Libertatem Magazine

Know All About Social Stock Exchange (SSE)

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Corporatization has boosted companies to grow and expand across the globe and paved the opportunity for a layman to buy shares of the company which are listed in the stock exchanges. As per records in 2020, there are only 20 million people in India are active share traders out of 1.2 billion population. From 2017, the quantum of participants is shooting up due to the provision of trading through mobile and higher internet facilities. Though India is not among the first list in share trading, there is a remarkable hike in the number of participants. The trend of social finance and investment has emerged recently which is still under evolution.

What is Social Finance?

Social Finance refers to the mode of thinking where traditional economic principles are employed to work in tandem with social and environmental objectives. It is considered as a parallel social economy with its own institutional and governing structures. It aims to finance social business i.e. the business’s social environmental and developmental focus which directly attracts the title or label “social”.

What is Social Stock?

According to laws and practices, it is unimaginable that a non-governmental organization or an organization of social welfare or non-profit organization or private organization is participating and selling its shares as other companies. Yes, it is true and is a current trend across the globe to motivate investment. The shares of such organizations are called social stocks. The exchange or the institution through which the listing and other processes for share trading are called Social Stock Exchange. Social Stock Exchange is regarded as the element of social finance.

Why Social Stock?

Social Entrepreneurs are continuously and consistently facing problems of inflow of investment and capital production. The intent is not to back every social entity but to inject equity to midsized entities grown up to the level of social business. The demand for SSE was primarily pushed by social entrepreneurs and businesses and also the investment firms and fund managers.                                                                                                                                                                                                                                                                                                                                                      

Birth of SSEs

With respect to the origin of SSE, we go back to the United Kingdom in 2000 where the Social Investment Task Force named “Enterprising Communities beyond Welfare”. Supporting social finance, the British Prime Minister Cameron said:

“We have got a great idea here that can transform our societies by using the power of finance to tackle the most difficult social problems that we face. Problems that have frustrated government after government, the country after country, generation after generation…. The potential for social investment, I think, is really that big”. 

The Global Impact Investment Network (GIIN) is an industry association for social finance that defines impact investment as investment made into companies, organizations, and funds to generate social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and targeted a range of returns from below market to market rate, depending on the circumstances.

The objective of the task force was to find answers for “how entrepreneurial practices could be applied to obtain higher social and financial returns from the investment, to harness new talents and skills to address economic regeneration and to unleash new sources of private and institutional investment”.

Benefits of SSEs

  1. Attracting and mass push of investors to social business
  2. The equalizing opportunity of NPO and NGO development as like profit organization
  3. The increasing scope of commitment to social welfare objects.
  4. Encourage social business and revamping societies.
  5. Increasing opportunities for stock players.
  6. Introducing a high level of governance with respect to transparency and accountability.
  7. Opening new pathways for investment and development.
  8. Promising social and economic growth under the same process.


  1. Microfinance Institutions founded on a strong social mission (MFI).
  2. Huge population inhabiting both in rich and poor countries.
  3. Customers (receive free goods and services) and Workers of vaccinations etc.

Social Stock Exchange- Art/ Science/Management

  1. Art- It is an art of filling the gaps between the economic and social ambits where people are multi-furcated and discriminated regionally and globally.
  2. Science- It is the science of bringing unequal’s equal by implementing several models through social commitments through the business angle.
  3. Management- It is the management of the flow of investments to profit organizations and non-profit organizations. 

Why Regulating through Stock Exchanges?

Companies Stock Exchanges are based and works on three devices, i.e. listing requirements, disclosure, and enforcement or delisting requirements. Even though social business shows resemblances with several characteristics of the companies, they are not just blueprinted. Social business involves the element of welfare and social commitments and beneficiaries are not just investors. They are socially committed or the outcome of social commitments. Hence there is a great need to add elements of social and welfare beneficiary protection elements for the smooth and proper working of Social Stock Exchanges. 

Working Framework- International Perspective

As already said, the United Kingdom brought in the aspect of social stocks and regulation through Social Stock Exchanges. The other countries having a full-fledged working framework of SSEs are Canada and Singapore. Let us have a look.

