The Social Stock Exchange (SSE) segment on the NSE & BSE is changing the way social enterprises can raise funds from the public to maximize their impact on society's well-being. These social enterprises can be any non-profit organizations (NPOs) as well as For-Profit Enterprises (FPEs).
SSE acts as a distinct digital platform for social enterprises to register and raise funds through recognized exchanges by meeting the eligibility criteria outlined in SEBI’s ICDR Regulations, so that they can be more impactful. But, notably, FPEs need to be listed on Mainboard/SME platforms as they fall under for-profit entities.
Social Enterprise is an organisation that focuses on making a positive social impact on humans and the environment's well-being while also applying commercial strategies to maximize this impact. These enterprises generally target the undeserved or less privileged population regions that are not performing well as per the record of central and state governments’ priorities.
In India, social enterprises include organisations that are working in sectors such as education, healthcare, poverty alleviation, gender equality and environmental sustainability. These organisations reinvest the profits in their core mission rather than redistributing them to owners or shareholders.
Various legal forms of NPOs are recognised by SSE as social enterprises that enable a broader range of organisations to participate in fundraising through SSE. The primary categories include:
All the organisations that are registered under the Indian Trusts Act, 1882, or relevant state public trust statutes, are governed by trustees while focused on charitable objectives.
Organisations that are registered under the Societies Registration Act, 1860 and managed by a governing body often work in fields like education, health, or community development.
Organisations incorporated under Section 8 of the Companies Act, 2013 (or Section 25 of the Companies Act, 1956) but operate as not-for-profit companies with a clear social mission.
Eligibility Note: To be eligible for SSE listing, NPOs must have a minimum of three years operational record and have served at least of their target populations through identified social activities and meet strict documentation along compliance standards.
Listing on the SSE offers several significant benefits:
Opens up new avenues for funding beyond traditional grants and donations. It attracts impact investors and CSR funds seeking measurable social returns.
SSE listing validates regulatory compliance and impact reporting that enhances trust among donors and partners. Due diligence by the exchange acts as a quality stamp.
Being listed on platforms like NSE/BSE provides national-level visibility and recognition.
Direct access to socially conscious investors looking for verified, impactful projects.
Mandatory disclosures and annual impact reporting encourage best practices and continuous improvement.
Easier access to larger pools of capital can help NPOs scale their operations and impact.
While SSE listing offers many benefits, it also comes with certain challenges and risks:
Social enterprises have to work on two fronts, where their basic nature means generating a social impact, while maintaining financial sustainability as well. When it gets listed on SSE, regular disclosures, impact reporting and audits increase the administrative workload.
Even though the SSE opens up new avenues for funding to these social enterprises but registration, documentation and potential advisory fees can be significant, especially for smaller organisations.
The registration and listing process for social enterprises is known as very complex and time-consuming, requiring even professional help. Not all the NPOs may meet the operational, financial and impact requirements for the listing.
Due to a short fundraising window for public fundraising campaigns, social enterprises have to work extra hard, which requires extra energy and resources. Fundraising window used to be typically of 3-10 days which means it demands a strong preparation and marketing to attract potential donors.
In SSE, there is a minimum subscription obligation(75% of the issue size), which is lower than IPOs. If it's not achieved then the fundraising round fails and all the funds must be refunded to the respective donors.
SSE registration is valid for one year and all non-profit organizations (NPOs) have to renew themselves every year. NPOs have to apply for renewal at least 30 days before expiry. For the renewal, social enterprises have to submit updated compliance documents and impact reports as required by exchanges. Preparing these documents is time-consuming for them.
| Parameters | SSE Listing (For NPOs) | IPO (For-Profit Companies) |
| Purpose | Raise funds for social impact projects | Raise capital for business growth/profit |
| Eligible Entities | NPOs (Trusts, Societies, Section 8 Companies) | For-profit companies |
| Investors | Impact investors, philanthropists, CSR funds | Retail, institutional and HNI investors |
| Disclosure Norms | Social impact reporting, annual disclosures | Financial disclosures, business performance |
| Regulatory Authority | SEBI (SSE segment of NSE/BSE) | SEBI (Main Board/SME segment) |
| Fundraising Instruments | Zero Coupon Zero Principal Instruments, Grants, etc. | Equity shares, debentures, bonds |
| Minimum Issue Size | INR 50 lakhs | As per SEBI regulations |
| Subscription Requirement | 75% of issue size | 90% of the issue size |
| Listing Validity | 1 year, renewable | Perpetual, until the company delists |
| Reporting Focus | Social outcomes and impact | Financial performance and returns |
| Cost Structure | Lower fees, but compliance costs | Higher fees, extensive compliance |
| Market Risk | Limited, as instruments are not traded | High, due to price volatility |
| Merchant Banker | Not required | Mandatory |
| Minimum Lock-in requirement | No, there is no Lock-in or minimum period between the registration of any NPO and raising of funds from the market. | A minimum lock-in period is required in case of listing on SME/Main Board Platform of the Exchange. |
