15 activities, excluding political and religious organisations, to be allowed on the bourse
In the wake of the ongoing pandemic, Sebi on Friday extended the deadline for submitting public comments on suggestions made by the technical group on social stock exchange till July 20. Earlier, the market regulator had sought public comments till June 20.
“In view of requests from stakeholders seeking extension of timeline for submission of comments due to the pandemic, it has been decided to extend the timeline for seeking public comments to July 20, 2021,” Sebi said in a notice.
A Sebi-appointed panel in May suggested a detailed framework for on-boarding social enterprises and non-profit organisations on the proposed social stock exchange.
Under the framework, corporate foundations, political and religious organisations among other entities should not be allowed on the bourse. The panel had also listed 15 broad activities that will make a social enterprise (SE), eligible to be on-boarded at the exchange.
In its report to Sebi, the panel, under the chairmanship of former NABARD chairman Harsh Kumar Bhanwala, had deliberated on aspects related to ecosystem development, especially on social auditors.
SEs eligible to participate in the social stock exchange should be entities — non-profit organisation (NPO) and for-profit social enterprise (FPE) having social intent and impact as their primary goal. Such intent is demonstrated through focus on eligible social objectives for the underserved or less privileged populations or regions, as per recommendations.
The primacy is to be determined through application of three filters — SE should be engaged in at least one of the 15 broad eligible activities; should target underserved or less privileged population segments or regions; and have at least 67 per cent of its activities qualifying as those eligible to the target population.
The 15 broad areas of eligible activities include eradicating hunger, poverty, malnutrition and inequality; promoting health care, supporting education, employability and livelihoods; gender equality empowerment of women and supporting incubators of social enterprises.
Besides corporate foundations, political and religious organisations, the committee recommended that professional or trade associations, infrastructure firms and housing companies should not be permitted on the exchange. However, entities in the affordable housing segment can be allowed.
The social stock exchange is a novel concept in India and such a bourse is meant to serve private and non-profit sector providers by channelling greater capital to them.
The idea of social stock exchange was floated by Finance Minister Nirmala Sitharaman in her Budget Speech 2019-20.