Social stock exchange

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In news: Technical group (TG) on Social Stock Exchanges (SSE) constituted by SEBI has submitted its report.

Highlights of the report-

The corporate foundations, political and religious organisations, professional or trade associations, infrastructure and housing companies (except affordable housing) should be made ineligible to raise funds using the SSE mechanism.
Both for-profit (FP) and not-for-profit organisations (NPO) should be allowed to tap the SSE provided they are able to demonstrate that social intent and impact.
The panel has recommended different instruments of fundraising for NPOs and FPOs- equity, zero coupon zero principal bond (ZCZP), development impact bonds, social venture fund (SVP) and donations by investors through mutual funds.
It recommended that the minimum corpus size for such funds be reduced from Rs 20 crore to Rs 5 crore and the minimum subscription amount be reduced from Rs 1 crore to Rs. 2 lakh.
The capacity building fund for SSE should have a corpus of Rs 100 crore and this fund should be housed under Nabard.
Entities on SSE shall disclose social impact (for NPOs and FPEs) report on an annual basis covering aspects such as strategic intent and planning, approach, impact score card.
It has drawn a list of broad activities based on those identified by Niti Aayog under sustainable development goals that SEs can engage in.
These include eradicating hunger, poverty malnutrition and inequality; promoting gender equality by empowerment of women and LGBTQIA+ communities; training to promote rural sports; slum area development and affordable housing.

What is an SSE?

An SSE allows the listing of non-profit or non-government organisations on stock exchanges, providing them with an alternative fund-raising structure.
Cancer Fund by HDFC Mutual Fund is one example.
It may be listed on BSE or NSE.
Countries like the UK, Canada and Brazil have SSEs.
The SSEs will aim at unlocking large pools of social capital, and encourage blended finance structures.
The SSE shall be a separate segment under the existing stock exchanges.
Investment by companies will be considered as part of their Corporate Social Responsibility (CSR) initiatives.
The proposal to set up SSEs in the country was first floated during the Union Budget in 2019.
In September 2019, SEBI constituted a working group (WG) under the chairmanship of Tata group veteran Ishaat Hussain.
In September 2020, Sebi set up the TG as it felt further expert advice and clarity was needed on the WG’s recommendation