The Social Stock Exchange (SSE) in India is a new initiative aimed at facilitating the funding of social enterprises and non-profits by allowing them to access capital through the securities market. The SSE is set up under the regulatory framework of the Securities and Exchange Board of India (SEBI).
KEY FEATURES OF INDIA'S SSE
Purpose
The SSE aims to provide a platform for social enterprises—both non-profit and for-profit entities—to raise capital by issuing financial instruments. These enterprises focus on solving social problems related to areas like education, healthcare, environment, and poverty alleviation.
Eligibility
Non-profits: Charitable trusts, Section 8 companies, and societies that work towards social causes can list on the SSE.
For-profit social enterprises: Businesses with a social objective and measurable social impact can also participate.
Financial Instruments
Non-profits can raise funds through zero-coupon zero-principal bonds. These are instruments where the principal is never repaid, and investors contribute without expecting a financial return. For-profit enterprises can issue regular shares or bonds.
Accreditation and Reporting
Entities listed on the SSE will be required to maintain strict transparency and reporting standards to demonstrate their social impact. This involves periodic social audits and impact assessments.
Impact Investment
The SSE is designed to attract impact investors—those who seek to invest in enterprises that generate both financial returns and measurable social impact.
Current Status
As of recent developments, the Bombay Stock Exchange (BSE) launched India's first Social Stock Exchange in December 2022, with listing norms established. It is still in its early stages of development, with companies and non-profits preparing to list.
SIGNIFICANCE
The SSE will channel funding to organizations working on social challenges by connecting them with investors who are willing to contribute to social causes, potentially revolutionizing how social enterprises are funded in India.
About the author
K Kanagaraj Antonysamy is a Chartered Accountant with over 40 years of experience, involved in church activities at various levels. He possesses a broad expertise that spans the NPO sector, International Financial Reporting Standards, and Artificial Intelligence. Additionally, he is proficient in reading and editing a few software languages. Kanagaraj delivers lectures and speaks at seminars on various accounting topics both in India and internationally. God has blessed him with a happy family consisting of his wife, son, daughter-in-law, and granddaughter.