Entities listed on SSE to submit audited annual impact report, says Sebi

Market regulator clears the decks for setting up the bourse

The Securities and Exchange Board of India (Sebi) on Monday issued a detailed framework for the Social Stock Exchange (SSE), a regulated structure that will facilitate an additional avenue for social enterprises to raise funds. The framework lists registration and regulatory disclosures, including filing of audited annual impact report, for non-profit organisations that want to use the exchange. 

Finance Minister Nirmala Sitharaman proposed the concept of an SSE in her speech for the 2019-2020 Budget. The exchange is aimed at helping non-profit sectors to channel greater capital through the bourse. The market regulator notified regulations for the SSE in July this year.

The Sebi circular stated that a non-profit organisation (NPO) looking to register on the SSE must be registered for a minimum of three years as a charitable trust with a certificate valid at least for the next 12 months at the time of seeking registration. Annual spending by the entity in the previous financial year must be at least Rs 50 lakh and it must have had funding of at least Rs 10 lakhs in the said FY. Interested entities must also have a valid PAN.

The SSE will ensure that NPOs raising funds through the issuance of Zero Coupon Zero Principal Instruments disclose target segment, strategy, governance, compliances, and social impact.

Social enterprises, raising funds through the SSE, will have to provide an audited Annual Impact Report (AIR) within 90 days from the end of the financial year, Sebi said. The AIR must include qualitative and quantitative aspects of the social impact generated by the entity.

“For a social impact fund where the underlying recipients of funds are SEs (social enterprises), which have registered or raised funds using the SSE, must disclose an overall AIR for the fund covering all investee/grantee organisations where the fund is deployed,” stated the circular.

Moreover, NPOs will have to state disclosures like organisational goals, activities, products and services, outreach, scale of operations, details of top donors or investors of organisation, among a slew of other details on an annual basis, within 60 days from the end of financial year.

Listed NPOs will have to submit a statement of utilisation of funds to the SSE within 45 days from the end of the quarter.