Social Stock Exchange License

An SSE is a fundraising platform for NPOs and social enterprises. It helps them connect with investors, enabling them to issue instruments like “zero coupon zero principal (ZCZP) bond”.

No, only Indian entities are eligible to obtain a social stock exchange license from the SSE.

The list of organizations that aren’t eligible for raising funds through the SSE is as follows:

• Corporates with the appropriate mode of funding.
• Political and religious organizations.
• Any professional services or trade associations.
• Any entity or individual listed as a defaulter by the SEBI.

After obtaining the social stock exchange license, you can raise funds through:

• The issuance of Zero-Coupon Principal Instrument, either through public or private placement, or
• Mutual fund schemes in accordance with SEBI.

All NPOs and social enterprises seeking funding through the exchange must first complete the registration process before moving forward with the fund listing process.

If an NPO gets 50% of its funding through a corporation, then it’s not eligible to enroll on the social stock exchange.

No, foreign entrepreneurs or corporates, including:

• Foreign institutional investors;
• Foreign portfolio investors; and
• Non-resident Indian

They aren’t allowed to invest in fundraising through SSE.

The basic requirements and documents needed for the SSE license are as follows:

• The Non-profit organization (NPO) must be operational for at least three years before application.
• The said entity must have a tax registration under 12A/12AA/12AB of the ITA of 1961.
• Tax deduction under Section 80G registration.
• A minimum spending of INR 50 Lakhs in the last three years before the application.
• A statement indicating funds raised of a minimum value of INR 10 Lakhs.
• The applicant must be a trust under the Indian Trust Act of 1882, a society under the Societies Registration Act of 1860, or a Section 8 organization under the Companies Act of 2013.
• All-important incorporation documents, including MOA, AOA, and trust deed.
• PAN of the NGO/social enterprise and directors/promoters.

To register on the SSE, you must’ve at least 67% of your activities in the eligible list over the last preceding three years.

You should submit documents, including a certificate of incorporation and audited financial statements (last three years), for obtaining the SSE license.

Yes, your not-for-profit organization must be registered with the NGO Darpan for SSE license registration.

Yes, you must renew your social stock registration during the 11th and 12th months of your validity before it expires in the latter month, even if you haven’t raised any funds through the SSE.

Only a non-profit organization with a social stock exchange registration can raise funds by issuing the ZCZP instruments.

Go through the following procedure for issuing ZCZP instruments through public listing:

• Draft a fund-raising document with prescribed fees to obtain the in-principal approval.
• The SSE will publish your document for public comments for 21 days.
• The authority will send you any questions or concerns regarding your fund draft within 30 days of the submission.
• After modification, you must submit the final draft back to the Social Stock Exchange before you open the listing.

The minimum size issue for ZCZP must be INR 50 lakhs with a minimum application size of INR 10,000.

The maximum subscription that is needed must be 75% of the funds proposed for the successful issuance of the Zero Coupon Zero Principal instrument.