A framework for social stock exchange in India has been notified by the Securities and Exchange Board of India (Sebi), giving social firms another way to generate money. According to reports, the central council of the Institute of Chartered Accountants of India (ICAI) has authorised the creation of an “Institute of Social Auditors of India” as a result of this.
Non-profit organisations (NPOs) are listed on stock exchanges by the SSE. NPOs are charity organisations that strive to improve the well-being of society or the community. The SSE attempts to give them an alternate source of funding.
The pandemic underlined the necessity for increased capital contributions to charitable organisations and social enterprises. The SSE will assist in this regard by channelling more funding to such entities.
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The SSE will accept listings from organisations whose main objectives are to have a positive social impact and intent. This intention should be demonstrated through the organization’s involvement with marginalized populations or locations.
Sebi defines social work as 15 broad tasks that include eradicating hunger, poverty, malnutrition, and inequality, promoting gender equality, ensuring environmental sustainability, and promoting education—the NPO should be involved in one or more of these activities.
The regulator has suggested that qualifying non-profit organisations raise funds using equity, zero-coupon, zero-principal bonds, mutual funds, social impact funds, and development impact bonds. Zero-coupon-zero-principal bonds are issued by an NPO that is registered with the SSE and regulated by the RBI.
A deduction for contributions to specific relief funds and charity organisations is also available to investors under Section 80G of the Income Tax Act.