In the order to realise the effect and plannings of Hon'ble Finance Minister 's goal of inclusive growth and in a sustainable way in the budget speech of 2019-20 by harnessing the powers of the capital market. This covers regulatory framework to allow Social Enterprises (SE) to raise funds through securities markets.

Social stock exchange (SSE) is a novel concept in India under the ambit of the Securities and Exchange Board of India (SEBI). The idea will impart a separate segment of the existing stock exchanges. SSE, in simple words, are for the listing of Not-For-Profit Organization (NPO) on stock exchanges.

During the period of lockdown, the concept of SSE was more enlightened and became more impulsive by those enterprises who worked on social welfare activities where there was a need of capital in the market and society. SSE simplifies to be a separate segment on the existing stock exchanges for on boarding of Social Enterprise (SE), such as: a) Non-profit organizations (Sec 8 companies, trust, societies)  NGOs, b) For profit social enterprise (FPEs). SEBI approved the implementation of SSE on September 28th, 2021.

Primarily one challenge what SEBI had was something which is not necessarily related to finance. The main idea to help social ventures or enterprise raise capital as equity, debt and units like capital under the regularity ambit of SEBI. There is an extreme need to get help to all social enterprises which should not bound by any legal definitions. In favor of social enterprises, if helps to raise Zero coupons bonds to raise funds directly. As the trading will be social in nature and not financial in nature.

Scope and Analysis:
Basic ground level fact states that common people rarely donate in NGO's. This is because of lack trust factors involved and visibility of the organization. Its hard to find out the actual functioning of NGO's, their real money use and implementations. Concept of SSE will definitely help us find to out execution on their side. Social Stock Exchange (SSE), the aspects will be a new way of raising funds for Social Enterprises (SE). Till now SE were usually funded by CSR, charitable institutions, crowdfunding, brand sponsors, etc.

Now, the scope of SSE will be expanded to large people covering the whole states and nations a well. When SSE being listed, on stock exchange will be publicly available to awareness to the mass population. Zero coupon Zero principle instruments (ZCZP) investments will be issued by respective NPO through registering on SSE. This way there will be steady funds in the market which has a proof of payments to NGO. Any institutions or individual , when they donate to any charitable trust or NGO/NPO, there are high chances of black money outflow. Due to lack of provisions earlier, many NGO was also involved into corruption practices accepting black money.

Zero coupon investment bonds is altogether designed for SSE for raising capital. The regulatory framework to set up SSE are supported by few amendments announced by SEBI in the recent circulations:

• SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations
• SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("ICDR Regulations") &
• SEBI (Alternative Investment Funds) Regulations, 2012 ("AIF Regulations")

Meaning of Zero-Coupon zero principal instruments - These are type of new instruments which are specifically designed by for Social Enterprise (SE) and the listing to SSE. Zero coupon bonds and instruments are used to raise capital from general people from the markets and it has no need to pay principal or interest back to the investors.

The main benefits of such coupons and instruments are a kind of donations being made which will be officially on records with SSE. This can only be issued by NPO's and other charitable institutions under sec 8 companies, under Companies act, 2013. As per SEBI circular dated 19th September, 2022, NPO issuing such coupons shall submit a Statement of Utilization of Funds within 45 days to end of each quarter.

Who all are eligible to get listed on SSE?
As per the recent amendment notifications circular by SEBI (ICDR Regulations) 2018, both enterprises which are, for profit enterprise (FPE) and not for profit Organization (NPO) are counted themselves as Social Enterprise (SE). SE will be entitled, such as Non-Profit Organizations (NPO). This should be a primary goal. Such intent should be proved through their recent work and other future social objectives. Social intent and work are mainly to focus on underprivileged people in our society. Social welfare activities which include eradicating hunger, poverty, inequality, it can help to maximize employment ratio, supporting education among the society.

Who all are not eligible to get listed on SSE?
Any political or religious organization, profit motive organizations, Corporate foundations, professional services providers etc. are not included under SE, hence not eligible to get listed in SSE.

Need for SSE:
There is an extreme need to get help to all social enterprises which should not bound by any legal definitions. In flavor of social enterprises, if helps to raise zero-coupons zero instrument bonds to raise funds directly. As the trading will be social in nature and not financial in nature. The pandemic also gives an example for greater need to SSE towards financial help. The SSE will help in this aspects by channeling greater capital to such organization.

