Markets regulator Sebi on Thursday came out with a framework for the governing council of social stock exchange, which will have an oversight on the functioning of the bourse. The governing council is expected to provide guidance to facilitate the smooth functioning of the operations of the Social Stock Exchange (SSE) with regard to registration, fundraising and disclosures by social enterprises, the regulator said in a circular.
The stock exchange will have to constitute a governing council for the social stock exchange prior to seeking final approval from Sebi for the introduction of such a bourse as a separate segment.
With regard to the composition of the council, Sebi said it would comprise individuals with relevant expertise who can contribute to the development of SSE.
It will have a balanced representation, drawing from various categories of stakeholders such as philanthropic, non-profit organizations, information repositories, social impact investors, social audit profession, capacity building fund and stock exchange.
The governing council will have a minimum of seven members having representation from each of these categories and would be supported by administrative staff from the SSE.
The board of the stock exchange will have to prescribe the procedure, frequency, and quorum for the meetings of the council as well as guidelines for handling potential conflict of interest, if any. The council would meet as frequently as required with a minimum of four meetings in a financial year.
The council has been mandated to provide expertise towards development of the SSE including listing of social enterprises and number of investors and oversee the listing function of SSE and provide guidance in laying down procedures for on-boarding and listing of social enterprises.
Also, it will facilitate effective oversight on the adequacy of disclosures made by social enterprises and guide development of necessary systems and processes towards the same; review the functioning of the SSE, including feedback received from stakeholders, and any other matter related to governance and development.
Last month, Sebi came out with a detailed framework for social stock exchange, specifying minimum requirements for a Not-for-Profit Organisation (NPO) for registering with the bourse and disclosure requirements.
This development came after the capital markets regulator, in July, notified rules for social stock exchange to provide social enterprises with an additional avenue to raise funds.
SSE is a novel concept in India and such a bourse is meant to serve the private and non-profit sectors by channelling greater capital to them and the idea of SSE was first floated by Finance Minister Nirmala Sitharaman in her Budget speech for the financial year 2019-20.
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