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Grasping the Fundamentals of the Social Stock Exchange (SSE)



  Aug 19, 2023

Social Stock Exchange (SSE): Understanding the Basics


1. What is the Social Stock Exchange (SSE)?

The Social Stock Exchange (SSE) is a regulated platform established to facilitate organizations dedicated to social causes in raising funds and accessing capital through stock exchanges.
 

2. What is the purpose of SSE?

The SSE serves as a meeting ground for donors and social enterprises, allowing organizations to raise funds for their social initiatives while providing investors with the opportunity to support impactful projects.
 

3. What benefits are sought for SSE contributions?

Market participants have approached the Securities and Exchange Board of India (Sebi) and the government to request additional benefits for contributions made towards social enterprises through SSE. Currently, funds allocated from corporate social responsibility (CSR) initiatives do not qualify for tax benefits under Section 80G of the Income Tax Act.
 

4. What is the status of SSE approvals?

Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have received approvals for SSE. BSE received an in-principle nod in October 2022, while NSE got the final nod in February of the same year.
 

5. How many organizations are registered on SSE?

As of now, NSE has onboarded 18 organizations for SSE, and BSE has registered 14. Some organizations are registered on both exchanges.
 

6. Has fundraising started on SSE?

No fundraising activities have taken place on the SSE yet, largely due to initial challenges and questions related to additional benefits and the operational framework.
 

7. What are the requirements for organizations on SSE?

Organizations aiming to raise funds through SSE must be registered for a minimum of three years as charitable trusts with valid PAN. They must provide an audited annual impact report showcasing their social impact and comply with reporting standards.
 

8. What sectors do SSE-registered organizations focus on?

SSE-registered organizations are required to work in areas such as eradicating hunger, promoting sports training, financial inclusion, disaster management, education, and more. Certain entities like corporate foundations, political or religious organizations, and trade associations are excluded.
 

9. How can for-profit organizations participate in SSE?

For-profit organizations working for social causes can also raise funds through SSE. However, their fundraising avenues will primarily include equity, alternative investment funds, and debt securities.
 

10. How long will SSE issuances remain open for subscription?

Issuances by social enterprises on SSE may typically remain open for 10-15 days for subscription or investments. As these are donations, secondary sales of zero-coupon zero-principal bonds are not applicable.
 
 
Note: The Social Stock Exchange (SSE) is a platform aimed at encouraging funding for social enterprises, promoting impact-driven investments, and fostering collaboration between organizations and investors for positive social change.


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