Regulator Sebi proposes steps to boost appeal of social stock exchanges

The Securities and Exchange Board of India (Sebi) has proposed to halve the issue size for tapping social stock exchanges (SSEs) and bring down the minimum application amount from Rs 2 lakh to Rs 10,000.

The social stock exchange of NSE and BSE have together onboarded over 30 social enterprises for the social stock exchange (SSE).

However, no fundraise has been done till date through the platform.

Sebi’s latest proposals are aimed at boosting the appeal of social stock exchanges.

Following discussions with the exchanges and participants, the markets regulator has proposed to relax several norms for listing on SSE and raising money through Zero Coupon Zero Principal (ZCZP) Bonds.

Sebi has proposed to bring down the minimum issue size for non-profit organisations (NPOs) to Rs 50 lakh from Rs 1 crore as enterprises may find it difficult to raise Rs 1 crore at the initial stage of SSE.

The minimum application amount or the minimum donation has been proposed to be reduced as Rs 2 lakh seemed to be a too large amount for people who donate on a regular basis and Rs  10,000 threshold will help a larger number of investors subscribe to ZCZP offered by NPOs.

Sebi is also planning to do away with the mandatory requirement of NPO registration under Section 80G of the Income Tax Act to onboard more social enterprises.

Even NPOs with ongoing tax scrutiny or notices from the IT department will be eligible to register for SSE subject to certain disclosures and conditions.

Another concern from social enterprises has been on adhering to impact reports as per the format prescribed by Sebi.

“Exchanges have recommended that the format and detail of the past social impact to be provided can be provided by NPOs based on past practice,” Sebi said, while explaining that this would allow faster listing by NPOs and will be less expensive.

In the slew of relaxations under consideration, it has been recommended to modify the term Social Auditor to Social Impact Assessor whose work is to reflect the impact of the work taken up by NPOs. 

According to the consultation paper, 957 individuals have cleared the certification programme for social auditors launched by National Institute of Securities Markets (NISM).

The market regulator has sought comments on the proposal by September 19.