A Working Group (WG) on the Social Stock Exchange (SSE) had been constituted in September 2019 to review and recommend for building up a mechanism (within the securities market domain) so that social enterprises can raise funds. The aim was also to suggest a regulatory framework covering areas such as eligibility norms for participation, disclosures, listing, trading, oversight etc. The WG submitted its report on June 1, 2020. It recommended the participation of Non-Profit Organizations (NPOs) and For-Profit Enterprises (FPEs) by outlining minimum reporting requirements. It also suggested a standard format to be developed for financial reporting by NPOs.
FPEs are basically company form of organizations having social impact as part of their business and can raise equity capital. NPOs include Section 8 companies under the Companies Act, 2013, trusts and societies that cannot raise capital through equity.
Keeping in view the recommendations of the working group, a technical group was constituted on September 21, 2020 to develop a framework for NPOs and FPEs who are willing to join the exchange. The technical group is aiming to prescribe disclosure requirements on financials, performance and governance. The group also aimed to discuss the issues relating to social impact and social audit. SEBI has also clarified that technical group may take help from other experts by inviting them in their discussions and seeking their views.
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