SEBI

Social Stock Exchange: Eligibility, Disclosure, and AIR Framework

Social Stock Exchange (SSE) is a platform where social welfare organizations and social enterprises can raise funds for their projects. Its main objective is to connect investors and social welfare organizations in a transparent system.

The Securities and Exchange Board of India (SEBI) has taken the initiative to form SSE in India. This organization controls everything from policy formulation to regulations and supervision.

SEBI has already issued several circulars and made this framework more effective through amendments to the law. The scope of SSE has been further expanded through recent amendments and gazette notifications. It ensures investment and accountability in the social sector in the future.

Development of Social Stock Exchange in India

The idea of ​​Social Stock Exchange in India first came through the recommendations of the Social Stock Exchange Advisory Committee (SSEAC). This committee analyzed the challenges of financing in the social sector and made suggestions to create a transparent and accountable platform.

SEBI collected feedback from the public and stakeholders. The policy was further refined by analyzing the feedback received through this public consultation. In a phased manner, SEBI issued important circulars in September 2022 and December 2023.

The Indian framework is largely in line with international standards. So, it helps investors and enhances the credibility of Indian social welfare schemes at the global level.

Major SEBI Circulars and Amendments

SEBI has issued a series of important instructions and amendments to implement the framework for the Social Stock Exchange of India. These are given below in bullet points:

SEBI Circular (September 19, 2022):

The detailed framework was published for the first time. It prescribes the registration, eligibility, and disclosure obligations for NPOs (Not-for-Profit Organizations).

SEBI Circular (December 28, 2023):

The previous instructions were further clarified, and the disclosure issues were simplified. It also includes guidelines for annual disclosure and impact reporting.

Amendment to ICDR Regulations, 2018:

Necessary changes have been made in the rules related to capital raising and disclosure, so NPOs can easily join the SSE.

Amendment to LODR Regulations, 2015:

Disclosure requirements of listed companies have been strengthened so that transparency is maintained.

Latest Gazette Notification (September 2025):

The amendments brought in by ICDR and LODR have been formally implemented. This notification provides a legal basis for the SSE framework and provides guidelines to exchanges and depositories for its implementation.

Eligibility Criteria for NPOs on Social Stock Exchange

A Non-Profit Organization (NPO) has to fulfil certain minimum conditions to register on the Social Stock Exchange. These are mentioned in Section 292F of the ICDR Regulations of SEBI. The key points are:

Period of Registration: The organization should have a valid registration certificate. It should be valid for at least the next 12 months.

Eligible Organizations:

• Charitable Trusts registered under the Indian Trusts Act, 1882.
• Trusts registered under the Public Trusts Act of the concerned State or the Indian Registration Act, 1908.
• Charitable Societies registered under the Societies Registration Act, 1860, or the State Societies Act.
• Companies registered under Section 8 of the Companies Act, 2013 (or under Section 25 of the old Act, 1956).

Practical Challenges:

Many NPOs do not have long-term registration documents or required licenses. Moreover, the process can be complicated for small companies. So, they have to seek additional legal and administrative support to meet the eligibility criteria.

Disclosure Obligations for NPOs

Every NPO registered or raising funds with the SSE is required to disclose detailed information annually. This ensures transparency and investor confidence. The key disclosures for NPOs are:

Annual Disclosure (within 60 days of the end of the financial year):

• General Information: Vision, Mission, Activities, Number of Employees, and Volunteers.
• Governance: Organizational Structure, Board Composition, Risk Management Plan, Ethics Policy.
• Licenses and Certificates: 12A, 80G, FCRA, GST, etc.

Additional Disclosures (by October 31 or the last date for filing income tax returns):

• Outreach: How many and what types of beneficiaries have been reached
• Top Donor List: Top 5 donors or investors as per the budget.
• Programmatic Expenditure: Top 5 projects and their expenditure as per the budget.
• Compliance: Related party transactions, compliance statement of top officials.
• Financial Statements: Balance Sheet, Profit and Loss Account, Fund Utilization Report, and Auditor’s Report.

Role of SSE:

SSE may prescribe additional disclosure rules as required. This makes the activities of NPOs more transparent and allows investors to assess the real impact of the project.

Annual Impact Reporting (AIR) Framework

Every social organization raising funds through the Social Stock Exchange is required to submit an Annual Impact Report (AIR). This aims to present the results and impact of the projects in a transparent manner.

Deadline:

The report should be submitted by 31st October of each year or by the last date of filing of the income tax return, whichever is later.

For registered but not listed NPOs:

• A self-prepared AIR should be submitted.
• It should include the significant activities and projects of the organization.
• The report should include at least 67% of the total expenditure of the previous financial year.
• Role of Social Impact Assessors:
• They independently evaluate the report.
• Their evaluation report should be published along with the AIR.
• This gives investors an unbiased idea of ​​the actual impact of the project.

The AIR framework ensures social enterprises are not just raising funds but also making real social change and proving it with verifiable data.

Role of Stock Exchanges and Depositories

Stock exchanges and depositories have been given certain responsibilities to manage the Social Stock Exchange effectively. The main ones are:

Informing stakeholders: Informing the relevant parties about all new rules, amendments, and obligations related to SSE.

Technical infrastructure and monitoring: Creating a robust system for monitoring fundraising, disclosure obligations, and impact reports.

Regulatory revision: Updating by-laws, rules, and regulations to align with the SSE framework.

Creating a transparent portal: Keeping an easy and effective online portal open for transparent bidding and listing processes.

Fulfilling these responsibilities will increase investor confidence and make the SSE system more credible.

Impact of SSE on Social Sector Financing

The launch of the Social Stock Exchange has changed the nature of financing in the social sector. Where earlier investors used to participate only in donations or limited CSR funds, now they are getting a transparent and assessable platform. This has increased transparency and accountability.

Registered NPOs can now easily reach out to investors and raise structured funds for their projects. So, their credibility and fundraising power have increased manifold.

Investors can be assured their money is being used for high-impact projects. This will strengthen social enterprises and accelerate inclusive growth in the long run.

Challenges and Future Directions

While the Social Stock Exchange framework has created great opportunities for the social sector, some real challenges remain. Compliance pressures are one of the biggest hurdles for small and medium-sized NPOs. They often lack the resources and human resources to provide detailed disclosures and regular reporting.

Another problem is a lack of awareness. Many organizations are not aware of the SSE framework or its benefits.

Capacity building, training, and hands-on support are needed to address this challenge. Here, Enterslice can play a key role. We provide organizations with the right guidance, training, and compliance support to simplify the entire process. So, NPOs can operate in compliance and demonstrate their social impact more effectively.

In a Nutshell

India’s Social Stock Exchange framework has ushered in a new era in social finance. It has provided the social sector with a structured, transparent, and sustainable source of financing.

However, there is a balance to be struck here; accountability must be ensured and must be accessible to small companies.

Here, an experienced consultant is essential. Enterslice can help your company complete Social stock exchange registration, compliance, and reporting with ease. Connect with us and take your social enterprise to the full potential of India’s Social Stock Exchange framework.

FAQs