Social Stock Exchange (SSE) is a separate segment of the existing Stock Exchange, that can help Social Enterprises to raise funds from public through the stock exchange mechanism. SSE will act as a medium between Social Enterprises and fund providers and that can help them to select those entities that are creating measurable social impact and reporting such impact.
SEBI vide its circular dated September 19, 2022 has prescribed certain minimum requirements in order for a not-for-profit organization to register on Social Stock Exchange. These are as under:-
Mandatory age of NPO as 3 years,
One year valid certificate u/s 12A/12AA/12AB & 80G of the Income Tax Act.
Minimum INR 50 lakhs as annual spending and
Minimum INR 10 lakhs of fund in the past year etc.
Social Stock Exchange identifies the following two forms of social enterprises:-
i. Not-for-profit organization
A charitable trust registered under the public trust statute of the relevant state;
A charitable society registered under the Societies Registration Act, 1860 (21 of 1860);
A company incorporated under section 8 of the Companies Act, 2013 (18 of 2013);
Any other entity as may be specified by SEBI;
ii. For profit social enterprise
A company under the Companies Act, 2013, operating for profit and does not include a company incorporated under section 8 of the Companies Act, 2013 (18 of 2013);
A body corporate operating for profit
In order to establish primacy of social intent, the entity should meet following criteria as mentioned under Regulation 292E(2) of the ICDR Regulations.
1) The entity should be engaged in 16 broad social activities as listed by SEBI. 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.
2) The entity must target underserved or less privileged population segments or regions which have recorded lower performance in the development priorities of central or state governments.
i. At least 67% of its revenue of the immediately preceding 3-year average of revenues comes from providing eligible activities to members of the target population.or
ii. At least 67% of the immediately preceding 3-year average of expenditure has been incurred for providing eligible activities to members of the target population. or
iii. Members of the target population to whom the eligible activities have been provided constitute at least 67% of the immediately preceding 3-year average of the total customer base and/or total number of beneficiaries.
However, corporate foundations, political or religious organizations or activities, professional or trade associations, infrastructure, and housing companies, except affordable housing, shall not be eligible to be identified as a Social Enterprise.