The target segment may be expanded to include cultural and environmental ecosystem entities in addition to social entities
SEBI has proposed a new framework for social stock exchanges with changes in the definition of what constitutes a Not-for-Profit (NPO) organisation and expansion of eligible activities to be identified as social enterprise.
The list of legal structures permissible to be recognised as NPOs may include trusts registered under the Indian Registration Act with relevant sub-registrar, a charitable society registered under the society registration statute of the relevant State and companies registered under Section 25 of the Companies Act, 1956.
Currently, an NPO means a social enterprise registered under a charitable trust which is registered under the Indian Trusts Act, 1882 or under the public trust statue of the relevant State, or a charitable society registered under the Societies Registration Act, 1860, or a company incorporated under Section 8 of the Companies Act, 2013.
The list of activities to be eligible as a social enterprise will be expanded to include welfare of disadvantaged children, women, destitute, elderly and the disabled; vocational skills and promotion and education of art, culture and heritage. The target segment may be expanded to include cultural and environmental ecosystem entities in addition to social entities.
Sebi has proposed that NPOs be permitted to register with SSEs for two years without raising funds through SSEs. Several NPOs register with the SSE and do not graduate to listing or renew the registration due to the cost of annual reporting including the social impact assessment of significant programmes.
The term “Social Impact Assessment Firm” will be replaced with “Social Impact Assessment Organisation” as the former connotes an audit firm. Such organisations that have at least two social impact assessors working full time will be allowed to get empanelled with self regulatory organisations such as ICAI, ICSI or ICMAI.
Sebi has proposed to prescribe the condition of business income of more than 20 per cent of revenues in the latest annual year for the For-Profit Social Enterprises or Not for Profit Social Enterprises in order to comply with the criteria of 67 per cent of activities qualifying as eligible activities.
Other suggestions include bifurcating the annual disclosures in financial and non-financial aspects and revising the timelines for the annual disclosures as well as segregating reporting for listed and other significant non-listed projects
As on December 31, 111 NPOs were registered on SSE segment of both the stock exchanges NSE-SSE and BSE-SSE. Ten NPOs have raised funds of ₹22 crore through SSE by issuing Zero Coupon Zero Principal instrument.
Source: www.thehindubusinessline.com
