“Several NPOs register with the SSE and do not graduate to listing, neither do they renew the registration due to the cost of annual reporting including the social impact assessment of significant programmes,” Sebi said in its consultation paper.
Additionally, the regulator has suggested to replace “social impact assessment firm” with “social Impact assessment organization”, include cultural and environmental entities as social enterprises and set criteria to establish the social focus of NPOs.
The proposed changes aim to improve clarity, expand eligibility, and enhance transparency in the Social Stock Exchange framework.
The regulator has sought feedback till February 10 on proposed changes to the SSE framework, as recommended by the Social Stock Exchange Advisory Committee (SSEAC). The framework was first introduced in 2022, covering capital issuance, disclosure, and alternative investment funds.
As of December 31, 2024 total 111 NPOs are registered on SSE segment of both the Stock Exchanges — NSE-SSE and BSE-SSE. Further, 10 NPOs have raised funds of Rs 22 crore through SSE by issuing Zero Coupon Zero Principal instrument. In its consultation paper, Sebi said that the Social Stock Exchange Advisory Committee has recommended to expand the list of legal structures permissible to be recognized as NPOs to include Trusts, Charitable society and Companies. The committee has proposed that NPOs should be permitted to be registered with SSE for a period of total of two years without raising funds through SSE or such duration as may be specified by the Sebi.
Also, it has been recommended expanding the list of eligible activities under the SSE framework to make it more inclusive and aligned with the regulations’ intent.
The key proposals include adding welfare for disadvantaged groups, vocational skills training, broader environmental stewardship, and the promotion of all forms of art, culture, and heritage.
Moreover, the scope for sports has been expanded to emphasize promotion over training, while research and development in fields like science and medicine, funded by public entities, has been included.
Additionally, non-profit ecosystem support now encompasses capacity building in areas such as governance, transparency, leadership, and impact measurement.
The committee has proposed replacing the term “Social Impact Assessment Firm” with “Social Impact Assessment Organization.” These organizations must have at least two full-time Social Impact Assessors with a minimum of 3 years’ experience in social impact assessment to qualify for empanelment by self-regulatory organizations like ICAI, ICSI, or ICMAI.
Additionally, these organizations may employ or engage Social Impact Assessors on a long-term basis, emphasizing their domain expertise and professional competence.
The committee proposed separating annual disclosures into financial and non-financial aspects with revised timelines and requiring separate impact reports for listed and significant non-listed projects.
It also recommended adding tax registration details for NPOs, including project proposals in initial disclosures, and disclosing governance and remuneration information.
Additionally, the proposals include adding governance and financial details to annual reports, using a “logic model” for impact reports, and updating governance body details in the reporting annexure.
