Markets regulator SEBI has approved the Bombay Stock Exchange (BSE) to set up a separate social stock exchange. BSE informed in a regulatory filing that SEBI has given in-principle approval to start a social stock exchange, through which non-profit organizations (NPOs) such as social enterprises will be able to raise funds for social causes from the general public, and investors. In July this year, SEBI notified the rules for starting a social stock exchange.
NPOs opened 03 years ago will be able to list themselves to raise money.
Minimum expenditure of Rs 50 lakh and funding of at least Rs 10 lakh in the previous financial year to be listed.
There are more than 31 lakh non-profit organizations in India for now 03 years, the NGO has to be registered as a charitable trust.
For-profit enterprises and non-profit organizations falling under Social Enterprises shall be eligible to list on the Social Stock Exchange. To get listed, NPOs and NGOs will have to register as charitable trusts for 3 years. To be listed, these non-profits need to spend Rs 50 lakh in the previous financial years and get funding of Rs 10 lakh.
With India placing 129th out of 189 nations on the Human Development Index, experts believe social exchange might do more for the social sector. According to Bain & Company, money from individual philanthropists totaled 70,000 crores in 2018. There is a chance to assist these companies in tapping additional sources of funding such as foreign philanthropy, domestic CSR, official development aid, and so on.
SEBI published guidelines for the Social Stock Exchange (SSE) in July, giving social entrepreneurs another way to obtain financing.
