NSE gets the final Sebi approval to launch Social Stock Exchange

The NSE has got the greenlight from the capital markets regulator to launch its Social Stock Exchange, the bourse said in a release today.

The Securities and Exchange Board of India (Sebi) had given an in-principle approval to National Stock Exchange (NSE) for setting up the exchange last December.

The idea of a social stock exchange was first mooted in the Union Budget 2019-20 to enable entities involved in social activities such as charitable trusts and non-profit organisations (NPO) to access the capital market for funds.

NPOs and even for-profit social enterprises (FPE) will need to register on the exchange and mobilise funds through instruments such as zero coupon zero principal (ZCZP) through a public offering or even a private placement.

"For eligible NPOs, the first step for onboarding starts with the registration on the Social Stock Exchange segment. Post registration, NPOs can initiate the fund mobilisation process by issuance of instruments such as Zero Coupon Zero Principal (ZCZP) via a public issue or private placement," the NSE said in a statement.

"To bring in awareness, we have been conducting various events and hand-holding social enterprises currently at various stages of onboarding on the exchange," it said.

The minimum issue size stands at Rs 1 crore now and the minimum application size for subscription is Rs 2,00,000. Subscription to such issues would be considered as philanthropic.

The idea of social stock exchange gained currency during the pandemic in the wake of growing need for capital for social enterprises at reasonable cost.

A framework for the Social Stock Exchange was provided by a working group constituted by the Sebi. Enterprises will have to be engaged in 16 broad areas of social activity prescribed by the working group to qualify for listing on the exchange.

Corporate foundations, trade associations, political and religious organisations, infrastructure companies are not eligible to list on social stock exchange.