The National Stock Exchange (NSE) received approval from the Securities and Exchange Board of India (SEBI) to set up a Social Stock Exchange (SSE) as a separate segment on Thursday, December 22. Through the SSE, non-profit organisations (NPO) can now list on the NSE and raise funds. In the Union Budget 2019-20, Finance Minister Nirmala Sitharaman proposed the creation of SSE for listing social enterprises and voluntary organisations, so they can raise funds through equity, debt and as units like Mutual Funds. The NPOs will issue Zero Coupon Zero Principal (ZCZP) securities to raise funds. At present, the prescribed minimum issue price is Rs 1 crore and the minimum application subscription size is Rs 2 lakh. According to NSE, trading is not permissible in ZCZP, but it can be transferred for other purposes, such as transfer to legal heirs.
“NSE has always played a pivotal role in capital formation for the country. We are working towards the launch of the Social Stock Exchange as a segment on NSE. We believe this platform will immensely benefit the social enterprises contributing to the Sustainable Development Goals,” said Shri Ashishkumar Chauhan, MD & CEO, NSE.
What is a Social Enterprise?
Social Stock Exchange identifies non-profit organisations and for-profit organisations as social enterprises. To be recognised as a social enterprise, organisations need to demonstrate that 67% of their activities have targeted underserved or less privileged population segments or regions which have recorded lower performance in the development priorities of central or state governments, apart from other regulations.
Who can invest in securities issued by Social Enterprises?
Institutional and non-institutional investors can invest in the securities issued by social enterprises while retail investors are allowed to invest only in securities issued by for-profit social enterprises. Foreign Investors are currently not allowed to invest through the SSE, according to NSE.