For Non-profit Organisations Wanting To Get Listed on SME, There Should Be No I-T notice or Scrutiny: SEBI
IANS 21 September 2022
Markets regulator, the Securities and Exchange Board of India (SEBI) has said that any non-profit organisation (NPO), which wants to get listed, should be registered as a non-profit entity and the registration certificate should be valid for 12 months. Also, There should not be any ongoing scrutiny or notice by the income-tax (I-T) department.
SEBI on Monday proposed a new framework for the Social Stock Exchange (SSE). This new framework would allow the listing of NPOs.
The firm should be registered in India as a "charitable trust registered under the public trust statute of the relevant state" or under the Societies Registration Act, 1860, or the Indian Trusts Act, 1882, or incorporated as a company under Section 8 of the Companies Act, 2013. The minimum age of the NPO should be three years, Angel One said in a note.
The NPO should declare whether it is government or privately owned. Any NPO that wishes to get listed should have 80G registration under the Income-Tax Act. Each entity should have a minimum spending of Rs50 lakh in the last fiscal year and minimum funding of Rs10 lakh in the past financial year.
The primary goal of the NPOs that want to get listed should be social intent and impact. These intents should be focused on various social objectives for unattended and underprivileged populations or regions.
The NPO should be engaged in 16 broad social activities listed by the board. The eligible activities include eradicating hunger, poverty, malnutrition and inequality, promoting healthcare, supporting education, employability and livelihoods, gender equality empowerment of women and LGBTQIA communities, and supporting incubators of social enterprise.
The NGO sector in India is quite large. There are over 3.1mn (million) NPOs which amounts to one NPO per 400 Indians. This new framework suggested by SEBI will definitely help these NPOs take an advanced route for the betterment of the people, Angel One said.
To list, SEBI said, "The SSE under the guidance of SSE Governing Council (SGC) shall mandate the structure of the draft fundraising document/final fundraising document. The SSE shall host such requirements on its website."
SSE is formed with the intent to give social enterprises an additional avenue to raise money. This novel concept was built with the sole purpose of serving the private and non-profit sectors by routing greater capital to them.
The information that is mandated for SSE to collect is the NPO's vision, strategy, details of key management personnel, financial statements for the last three years, and the risks that the NPO sees to its work.
"The SSEs will aim at unlocking large pools of social capital, and encourage blended finance structures so that conventional capital can partner with social capital to address the urgent challenges of Covid-19," SEBI stated.
In 2019, a working group was created under the chairmanship of Ishaat Hussain (ex-director, Tata Sons). This working group consisted of representatives from social welfare, social impact investing, representatives from the ministry of finance, the stock exchanges and NGOs.
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