Explained: What is the Social Stock Exchange that BSE should set up after SEBI approval?

Bombay Stock Exchange (BSE) said in a regulatory filing today that it has received in-principle approval from the capital market regulator Securities and Exchange Board of India (SEBI) to set up the Social Stock Exchange as a separate segment.

“…SEBI has given its approval in principle to BSE for the introduction of SSE as a separate segment to BSE,” it said. It is recalled that in July this year the SEBI notified the rules for the Social Stock Exchange (SSE) to boost social enterprises with an additional opportunity to raise funds.

SEBI later released a detailed framework for the Social Stock Exchange in which it specified minimum requirements for a nonprofit organization (NPO) to register with the exchange.

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What is Social Stock Exchange or SSE?

SSE is a scholarship that aims to serve the private and non-profit sectors and will help them raise funds through the scholarship. The idea of ​​SSE was first floated by Finance Minister Nirmala Sitharaman in her 2019-20 budget speech. Many countries such as the UK, Canada and Brazil already have SSEs.

Social enterprises eligible to participate in the SSE are non-profit organizations (NPOs) and for-profit social enterprises. Under the rules of the SEBI, the SSE becomes a separate segment from the exchanges.

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The SSE allows non-profit or non-governmental organizations to be listed on the stock exchange to raise funds.

Under the rules, corporate foundations, political, religious organizations, professional or trade associations, infrastructure and housing companies are not eligible to be listed on the SSEs. However, the affordable housing segment does qualify for the same.

According to an earlier draft SEBI report, the SSE can help rebuild the livelihoods of people who may have been affected by calamities or pandemics such as COVID-19.

According to reports, India has more than 31 lakh non-profit organizations.

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