Daily Current Affairs : 16-December-2023

In a groundbreaking move, the Unnati Foundation has achieved a historic milestone by becoming the pioneer entity to list on the newly established Social Stock Exchanges (SSE). This development holds significant relevance in the context of India’s economic landscape, falling under the purview of GS III: Indian Economy.

Understanding Social Stock Exchanges

Definition and Functionality

A Social Stock Exchange (SSE) emerges as a distinct segment within the existing stock exchange framework, serving as a vital platform for social enterprises to raise funds from the public. It introduces a mechanism that facilitates financial support for social initiatives while enhancing visibility and ensuring transparency in fund mobilization and utilization.

Investment Opportunities

Under the SSE, retail investors gain the opportunity to invest exclusively in securities offered by for-profit social enterprises (SEs) through the Main Board. Meanwhile, institutional investors and non-institutional investors are limited to investing in securities issued by SEs in other cases.

Eligibility Criteria for Social Enterprises

Recognition as a Social Enterprise (SE)

To be recognized as a Social Enterprise (SE) and thereby eligible for SSE listing, an organization must establish the primacy of its social intent. This encompasses both non-profit organizations (NPOs) and for-profit social enterprises (FPSEs).

Stringent Criteria for Recognition

SEBI’s ICDR Regulations of 2018 outline seventeen specific criteria for eligibility, emphasizing the dedication of enterprises to eradicate issues such as hunger, poverty, malnutrition, and inequality. Additionally, they must contribute significantly to areas like education, employability, equality, women’s and LGBTQIA+ empowerment, environmental sustainability, protection of national heritage, and bridging the digital divide.

Exclusions from SE Classification

Certain entities, including corporate foundations, political or religious organizations, professional associations, and housing companies (except affordable housing), are explicitly excluded from SE recognition. Notably, SEs are required to dedicate at least 67% of their activities towards the stated social objectives.

Important Points:
  • Social Stock Exchange (SSE) Basics
    • SSE as a separate segment within the stock exchange.
    • Facilitating social enterprises to raise funds from the public.
    • Enhanced visibility and transparency in fund mobilization and utilization.
  • Investment Opportunities
    • Retail investors restricted to securities from for-profit social enterprises on the Main Board.
    • Institutional investors and non-institutional investors allowed in other cases.
  • Eligibility Criteria for Social Enterprises
    • Recognition of organizations as Social Enterprises (SEs).
    • Inclusion of non-profit organizations (NPOs) and for-profit social enterprises (FPSEs).
    • Stringent criteria under SEBI’s ICDR Regulations of 2018.
    • Seventeen criteria, focusing on eradicating hunger, poverty, malnutrition, and inequality.
    • Emphasis on education, employability, equality, empowerment of women and LGBTQIA+ communities, environmental sustainability, protection of national heritage, and bridging the digital divide.
    • Requirement for at least 67% of activities to align with stated social objectives.
  • Exclusions from SE Classification
    • Entities excluded from SE recognition: corporate foundations, political or religious organizations, professional associations, and housing companies (except affordable housing).
Why In News

Recently, the Unnati Foundation achieved a historic milestone by becoming the first entity to list on the social stock exchanges (SSE), marking a groundbreaking moment in the intersection of philanthropy and financial markets.

MCQs about Social Stock Exchanges

  1. What is the primary purpose of Social Stock Exchanges (SSE)?
    A. To facilitate trading of traditional stocks
    B. To provide a platform for social enterprises to raise funds
    C. To regulate institutional investors
    D. To promote speculative investments
    Correct Answer: B. To provide a platform for social enterprises to raise funds
    Explanation: Social Stock Exchanges (SSE) are specifically designed to serve as a platform for social enterprises to raise funds from the public.
  2. Who is restricted to investing only in securities offered by for-profit social enterprises on the Main Board of SSE?
    A. Institutional investors
    B. Non-institutional investors
    C. Retail investors
    D. All of the above
    Correct Answer: C. Retail investors
    Explanation: Retail investors are limited to investing in securities offered by for-profit social enterprises on the Main Board of SSE.
  3. According to SEBI’s ICDR Regulations, what percentage of activities must a social enterprise (SE) dedicate towards its stated social objectives?
    A. 50%
    B. 67%
    C. 75%
    D. 90%
    Correct Answer: B. 67%
    Explanation: According to SEBI’s ICDR Regulations, a social enterprise must dedicate at least 67% of its activities towards its stated social objectives.
  4. Which of the following entities would NOT be identified as a Social Enterprise (SE)?
    A. Corporate foundations
    B. Political organizations
    C. Infrastructure companies (affordable housing)
    D. All of the above are excluded
    Correct Answer: D. All of the above are excluded
    Explanation: Corporate foundations, political organizations, and certain infrastructure companies are explicitly excluded from being identified as Social Enterprises (SE).

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