SSE Introduction

The Social Stock Exchange segment on NSE and BSE provides Social Enterprises (Non-profit organizations (NPOs)) and For-profit enterprises (FPEs)), a listing platform to raise funds on this recognized exchange platform.

A Social Enterprise that could register and list its instruments include Not-for-Profit Organization (NPO) and For Profit Social Enterprise (FPE). These enterprises would have to fulfil the eligibility criteria as stated therein by the Social stock Exchange for listing purposes. However, it should be noted that FPEs would be listed on the Mainboard/SME platforms as they are for profit entities.

What is a Social Enterprise?

‘Social Enterprise’ is an enterprise which is focused on its objective of ‘creating positive social impact’. The activities of such social enterprises must be targeting the undeserved or less privileged population regions that have recorded lower performance in the development priorities of central and state governments.

Categories of Social Enterprises

Non Profit Organisations (NPOs) can be in the form of

1. Section 8 companies
2. Trusts and Societies

Objects of SSE Listing

• Fund Raise Platform- Listing on a regulated platform would bring more transparency through enhanced financial reporting and structured functioning of NPOs. The regulated SSE platform facilitates fund raise by NPOs which help them to achieve their social goals and targets. SSE functions as a link between social entrepreneurs in need of capital and investors (donors) willing to finance their projects for maximum social benefits.  
• Investments in Social Sector- SSE will act as a medium between Social Enterprises and fund providers (Donors) and that can help them to select those entities that are creating measurable social impact and reporting such impact. Regulated NPOs would attract funds in the social sector as well.
• Build Robust Standards- SSE Registration and Listing enable mechanisms to ensure robust standards of social impact and financial reporting.
• Finances the project of NPO- Listing and fund raise finances the particular project of a NPO. Once this project is completed, it shall again follow the same process of listing for another project.
• Informed Decision Making- The donors get to understand the alternatives available for making donations and can make an informed decision after analysing the NPO projects on the basis of their financial reporting.

Advantages of SSE Listing

• Reliable Platform – The SSE acts as a bridge between social enterprises and investors (donors). It provides a reliable space where these two parties can come together. It’s a platform where social enterprises list their projects, and investors/donors explore opportunities to support causes they care about. The SSE ensures that all financial transactions are regulated and transparent, giving everyone confidence in the process.
• Maximization impact/Creates Synergy - The SSE offers a wide range of choices for both investors and social enterprises. It is a platform where the social enterprise and the investors (donors) with similar mission and vision can align easily. This flexibility allows for stronger partnerships and collaborations.
• Performance oriented - On the SSE, social enterprises are accountable for their actions and impact. They can track how well they're achieving their social goals. This focus on performance encourages social enterprises to strive for excellence.
• Minimal registration cost – Registering and listing on the SSE is affordable for both social enterprises and investors/donors. The economical and structured process of the SSE platform makes it easier for social enterprises to access funding and for investors/donors to support causes they believe in.
• Macro level benefits- Registration and listing of NPOs leads to achievement of sustainable development goals of central and state governments thereby benefiting the Nation. The unique Fundraising platform through SSE would further encourage Social enterprises to list their instruments.

Disadvantages/Risk of SSE Listing

• Extra compliance for Social enterprises - Social enterprises operate with a dual mission of generating social impact alongwith financial sustainability. To ensure accountability and transparency in fulfilling their social objectives, after listing themselves on SSE they are subjected to additional compliances compared to traditional for-profit entities.
• Only Listed activities are considered eligible for list on SSE- Social enterprises seeking registration and listing on the Social Stock Exchange (SSE) must engage in activities explicitly listed as eligible. These activities typically encompass endeavours directly contributing to social welfare, environmental sustainability, or community development.
• Lengthy registration process for registration- The registration and listing process for social enterprises is more intricate and time-consuming. The complexity needs professional help to assess and verify the extensive documentation and scrutiny.
• Restriction on Retail Investors- Retail investors are only permitted in securities offered by For-profit social enterprises under the Main Board.

Renewal process

Non-profit organizations (NPOs) engaged in social enterprise activities are usually required to undergo a renewal process for registration on an annual basis. Renewal needs documentation and is time consuming. Social enterprises on the SSE face extra compliance, including eligibility restrictions, a complex registration process, limited retail investor participation, and annual renewal requirements for NPOs.

SSE vs Normal IPO

Listing on Social Stock Exchange is the process through which Social enterprise (NPO and FPO) can raise funds for their eligible activities on the other hand the companies can raise funds adhering to the rules and regulation of SEBI.

The main differences between SSE listing and IPO are described below: