Where should we register – on NSE or BSE?

Practically there is no difference between NSE and BSE as all the compliance and disclosure requirements as well as the costs remain the same.

Does SSE help us raise the funds? If yes, how? If no, why?

Although Social Stock Exchanges (SSEs) doesn’t directly help raise the funds, it can be a powerful tool for Non-Profit Organizations (NPOs) to raise funds as it offer a structured platform to access capital from a wider range of investors, including those interested in both social impact and financial returns.SSEs provide a regulated and transparent platform that enables NPOs to tap into the growing interest in impact investing, ultimately helping them raise the capital needed to scale their social impact.

Where to find the details of the NPOs registered on SSE and a particular issue?

To find details of NPOs registered on the Social Stock Exchange (SSE) and specific issue information, you can check the official websites of the SSE platforms, such as the NSE website.

Does SEBI ensure compliance and prevent misuse of funds?

SEBI does not ensure compliance or prevent misuse of funds by the listed NPOs. It mandates stringent disclosure norms, regular audits, and a robust governance mechanism. This includes detailed reporting on fund utilization, impact assessments, and independent third-party audits. SEBI also has the power to impose penalties for non-compliance and misuse of funds.

How can individuals support or participate in the SSE?

Any retail investor can invest in an issue on SSE with a contribution as small as ₹1,000.

What are the eligibility criteria for listing on the SSE?

What are the eligibility criteria for listing on the SSE?

Other specific criteria include (i) a minimum of three years of operations (ii) holding valid Income Tax exemption certificates under Section 12A/12AA/12AB and 80G and (iii) they should have a minimum annual spending of ₹50 lakh and a minimum fund of ₹10 lakh received in the past year.

What is the “primacy of social intent” and how do we demonstrate it?

To establish primacy of social intent, the entity should meet all three criteria mentioned under Regulation 292E(2) of the ICDR Regulations. The regulation specifies a list of eligible activities that a Social Enterprise should undertake:

• Engage in activities that address social or environmental problems.

• Focus on underserved or less privileged populations.
• Demonstrate that a substantial portion of their work directly benefits the targeted population. 

How long is the registration valid?

Registration on SSE is valid for 2 years from the date of registration.

What types of funding instruments are available?

NPOs can raise funds through Zero Coupon Zero Principal (ZCZP) bonds, donations via specified mutual fund schemes, and development impact bonds. For-profit social enterprises can utilize equity shares, debt instruments, and alternative investment funds. 

What are the ongoing disclosure and reporting requirements?

All NPOs registered on the SSE (whether listed or not) will self-report annually in Form 1A Annual Self-Disclosures Report. A copy will be filed with the respective SSE within 60 days of the close of the previous financial year.

NPOs listed on the Social Stock Exchange (SSE) have specific disclosure requirements, including annual disclosures to the SSE, a statement of fund utilization, and an Annual Impact Report (AIR) and Materiality Policy. These disclosures are crucial for transparency and accountability, ensuring that NPOs effectively communicate their activities and impact to stakeholders. 

What is the minimum issue size?

The minimum issue size for listing on the Social Stock Exchange (SSE) is ₹50 lakhs.

What is the minimum subscription for an issue to get successfully listed?

NPO has to raise at least 75% of your issue size as stated in the FRD for a successful listing. 

What happens if the issue is not fully subscribed?

Failure to raise at least 75% of the issue size, will require the NPO to refund the entire amount collected back to the Investors.  

In case the subscription is greater than 75% but less than 100%, the same is to be treated in accordance with the disclosures made in the fund-raising document. The NPO, in the fund raising document shall make the following disclosures:

1. 1. manner of raising balance capital in case of under subscription between 75% and 100%.
   2. possible impact on achieving the social objective(s) in case such under subscription is not arranged.

What are the compliance/disclosure requirements post-listing?

Post-listing NPOs must comply with various ongoing filings including:

1. 1. Annual Impact Report
   2. Annual Disclosures
   3. Materiality Policy
   4. Fund Utilization Statements
   5. General Compliance with SEBI (LODR) Regulations

How much does the registration cost?

The registration with the Social Stock Exchange is free of charge.

Is it mandatory to raise funds once registered on SSE?

No, it is not mandatory to raise funds on the Social Stock Exchange (SSE) after registration. NPOs can choose to register on the SSE for the purpose of making continuous disclosures of their social impact but may opt to raise funds through other means. 

Is there any time limit for listing once registered on SSE?

A registered NPO can list while its registration is valid.

Registration on the Social Stock Exchange (SSE) is valid for two years and is renewable. 

What is the Fundraising document? Is there any template available to put it together?

Fundraising Document (FRD) is a detailed proposal of your project, to start the listing and fundraising process. There is a guideline available for various sections that must be included in the FRD. However, there is no ready to fill template as such available and NPOs can develop their FRD based on the guidelines provided.

