SYNOPSIS: L.L.M.

PROJECT (T III)
SUBJECT: INVESTMENT LAWS

SOCIAL STOCK EXCHANGES:

FROM COMMERCE TO CONSCIENCE

Submitted by: Mrs. Trisha Shreyashi (B.A. LL.B., LL.M.)1

National Institute of Securities Markets (NISM)2

1
Shreyashi is a law graduate and columnist. She writes for major national print media, viz:-
The Hindu, Mint, Telegraph, and Financial Express. She has been awarded as the Emerging
Counsel of the Year 2021 by Indian National Bar Association (INBA) and Emerging
Woman Author of the Year 2022 by GISR Foundation.
2
Established under the aegis of Securities & Exchange Board of India (SEBI)
Introduction:

The Securities & Exchange Board of India (SEBI) approved the creation of Social Stock
Exchange (SSE) in India in September 2021 to further the goals of financial inclusion and aid
Environmental, Social & Governance (ESG) principles. The framework has been approved
by the working group (WG) and the technical group (TG) constituted by SEBI. The TG &
WG comprised of representatives of various stakeholders in social welfare, social impact
investing, Ministry of Finance, the stock exchanges and the NGOs. The TG proposed its
recommendations based on the public comments received on WG’s report on framework for
SSE in India.

The proposed SSE would enlist social enterprises (SEs), philanthropic institutions and
voluntary organizations working with a social welfare objective. The proposed SSE shall
enable these SEs to tap in additional sources of fundraising. Moreover, it is projected to
infuse transparency in usage of the funds by the SEs.

While providing a unified funding channel, the SSE shall act as an umbrella organization to
monitor due diligence, compliances, reporting and standardized disclosures regarding
financial, governance and social impact aspects. The SEs enlisted herein would be subjected
to social audits by certified auditors and self-regulatory sustainability directorate. The listed
SEs shall be able to raise capital through equity, bonds, mutual funds, debt, social impact
funds, and development impact bonds.

Prior to this, SSEs have been set up in Brazil, Jamaica, Portugal, South Africa, UK, Canada
and Singapore. However, only the Jamaican, Singaporean, British and Canadian SSEs are
presently functional. Most of the SSEs shut down owing to the issues of insufficient income,
operating costs, fee structure and other regulatory loopholes & institutional drawbacks.

Research Objectives & Proposal:

This research paper explains what SSEs are, their scope and their working mechanism. It
explores the recommendations of the TG report and loopholes in the proposed framework.
Further, the paper shall make a comparative analysis of SSEs setup across the world, the
reasons for their failure and the takeaways thereof. The tricky part that this paper explores is
how the proposed framework shall strike balance its commercial prerogatives and
philanthropic goals.

Research Methodology:
This research paper is doctrinal. The author has employed exploratory, explanatory,
analytical and historical forms of research for the purposes of achieving the desired outcome.
She has referred to secondary and primary sources of data available on public domain.

Chapterisation:

1. What is Social Stock Exchange?

 The Concept and Genesis of Social Stock Exchange
 Aims and Objectives of Social Stock Exchange
2. Role of SSE in India
 Working of SSE
 Role of SSE in tracing Money Laundering
 Role of SSE in Corporate Governance in social enterprises
3. Factors and various aspects of SSE
 Stakeholders and key participants
 Qualifying Criteria and Process for On-Boarding
4. Loopholes in the Framework
5. Takeaways from Global examples
 Jamaica Social Stock Exchange
 UK SSX
 Singapore/Mauritius Social Stock Exchange
 Canadian Social Stock Exchange
6. Conclusive and Suggestive Remarks