The Securities and Exchange Board of India (Sebi) has directed all social enterprises, registered on the Social Stock Exchange (SSE) and have raised funds through it, to submit annual disclosures and ‘annual impact report’ for the financial year 2023-24 by October 31, 2024. They have to submit the annual disclosure to the Social Stock Exchange. "Social Enterprises which has registered or raised funds through SSE shall be required to submit Annual Impact Report to SSE by 31st October 2024 for the Financial Year 2023-24," Sebi circular said.
The current requirement states these social enterprises to disclose the annual impact report within 90 days from the end of each financial year.
A social stock exchange is a separate platform from existing stock exchanges in which non-profit organisations and for-profit social enterprises can raise funds from the capital market. Entities can register on these exchanges and raise funds through instruments such as zero coupon zero principal (ZCZP) via public offerings or private placements.
Thus, investors who want to get involved in social activities such as charitable trusts and non-profit organisations (NPO) get an avenue to invest where there are checks on how social enterprises use funds. For example, if an entity issues ZCZP bonds and has few takers, it can serve as a red flag for donors if the minimum subscription is not met. The exchange requires SSEs to do regular audits and reporting of their social impact.
A social impact report that Sebi has mandated to be submitted by the end of October will include qualitative and quantitative details of the enterprise's past social impacts, covering aspects such as strategic intent, planning, approach, and an impact scorecard.
Further, in another circular Sebi has allowed two more self-regulatory organisations (SRO) with which social impact assessors can be registered, in the context of the social stock exchange. Erstwhile, the only Self-Regulatory Organization under the Institute of Chartered Accountants of India, was the only accepted organization under which assessors could get registered.
Now Sebi has added ICMAI Social Auditors Organisation under the Institute of Cost Accountants of India and ICSI Institute of Social Auditors under the Institute of Company Secretaries of India to the list.
A social impact assessor is an individual registered with any of the above self-regulatory organisations or any such other agency as specified by Sebi and has qualified for a certification programme conducted by the National Institute of Securities Market (NISM). These assessors quantify the social impact of interventions made by these social enterprises that raise funds through the Social Stock Exchange platform.
