In a directive issued on Monday, the Securities and Exchange Board of India (Sebi) mandated social enterprises associated with the Social Stock Exchange (SSE) to furnish an ‘annual impact report’ for the fiscal year 2023-24 by the end of October.

This comprehensive report to the SSE encapsulates both the qualitative and quantitative dimensions of the social impact engendered by the respective enterprises. Should a Not for Profit Organization (NPO) be solely registered without any listing of securities, the report must encompass the NPO’s significant undertakings, interventions, and programs, among other pertinent details.

Sebi’s circular stated, “Social enterprises that have either registered with or raised funds through the SSE are obligated to submit their Annual Impact Report to the SSE by October 31, 2024, pertaining to the Financial Year 2023-24.” Previously, in September 2023, Sebi had instructed social enterprises utilizing SSE for fundraising to disclose their annual impact reports within 90 days from the close of the financial year.

In a bid to evaluate the societal ramifications of the activities undertaken by social enterprises, Sebi has designated additional bodies — namely, the ICMAI Social Auditors Organization under the Institute of Cost Accountants of India and the ICSI Institute of Social Auditors under the Institute of Company Secretaries of India — as Self Regulatory Organisations (SROs) for social impact assessors within the SSE framework.

These organizations are authorized to serve as platforms for registering social auditors, complementing the existing SRO designated under the Institute of Chartered Accountants of India (ICAI) for social impact assessment. A social impact assessor refers to an individual registered with a self-regulatory organization under the Institute of Chartered Accountants of India or another accredited agency, who has successfully completed a certification program conducted by the National Institute of Securities Market (NISM).

The SSE represents an innovative paradigm in India, constituting a distinct segment within the prevailing stock exchange infrastructure, facilitating social enterprises in mobilizing funds from the public through the stock exchange mechanism.

Entities eligible to participate in the SSE encompass both NPOs and for-profit social enterprises, with a primary commitment to social intent and impact. Moreover, this commitment must be substantiated through a focus on eligible social objectives aimed at underserved or marginalized populations or regions.

Participating social enterprises must undertake a social activity from a comprehensive list of 16 broad categories delineated by the regulator. These eligible activities encompass endeavors such as alleviating hunger, poverty, malnutrition, and inequality; advancing healthcare, fostering education, enhancing employability and livelihoods; promoting gender equality and empowering women and LGBTQIA+ communities; as well as supporting the incubation of social enterprises.