Social Stock Exchange

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    Recently, the National Stock Exchange of India received final approval from the markets regulator Securities and Exchange Board of India (SEBI) to set up a Social Stock Exchange (SSE). 

    Background  

    • Finance Minister Nirmala Sitharaman, presenting the Union Budget back in 2019, had proposed to initiate steps for creating a stock exchange under the market regulator’s ambit. 
      • The proposal was cleared in September 2021.

    What is a Social Stock Exchange?

    • The SSE would function as a separate segment within the existing stock exchange and help social enterprises raise funds from the public through its mechanism. 
    • It would serve as a medium for enterprises to seek finance for their social initiatives, acquire visibility and provide increased transparency about fund mobilisation and utilisation. 
    • Features: Retail investors can only invest in securities offered by for-profit social enterprises (SEs) under the Main Board. 
      • In all other cases, only institutional investors and non-institutional investors can invest in securities issued by SEs.
    • Eligibility: Any non-profit organisation (NPO) or for-profit social enterprise (FPSEs) that establishes the primacy of social intent would be recognised as a social enterprise (SE), which will make it eligible to be registered or listed on the SSE.
      • NPOs can raise money either through the issuance of Zero Coupon Zero Principal (ZCZP) Instruments from private placement or public issue, or donations from mutual funds.

    Source: TH