SEBI notifies framework for Social stock exchange – 25 th July, 2022

SEBI vide its notification dated 25 th July, 2022 made amendments SEBI (ICDR) Regulations, 2018, and SEBI (LODR) Regulations, 2015. These amendments will immediately come into effect. The amendment has been made in order to provide social enterprises with an additional avenue to raise funds.

The notification said that framework for the Social stock exchange (SSE) has been developed on the basis of recommendations of a working and technical group constituted by SEBI.

The social stock exchange is a novel concept in India and such a bourse is meant to serve the private and non-profit sectors by channelling greater capital to them. The idea of SSE was first floated by finance minister Nirmala Sitharaman in her Budget Speech 2019-20.

The amendment provides for a framework for Social stock exchange which majorly provides eligibility of organizations to raise funds through Social stock exchange, eligibility of entities to be classified as “Not for Profit Organization”, eligibility of entities to be classified as “For Profit” Social Enterprise, Means through which Social enterprise can raise funds, obligations of Social enterprises.

Organization eligible to raise funds through Social Stock exchange :

a Not for Profit Organization seeking to only get registered with a Social Stock Exchange; a Not for Profit Organization seeking to get registered and raise funds through a Social Stock Exchange; a For Profit Social Enterprise seeking to be identified as a Social Enterprise under the provisions of this Chapter.

“Not for Profit Organization” means a Social enterprise which is any of the following entities:

(i) a charitable trust registered under the Indian Trusts Act, 1882;

(ii) a charitable trust registered under the public trust statute of the relevant state;

(iii) a charitable society registered under the Societies Registration Act, 1860;

(iv) a company incorporated under section 8 of the Companies Act, 2013;

(v) any other entity as may be specified by the Board;

“For Profit” Social Enterprise ” shall fulfill the following eligibility criteria to be identified as a Social Enterprise: a) The Social Enterprise shall be indulged in at least one of the following activities: eradicating hunger, poverty, malnutrition and inequality; promoting health care including mental healthcare, sanitation and making available safe drinking water; promoting education, employa