Framework for onboarding social enterprises suggested
6: A Sebi-appointed panel on Thursday suggested a detailed framework for onboarding social enterprises and non-profit organisations on the proposed social stock exchange.
Corporate foundations, political and religious organisations, among other entities should not be allowed to be on the bourse, the panel said as it listed out 15 broad activities that will make a social enterprise (SE) eligible to be onboarded on the exchange.
In its report submitted to Sebi, the panel, under the chairmanship of Nabard former chairman Harsh Kumar Bhanwala, also deliberated on aspects related to the ecosystem development, especially on social auditors.
SE eligible to participate in social stock exchange (SSE) should be entities non-profit organisation (NPO) and for-profit social enterprise (FPE) having social intent and impact as their primary goal. And, such intent is demonstrated through its focus on eligible social objectives for the underserved or less privileged populations or regions, as per the 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; it should target underserved or less privileged population segments or regions; and SE should have at least 67 per cent of its activities qualifying as eligible activities to the target population.
The 15 broad areas of eligible activities included 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 foundation, political or religious organisations, the committee has recommended that professional or trade associations, infrastructure and housing companies should not be permitted on the exchange. However, it said that entities in the affordable housing segment can be allowed.
Further, the panel has made certain recommendations for capacity building fund which will enable NGOs to navigate the SSE and its fundraising mechanism.
"These concepts of social auditors and capacity building fund are unique to fundraising for social enterprises in India, and would facilitate SSE in its activities," according to the report released by Sebi for public comment.
The Securities and Exchange Board of India (Sebi) has sought comments from public till June 20 on the report.
The panel or the technical group (TG) was constituted by Sebi in September 2020 for developing framework to onboard NPOs and FPEs on the SSE, including defining for-profit social investing/enterprises, prescribing disclosure requirements related to financials, governance, operational performance and social impact.