SEBI adds two more agencies who can recognise assessors for Social Stock Exchange

Through social stock exchanges, investors can fund enterprises that work on social welfare

The market regulator has added two more agencies with which social-impact assessors can be registered, in the context of social stock exchange.

A social stock exchange is a platform through which non-profit organisation (NPOs) and for-profit social enterprise. A social impact assessor will have various parameters to gauge the impact the actions of these NPOs and social enterprises have on the ground.

In a circular issued on May 27, the Securities and Exchange Board of India (SEBI) stated that ICMAI Social Auditors Organization (ICMAI SAO), under the Institute of Cost Accountants of India, and ICSI Institute of Social Auditors (ICSI ISA), under the Institute of Company Secretaries of India, have been added to the list of Self-Regulatory Organisations for Social Impact Assessors.

Also read: MC Explained: How does a Social Stock Exchange work?

Under the earlier norms, only Institute of Chartered Accountants of India (ICFAI) had been recognised as the agency with which such assessors had to be registered.

Under the norms, the regulator could specify any other agency at any point in time.

The social-impact assessor also needs to clear a certification programme conducted by the National Institute of Securities Market.

Background

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.

The SSE operates as a separate segment under the existing stock exchanges. It is not just be a platform where securities or other funding structures are “listed” but are also a set of procedures that act as a filter, selecting only those entities that are creating measurable positive social impact and reporting such impact.

Also read: SEBI cuts minimum issue size on Social Stock Exchanges by 50% to Rs 50 lakh

According to NSE's FAQs on SSEs,  corporate foundations, political or religious organizations or activities, professional or trade associations, infrastructure, and housing companies, except affordable housing, shall not be eligible to be identified as a social enterprise.