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How do you register for the NSE Social Stock Exchange?

Registering for the NSE Social Stock Exchange involves various steps to ensure that an organization meets the necessary criteria and complies with the regulatory requirements, etc. because the NSE has a higher volume of trading than the BSE due to its electronic trading methods.

It starts with following the SSE guidelines provided by the National Stock Exchange and Securities Exchange Board of India to assess whether the organization can meet the eligibility criteria and gather the required documents.

Following this, the SSE thoroughly evaluates the applications and the organization’s suitability for listing on the social stock exchange. If approved, the organization can register on the NSE Social Stock Exchange to raise funds from impact investors and further social projects.

NSE is the premium exchange in the country’s stock exchange and represents a modern customer-oriented and government initiative to represent the face of India to the world. On February 22, 2023, the NSE secured approval from the SEBI to establish a Social Stock Exchange as an important segment in social platforms.

Why Register in NSE Social Stock Exchange?

The National Stock Exchange in India is India’s leading financial exchange in the nation; the NSE has become involved in an advanced electronic system, providing trading facilities to investors nationwide, and it is also recognized for its advanced infrastructure; the NSE ranked fourth in 2021 and NSE Social Stock Exchange help in a higher volume of investment as compared to the BSE Social Stock Exchange due its advanced electronic investment options.

NSE enhances transparency in the capital market. It was formed through collaboration among prominent financial institutions and a pioneer in electronic trading, revolutionizing the integration of investors from across the country into a unified platform.

As of 2023, NSE claims a total market capitalization of $3.26 trillion (about $10,000 per person in the US). Corporate sector trading contributes around 12-14% of the total GDP in India, where the stock exchange transactors represent 4% of the country’s GDP.

Market Segments of the NSE Social Stock Exchange

The NSE Social Stock Exchange comprises distance market segments to provide various types of social enterprises and investors to facilitate efficient and targeted capital allocation towards impactful projects designed to cater to the diverse needs and preferences of the investors and issuers within the social impact investing framework. Some of the key market segments of the NSE Social Stock Exchange:

1. Non-Profit Organization

This market segment is dedicated to NPOs to focus on social causes and economic development. NPOs seek listing on the NSE SSE to access the specialized fundraising avenues and attract investments from financial institutions or individuals.

2. For-Profit Social Enterprises

FPEs are dedicated to businesses that integrate social and environmental objectives into their core operations. Listing on the NSE Social Srock Exchange allows FPEs to raise capital from impact investors who prioritize both financial returns and social impact.

3. Impact Investors

The impact investors seek to deploy the capital towards social enterprises and projects that generate measurable social and environmental impact with financial returns. It offers diverse investment opportunities across various sectors and countries through the NSE Social stock exchange platforms.

4. Accredited Intermediaries

Recognizing the important role of intermediaries in facilitating transactions and ensuring compliance, this market segment is designed for accredited intermediaries such as merchant bankers, financial advisors, and impact consultants to guide social enterprises through the listing process and conduct due diligence for the issuer and investors.

Role of NSE Social Stock Exchange in the Stock Market

NSE Social Stock Exchange emphasizes the importance of awareness. It encourages social enterprises to engage with NSE, electronically or digitally, to grasp the registration and listing process mechanism and benefits in the stock market and introduce social enterprises to raise funds and promote social initiatives.

Eligible entities, including Non-Profit organizations and For-Profit Enterprises, demonstrate a primary commitment to social objectives and can seek listing in the SSE Segment. NPOs commence the onboarding process by registering on the NSE Social Stock Exchange segment, followed by the issuance of financial instruments like Zero Coupon Zero Principal through public or private offerings to mobilize funds, with a minimum issue size of Rs one crore and a minimum application size of Rs Two Lac.

FPEs follow similar securities issuance and listing procedures, adhering to the eligibility criteria set for the main board, SME Platform or innovators growth platform, in addition to SSE’s specific criteria for social enterprises. NSE Socia Stock Exchange registrations also instil investor confidence and ensure funds are directed towards genuine social causes.

Investment Segments of the NSE Social Stock Exchange

The investment segments offer a range of investment opportunities that align with investors’ financial objectives and generate measurable social and environmental impact. Below are the key investment segments stated in detail:

1. Social Impact Funds

Social Impact funds are investments structured to deploy capital towards social enterprises and projects to generate positive social and environmental outcomes with financial returns.

2. Socially Responsible Investing Portfolio

The SRI portfolio comprises investment portfolios integrating environmental, social, and governance criteria into investment decision-making.

3. Impact Bond

Impact bonds allow investors to earn financial returns while supporting initiatives addressing social issues.

4. Community Investment Trust

Community investment trusts are collective investment vehicles that pool capital from individual investors to finance community-based projects and initiatives.

