Non-profit Organisations Can Directly List on Social Stock Exchanges: Sebi Panel

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News: Sebi-constituted panel under the chairmanship of Ishaat Hussain has submitted its recommendations on social stock exchange(SSE).

Facts:

Key Recommendations:

  • Direct listing of non-profit organisations(NGO) through the issuance of bonds and a range of funding mechanisms.
  • Tax Sops: It has recommended exemptions from securities transaction tax (STT) and capital gains tax (CGT) to ensure that social stock exchanges(SSEs) take off in the country.
  • Philanthropic donors and first time Retail investors should be eligible to claim 100% tax exemption.
  • Funding to non-profit organisations(NPOs) on SSEs to be considered as corporate social responsibility(CSR) spends.
  • Trading of CSR spends between companies with excess CSR spends and those with deficient CSR spends on SSEs.
  • Reporting and disclosure framework to ensure transparency.

Additional Facts:

  • Social Stock Exchange(SSE): It is a platform that allows investors to invest in select social enterprises or social initiatives.
  • Aim: To help social and voluntary organisations which work for social causes to raise capital as equity or debt or a unit of mutual fund.
  • Global Examples: SSE exists in countries such as Singapore,UK among others. These countries allow firms operating in sectors such as health, environment and transportation to raise risk capital.
  • Social Enterprise: It is a revenue-generating business whose primary objective is to achieve a social objective such as providing healthcare or clean energy.