Certain factors to need for SSE are pointed as below:

• SE have scare and irregular flow of funds and there is no sustained flow of funds. That is where we require a formal structure or design to sustain these activities. Grants and donations may not cover operational expenses as such.
• Lack of transparency and accountability which deters financial support.
• There are no statutory legislation mandating reporting of social stock impact to the donors.
• It is an opportunity for SSE that social enterprise no longer depending on private foreign donors.
• This is given relaxation to government's fiscal spend which will trigger growth in other sectors.
• This will open up avenues for investors who wants to contribute and play a role in social developments.
• This will open up foreign donors which is the most important need factors.
• Income tax deduction for individual donors.

Regulations:
As we discussed above earlier about SE (Social Exchange), what are covered under meaning of SE:

• Social Enterprise (SE):
  (a) For Profit Social Enterprise (FPSE), (b) Not for Profit Organization (NPO).

As per SEBI (ICDR) Regulations, 2018:
Vide notification dated July 25th, 2022 SE will be defined as both inclusions such as; NPO & FPE.

The SSE will operate as a separate segment under the rules of existing stock exchange. Further entities which are listed under Social Stock Exchange (SSE) are Social Enterprise (SE). These SE are can either be, for profit enterprises (FPE) and non-profit organization (NPO), which should satisfy common primary factor of social welfare intent.

Social enterprise (SE) should comply all the eligibility conditions under ICDR Regulations 292E.

An enterprise once listed should adhere all the norms of corporate governance. Further SE should conduct social audit by an appointed social auditor and carry out social audit committee under, Regulation 18 of SEBI (LODR) Regulation 2015.

The amendments of SEBI (ICDR) Regulation notifies about certain category which has to be fulfilled for a SE. In order to establish the primacy of social intent, SEBI has recognized a list of activities (Eligible Activities) in which NPOs and FPEs can engage.

The activities of SE should be targeted towards underserved, less privileged population segment or regions recording lower performance in the development priorities of central or state government (Target Segments). SEs are also required to show that: (a) at least 67% of their customer base in the preceding three years belong to the Target Segments; or (b) either 67% of their revenue or 67% of their expenditure in the preceding three years has been derived from or incurred on the Eligible Activities

Key Frames:
There are few frameworks which needs to be considered by SSE issued by SEBI in recent circular dated 19th September,2022 which are as follows;

• Minimum requirements for an NPO to be registered with SSE - Regulation 292F of ICDR Regulations.
• Minimum initial disclosure requirement for NPO's raising funds through the issuance of ZCZP instruments regulation 292K(1) ICDR Regulations.
• Annual disclosure requirements for NPO - Regulation 91C of LODR Regulations.
• Disclosure in the Annual Impact Report (AIR) - Regulation 91E of the LODR.
• Due date for submission of statement of utilization of funds should be within 45 days from the end of every quarter.

Furthermore, there are also regulations where, Investors can also claim a deduction under Section 80G of the Income Tax Act, which lets them claim a deduction for making contributions to certain relief funds and charitable institutions:

• Eligibility criteria for SSE where Non-Profit Organizations (NPO) can list themselves and will have access to public funding, which are;
• Should be registered as a charitable trust for at least 3 years.
• Annual spend in the PY should be at least 50 lakhs.
• Donation of at least 10 lakhs in the PY.
• Engaged in eligible charitable activities like eradicating hunger, poverty, access to healthcare, education, etc.

Conclusion:
Listing norms and reporting norms are stringent. Small and medium size NGO may not be able to take benefit of this due to their inadequate policies and procedures. These may be kept bit lenient for small social entities for initial years.

The SSEs will provide a platform for SEs to reach out to the larger pool of investors & can give raise funds easily for building a Social Impact. The Investors willing to create Social Impact will also be buoyed by the Increased Transparency, super vision, accountability & Corporate Governance along with Taxation Benefits & fulfillment of CSR Expenditures for Corporates (If benefit of these two proposals made by the working Group is also accepted by the Government).

These Social Stock Exchanges can create a Social Fund in the hands of Social Enterprises & help the Society solving its problems, disasters, emergencies like COVID-19, but a lot will depend upon how the Corporate Governance Issues of SSEs & SEs are taken care of, how well the disclosures & other requirements are penned for the SEs, how the trading of Instruments will be made possible on SSEs & lot more. The Social Stock Exchange is certainly a promising concept and the need for which is clearly evident. It might open a number of new opportunities for both Social Enterprises and impact investors.

A number of recommendations made by the working group and the technical group were approved by SEBI and the reports did address concerns raised by non-profits and experts. However, as admitted in the technical group's report, there is a lack of a sufficiently mature ecosystem in place since this is a novel concept in India. The SSE should focus on building Social Enterprises' ability to attract more capital, shifting investor focus from short-term gains, and educating the stakeholders or professionals required.