infrastructure corporations, and housing providers (apart from those providing affordable housing) are not eligible.
  • NPOs would be considered disqualified if they received more than 50% of their financing from corporations.

Fundraising for NPOs:

  • NPOs may collect funds by issuing Zero Coupon Zero Principal (ZCZP) Instruments through private placement or public offering, or by accepting donations from mutual funds.
  • ZCZP bonds are distinct from ordinary bonds in that they have no principal payment due at maturity and no coupon.
  • The current minimum issue size for ZCZP issuance is set at Rs 1 crore, and the minimum application size for subscription is set at Rs 2 lakhs.
  • Moreover, Development Impact Bonds are offered following project completion and are provided based on pre-established social criteria at pre-established costs/rates.
Money Raising for FPSEs:
  • Before raising money through SSE, FPEs are not required to register with SSE.
  • It can raise money by selling stock shares, selling equity shares to an AIF, such as a Social Impact Fund, or selling debt instruments.

Also Read About : - Funding for NGOs

Source: The Economic Times


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