SEBI Seeks Feedback on Social Stock Exchange Framework Review

SEBI has recently issued a consultation paper inviting comments on proposed changes to the Social Stock Exchange (SSE) framework which broadly focuses on updates to NPO registration, reporting requirements, and disclosure norms for better transparency and accountability. A total of 32 proposals / recommendations have been made the Social Stock Exchange Advisory Committee (SSEAC).

Some of the key highlights of the Proposed Changes:

(a) 𝐄𝐱𝐩𝐚𝐧𝐝𝐞𝐝 𝐍𝐏𝐎 𝐄𝐥𝐢𝐠𝐢𝐛𝐢𝐥𝐢𝐭𝐲: To expand the list of legal structures recognized as NPOs under the ICDR Regulations to include:
Trusts registered under the Indian Registration Act, 1908.
Charitable societies registered under state society registration statutes.
Companies registered under Section 25 of the Companies Act, 1956.

(b) Substituting the term “Social Impact Assessment Firm” with “Social Impact Assessment Organization”

(c) Expanding the list of eligible activity to be identified as Social Enterprise to include (1) welfare of disadvantaged children, women, destitute, elderly and the disabled (2) vocational skills (3) promotion and education of art, culture and heritage and include all heritage instead of only national heritage

(d) Expand the target segment for Social Enterprises to include environmental and cultural ecosystem entities and Include activities like welfare for disadvantaged children, vocational training, and promotion of cultural heritage in eligible activities for Social Enterprises

(e) 𝐒𝐢𝐦𝐩𝐥𝐢𝐟𝐢𝐞𝐝 𝐑𝐞𝐩𝐨𝐫𝐭𝐢𝐧𝐠: Introduction of standardized forms and timelines for annual disclosures and social impact reports.

(f) Social Impact Reporting for listed projects and non-listed significant projects should account for at least 67% of programme expenditure in the previous financial year

(g) To now include ‘Project/Programme Proposal’ along with the minimum initial disclosures for raising funds on Social Stock Exchange through Zero Coupon Zero Principal Instruments.

(h) In order to improve Transparency it has also been recommended to provide for additional governance details, including tenure, remuneration, government licenses, details of ‘Vision’, ‘Process of Performance Review’, ‘Organization level potential risks and mitigation plan’,  and accreditation.

(i) Introduction of Mid-Term and End-Term Reports for projects of three years or more, alongside annual reports.

A copy of the SEBI Consultation Paper is enclosed. Readers can share their views with Regstreet Law Advisors at info@regstreetlaw.com.