The National Stock Exchange (NSE) has announced that it has received the final approval from the Securities and Exchange Board of India (SEBI) to set up a Social Stock Exchange (SSE) as a separate segment on its platform. This move is expected to create a new avenue for financing social causes and increase transparency in fund mobilization and utilization.
According to the NSE, any social enterprise, non-profit organization, or for-profit social enterprise will be eligible to get listed on the SSE segment. This will provide a unique opportunity for these entities to raise funds from the capital markets and access a wider pool of investors who are interested in social impact investing.
The Social Stock Exchange segment will provide a new avenue for social enterprises to finance social initiatives, provide them visibility and bring in increased transparency in fund mobilisation and utilisation by social enterprises, the NSE said.
“To bring in awareness, we have been conducting various events and hand holding social enterprises currently at various stages of onboarding on the exchange,” NSE MD and CEO Ashishkumar Chauhan said.
The SSE is expected to play a crucial role in the development of social enterprises in India, as it will provide them with a platform to raise capital, enhance visibility, and increase their social impact. This is particularly important as social enterprises in India have traditionally struggled to access financing, with most banks and financial institutions focusing on more traditional for-profit ventures.
The SSE will also provide a transparent and efficient mechanism for mobilizing and utilizing funds, which will increase the confidence of investors in social enterprises. This will enable investors to track the utilization of funds and ensure that they are being used for their intended purposes.
Under the rules, any social enterprise, non-profit organisation (NPOs) or for-profit social enterprises (FPEs), that establishes its primacy of social intent, can get listed on the SSE segment.
“For eligible NPOs, the first step for onboarding starts with the registration on the Social Stock Exchange segment. Post registration, NPOs can initiate the fund mobilisation process by issuance of instruments such as Zero Coupon Zero Principal (ZCZP) via a public issue or private placement,” the NSE said in a statement.
In addition to providing a platform for social enterprises to raise capital, the SSE is also expected to create a new asset class for investors, which is focused on social impact investing. This is expected to attract a new group of investors who are interested in social causes and are looking for ways to make a positive impact through their investments.
The launch of the SSE is a major milestone for the Indian capital markets and social enterprises in India. It is expected to create new opportunities for social enterprises, increase transparency in fund mobilization and utilization, and create a new asset class for investors who are interested in social impact investing. The NSE is expected to roll out the SSE in the near future, which is expected to create a significant positive impact on the Indian capital markets and social enterprises in India.
