Framework on Social Stock Exchange

SEBI/HO/CFD/PoD-1/P/CIR/2022/120 · 2022-09-19 · SEBI

Summary

This circular establishes the regulatory framework for Social Stock Exchanges (SSE) following amendments to ICDR, LODR, and AIF Regulations. It outlines minimum eligibility criteria for Not-for-Profit Organizations seeking registration on an SSE. Additionally, it mandates specific initial disclosure requirements for fundraising instruments and annual reporting obligations for registered NPOs. This section mandates Social Enterprises to submit an Annual Impact Report within 90 days, detailing qualitative and quantitative social impact metrics. It outlines specific disclosure requirements for Strategic Intent, Approach, and Impact Score Cards, including alignment with Sustainable Development Goals. Additionally, it requires the statement of fund utilization to be submitted quarterly and provides guidance notes on general and governance disclosures. This section mandates disclosures regarding governance body meetings, risk mitigation plans, and related party transactions. It further requires reporting on ethical mechanisms, remuneration policies, stakeholder grievances, and compliance statements from senior decision-makers. The text concludes with financial disclosure requirements for

Text

Vide notification dated July 25, 2022, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”), Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) and Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) were amended to provide a broad framework for Social Stock Exchange.

A NPO desirous of registration on SSE, in terms of Regulation 292F(1) of ICDR Regulations, shall fulfil the following criteria:

Entities must be registered in India as one of the below: a. a charitable trust registered under the public trust statue of the relevant state; b. a charitable trust registered under the Societies Registration Act, 1860 c. a charitable trust registered under the Indian Trusts Act, 1882 d. a company incorporated under section 8 of the Companies Act, 2013

Disclose if NPO is owned and/or controlled by government or private

Registration Certificate under section 12A/12AA/12AB Income Tax Act, 1961 to be valid for at least the next 12 months. Does not have a notice or ongoing scrutiny by Income Tax.

Valid IT PAN

Minimum 3 years

Valid 80G registration under Income Tax Act, 1961. Entity to ensure whether tax deduction is available or not to investors.

As may be specified by SSE

Must be at least Rs. 50 lakhs

Must be at least Rs. 10 lakhs

SSE under the guidance of SSE Governing Council (SGC) shall mandate the structure of the draft fund raising document/ final fund raising document. SSE shall host such requirements on its website.

Source: SecMarx — Framework on Social Stock Exchange. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.