How many projects can be listed through an issue in one financial year?

Current regulations do not impose a cap on the number of projects a social enterprise can list through a single issue on the SSE. 

Can we list an ongoing project which is funded from other sources, like Grants/CSR, etc.?

Yes, an ongoing project which has a funding gap can be listed on a Social Stock Exchange (SSE), provided it meets the eligibility criteria and the organization is registered with the SSE.

Where can the NPOs find the investors?

Specified Investor categories can be accessed to raise the funds. Apart from certain categories like CSR, Foreign contributions, Foundations investing CSR funds, who are barred from investing on SSE, the NPO can approach investors from any other category including HNIs, individual investors, Philanthropy and charity organizations

What happens if the project is not completed as planned?

If a project outlined in the fundraising document (FRD) is not completed as planned, the consequences depend on the specific circumstances and the terms of the agreement. Generally, it could lead to penalties, reputational damage, and ineligibility for future funding.

Can we carry forward the unutilized funds to the next year?

Yes, NPOs listed on the Social Stock Exchange (SSE) are generally allowed to carry forward unutilized funds raised through the SSE to the next financial year or cycle, subject to certain conditions and reporting requirements. The specific rules and regulations governing this depend on the nature of the project. 

Whom do we report the project progress/fund utilization and how?

Listed NPOs have to report their project progress and fund utilization to the SSE. This is done through the submission of a quarterly statement of fund utilization within 45 days of the end of each quarter and a duly assessed Annual Impact Report (AIR) annually. The fund utilization statement details the amount of money raised, utilized, and the remaining balance, categorized by type. 

How is the impact measured and reported?

Social impact is measured by assessing the long-term effects of the project activities on society and the environment, using both qualitative and quantitative data. Reporting on social impact involves creating a framework that details how the project actions have contributed to positive change, including both positive and negative impacts.

Are any external agencies are required to complete the registration to listing process?

Apart from Financial Auditor, a Registrar and a Social Impact Assessor are mandatory agencies required for the process. NPOs may need professional help to ease the process from registration to listing and post-listing compliance requirements. At Seva Tarang we provide these services. 

How much does it cost to list on SSE?

There is no listing fee on SSE at the time of listing. Annual Project listing fee is Rs 25,000.

Who are eligible for investing on SSE?

Both institutional as well as non-institutional investors are allowed invest on SSE. Institutional investors include Mutual Funds (with specific schemes), Philanthropic or Charity foundations, Trusts, Societies or Section 8 companies that are not deploying CSR funds. 

What is the primary risk associated with investing in the SSE?

As there is no monetary return, the only risk is that NPOs will not deliver the social impact that they promised to create.

What financial returns (if any) can we expect from investing in SSE-listed entities?

Investors in SSE-listed NPOs cannot expect financial returns from their investments similar to traditional stock market investments, through dividends and capital gains. Returns are solely in the nature of social returns. 

What is the minimum/maximum amount that can be invested on SSE?

A retail investor can invest a minimum amount is ₹1,000. There is no upper limit for investment.

Do the investments on SSE qualify for any tax benefit for the investors?

Investments on SSE qualify for 80G deduction. Apart from this, there are no other tax benefits.

What mechanism ensures transparency in the use of funds raised through the SSE?

The SSE ensures transparency in the use of funds through stringent disclosure requirements, regular impact reporting, independent audits, annual impact reports, assessed by independent social impact assessment firms, and quarterly statements on the utilization of funds raised on the exchange.

What happens to the investment if the issue fails to raise minimum required value?

If an investment issue fails to raise its minimum required value (75% of the Issue size) , the entire issue is cancelled, and all application money is refunded to investors. 

What is the procedure for investing on SSE? Can it be completed online like an e-IPO?

The process of investing in any issue on SSE is described in the FRD. Online subscriptions are also permitted if prescribed in the FRD.

How do you help NPOs to list on SSE?

Our service Nidhi Sahayak is designed to help listing of NPOs on SSE. Please refer to our Services page on this website. It is an exhaustive 7 step process – wherein we handhold the NPOs from creating awareness to final listing.

How do you charge for your services?

We charge a Professional fee (to cover our costs) for the Nidhi Sahayak service. Amount of fees depends on the Scope of our engagement. Being a non-profit ourselves, our fees are not unreasonable. 

Do you help us get the investor?

We do not undertake to get investors to invest in your issue. However because of our experience and knowledge we can guide you to investors. We prepare the Investor pitch and also accompany and represent you in Investor meetings.

Do you conduct Social audits or Impact assessment audits?

As an organization we are not certified to conduct Social audits or Impact assessment audits. We however would know some of them and can get these Audits done.