- DEFINITION OF SOCIAL STOCK EXCHANGE –
It means a separate segment of a recognized stock exchange having nationwide trading terminals permitted to register Not-for-Profit Organizations and / or list the securities issued by Not-for-Profit Organizations in accordance with provisions of these regulations.
There is much potential for SSEs in India as there are 31 lakh NPOs more than the number of schools and 250 times the number of government hospitals. This means that there is one NPO for 400 Indians. That way the foundations for a robust welfare state can be aid.
- MINIMUM REQUIREMENTS TO BE MET BY A NOT-FOR-PROFIT ORGANIZATION (NPO) FOR REGISTRATION WITH SSE IN TERMS OF REGULATION 292F OF THE ICDR
A NPO desirous of registration on SSE, in terms of Regulation 292F(1) of ICDR Regulations, shall fulfil the following criteria:
|Entity is registered as an NPO||Registration certificate valid at least for next 12 months at the time of seeking registration with SSE||Entities must be registered in India as one of the below:
a. a charitable trust registered under the public trust statue of the relevant state;
b. a charitable trust registered under the Societies Registration Act, 1860
c. a charitable trust registered under the Indian Trusts Act, 1882.
d. a company incorporated under section 8 of the Companies Act, 2013
|Ownership and control||Governing document (MoA & AoA/ Trust Deed/ Bye-laws/ Constitution)||Disclose if NPO is owned and/or controlled by government or private|
|Exemption under Income Tax Act||Registration Certificate under section 12A/12AA/12AB under Income Tax Act, 1961||Registration Certificate under section 12A/12AA/12AB to be valid for at least the next 12 months. Does not have a notice or ongoing scrutiny by Income Tax.|
|Registration with Income Tax as an NPO||IT PAN||Valid IT PAN|
|Age of the NPO||Registration certificate||Minimum 3 years|
|Valid 80G registration under Income Tax Act, 1961.||Entity to ensure whether tax deduction is available or not to investors.|
|Eligible to be Social Enterprise||Requirements with Regulation 292E of ICDR Regulations||As may be specified by SSE|
|Minimum Fund Flows|
|Annual Spending in the past financial year||Receipts or Payments from Audited accounts/ Fund Flow Statement||Must be at least Rs. 50 lakhs|
|Funding in the past financial year||Receipts from Audited accounts/ Fund Flow Statement||Must be at least Rs. 10 lakhs|
- ACCESS TO SOCIAL STOCK EXCHANGE –
A Social Stock Exchange shall be accessible only to institutional investors and non-institutional investors: Provided that the Board may permit other class(es) of investors, as it deems fit, for the purpose of accessing Social Stock Exchange.
- SOCIAL STOCK EXCHANGE GOVERNING COUNCIL –
- Every Social Stock Exchange shall constitute a Social Stock Exchange Governing Council to have an oversight on its functioning.
- The composition and terms of reference for such Governing Council shall be specified by the Board from time to time.
- OTHER REQUIREMENTS RELATING TO REGISTRATION FOR A NOT-FOR-PROFIT ORGANIZATION –The Regulator Specified:-
- minimum requirements as specified in Point C to be met by a NPO for registration with SSE,
- disclosure requirement for NPOs raising funds through the issuance of zero-coupon zero principal instruments and
- Put in place annual disclosure requirements that needs to be made by NPOs on such exchanges.
- Listed NPO will have to submit a statement of utilisation of funds to SSE, as mandated under SEBI’s rules within 45 days from the end of quarter.
- SEBI has asked social enterprises raising funds using SSE to disclose Annual Impact Report (AIR) within 90 days from the end of financial year, capturing the qualitative and quantitative aspects of the social impact generated by the entity and where applicable, the impact that is generated by the project or solution for which funds have been raised on SSE.
- Specifying initial disclosure requirement for NPOs raising funds through the issuance of zero coupon zero principal instruments, SEBI said such entities need to make disclosure about its vision, disclose target segment (those affected by the problem and how are they affected) and approach to accomplish its planned activities; details of its governing body, composition, dates of board meetings held; and details of key managerial staff.
- In respect of annual disclosure by NPOs on SSE which have either raised funds through SSE or are registered with SSE, SEBI said that such NPOs will have to disclose about details of top five donors or investors in terms of budget, scale of operations, including employee and volunteer strength, governance structure, financial statement, programme-wise fund utilisation for the year and auditors report and auditor details.