Follow the Steps to Register NPOs with the NSE Social Stock Exchange

Steps to register NPOs with the NSE Social Stock Exchange in India are described below:

1. Understanding of Eligibility Criteria

The eligibility criteria set by SEBI for listing on the NSE Social stock exchange need to be followed. These criteria emphasize the social impact the organization aims to achieve and the financial sustainability.

2. Appointment of Social Auditor

The organization needs to ensure transparency by appointing a social auditor to perform a social audit to verify and evaluate the social impact generated by the NPOs and guide them through the registration process in NSE SSE.

3. Gathering of Documents

The NPO must collect the required documents and gather the related information for the organizations’ social activities, practices, legal framework, etc., to register in the NSE Social Stock Exchange.

4. Submission of Registration Application

After gathering all the required documents, submit the registration application and information accurately.

5. Evaluation of Application

After receiving the applications, SSE will conduct a thorough evaluation to assess the organization’s eligibility criteria, social objectives, financial sustainability, governance and social impact.

6. NSE SSE Listing

If the registration process is completed, the NSE Social Stock Exchange will grant permission to list on the National Stock Exchange and open the door for investors to invest electronically nationwide.

Benefits of Registering with NSE Social Stock Exchange

Registering with the NSE Social Stock Exchange offers various benefits for social enterprises and organizations that can positively impact society and the environment. Below are some of the key benefits are stated:

1. Access to Capital

The listed entities on the NSE Social Stock Exchange provide social enterprises access to a pool of investors willing to contribute to social and environmental development with financial returns by providing advanced trading and investment options.

2. Increase Confidence

NSE Social Stock Exchange signifies adherence to rigorous disclosure and reporting standards to maintain confidence and trust among investors.

3. Accurate Reporting

NSE Social Stock Exchange-listed entities to measure and report their social and environmental impact to maintain continuous improvement and attract funding from investors.

4. Contribution to Sustainable Development

Registering with the NSE social stock exchange aligns social enterprises with Sustainable development by providing a platform to advance initiatives contributing to culture and environmental development.

Legal Landscape on NSE Social Stock Exchange

NSE is the premium exchange in the country’s stock exchange market and represents a modern customer-oriented and government initiative to represent the face of India to the world. On February 22, 2023, the NSE secured approval from the SEBI to establish a Social Stock Exchange as a separate segment in social platforms. The legal landscape surrounding the NSE Social Stock Exchange is governed by the SEBI’s various key regulations and guidelines. Below are some of the legal landscapes described in brief:

1. The government has mandated that only NPOs registered on the Social Stock Exchange are eligible to raise funds through Zero Coupon Zero Principal bonds, which also streamlines fundraising activities.
2. SEBI has introduced regulations specifically prepared for the social stock exchange outlined in Sections 91A to 91F of the SEBI (Listing and Disclosure Requirements) Regulation, which also defines the operational framework for SSEs, eligibility criteria, etc.
3. SEBI has also issued amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations to address the eligibility criteria for obtaining the Social Stock Exchange License and for social enterprises seeking listing on the SSE.
4. SEBI also outlined the specific requirements for the NPOs seeking to list on the NSE Social Stock Exchange, such as:
5. NPOs must have operated for at least three years before registering on the NSE Social Stock Exchange.
6. NPOs need to obtain certification under sections 12A, 12AA, 12AB, or 80G of the Income Tax Act to qualify for tax exemption, which allows investors to claim a deduction for contributions made.
7. NPOs should demonstrate a minimum annual spending of Rs 50Lac and maintain a maximum fund balance of Rs 10Lac in the previous year.
8. Depending on their nature and activities, additional criteria may apply to specific NPOs seeking registration on the Social Stock Exchange.

Comparison Between Normal Stock Exchange and NSE Social Stock Exchange

The comparison between the normal stock market in the National Stock Exchange and the NSE Social Stock Exchange lies in the respective areas as discussed below:

1. The normal stock exchange of the NSE focuses on trading in financial instruments such as stocks, bonds and other securities. Still, the NSE Social Stock Exchange is the listed and trading securities for social enterprises & organizations.
2. The primary objective of the normal stock exchange, the NSE, is to provide a platform for investors to buy and sell stocks for profit maximization. Still, the primary objective of the NSE Social Stock Exchange is to channel investment capital towards social enterprises.
3. The normal stock exchange listing primarily focuses on financial performance and profits, but the primary focus in the NSE social stock exchange is social and environmental development.

Conclusion

In conclusion, the proper registration of the NSE Social Stock Exchange represents an important advancement in facilitating socially impactful investment opportunities. Listing the entities in the NSE SSE will maintain transparency and cater to both social enterprises and investors. The NSE SSE nurtures expansion by raising funding and contributing to resolving social issues.  

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