SSX of the United Kingdom

The Social Stock Exchange (SSX) aims to increase the presence of social business among the investment community to create efficient and universally accessible buyers’ and sellers’ market place where impact investors and social impact businesses of all sizes can achieve greater impact through capital raising or allocation. SSX performs two-pronged regulatory functions i.e. to create a rules-based informally rich and transparent platform that can draw investors into the social finance space and stimulate social business activity and as an inevitable corollary build up investor trust.

The vision and mission could give the impression that SSX is a complete trading platform, but not. It is just a portal providing information that enables investors to know about the impact of investing opportunities. There is no trading happening in SSX but all research services are provided for a wider knowledge of the investors. Further listing is made in SSX which includes companies that are trading publically in Company Stock Exchange and are regulated by the rules there. About 50 plus impact businesses are listed in SSX at present. It works with the support of the London Stock Exchange and is a standalone body not regulated by any official entity.

Eligibility criteria include the following

  1. Companies already listed in CSE.
  2. Social and Environment impact as a core aim. To satisfy the same companies shall submit a Social Impact Report for review by the independent Admissions Panel composed of 11 finance and impact investing experts.

Disclosure requirements

  1. Adherence to UK Corporate Governance Guidelines concerning disclosure of remuneration, tax, and ownership. They must disclose activities such as child labor, bonded labour, tobacco, abuse of human rights, etc. 
  2. Filing Annual Social Impact Reports determine the continuation of listing in SSX. The report shall be based on five themes that are; the social and environmental purpose of the company and social impact that they will deliver; beneficiaries from the social impact; how company’s product, services, and operations deliver impact; how a company involves and consults with all of its stakeholders and evidence as to social impact, collection, measurement, and report of such evidence.

SVX of Canada

Social Venture Connection was launched in 2013 with the support of the Ontario Stock Exchange, Government of Ontario, Royal Bank of Canada, KPMG and law firm Torys LLP and three charitable trusts Rockefeller Foundation.

SVX aims to create a market for good in the form of a local social impact-first platform connecting impact ventures, funds, and investors to catalyze new debt and equity investment capital for local ventures that have a demonstrable social and environmental impact. Through this SXV seeks to mobilize money towards impact social ventures that reduce poverty, creating opportunities, and advancing environmental stability. The SVX aims for long term standardization of the local social finance space by creating a fully regulated market with access for retail investors that could parallel or be integrated into mainstream markets.

Like SSX, SVX is not an actual trading platform but it is a private investment platform built to connect impact ventures, funds, and investors. 

Requisites for Listing and Governance

  1. Small and medium local for-profit social business within a range of revenue $50000- $ 25 million.
  2. Targets profit for-profit business, NPO, or cooperatives looking to raise $100,000- $10 million in investments from anywhere.
  3. Incorporated in Ontario for at least 2 years and have audited financial statements available.
  4. There are two categories: Social Impact Issuers and Environment Impact Issuers.
  5. For Listing, a for-profit business must obtain satisfactory company ratings through GIIRS a privately administered rating system.

Like SSX, SVR is not regulated by any official authority. With regard to disclosures, the following requirements shall be met:

  1. SVX must agree to the SVX Issuer Agreement.
  2. Reporting the expenditure and other financial transactions once capital is raised. But it is silent about how often the listed entities shall submit updated ratings.
  3. Security legislation compliance.
  4. File financial statements annually in accepted accounting methods and shall not have any post with regard to misleading information.

As far as enforcement is concerned, issuers are liable for the breach of the above-said agreement. In such events, SVX is entitled to interim and permanent injunction reliefs, specific performance and other equitable remedies which is suitable to fit into the gravity of damage. The agreement gives power to SVX to suspend access to an online platform or remove from the applicant temporarily or permanently from the SVX online platform with or without notice or giving reasons for such actions.

IX of Singapore

The Impact Exchange was established in 2013 is a joint initiative between the Stock Exchange of Mauritius and Impact Investment Exchange Asia @ IIX Singapore. It is operated by SEM and regulated by the Financial Service Commission of Mauritius. It was not launched in full swing. IX is the only one that is an actual public exchange. In the bill, it is saved as the world’s first public trading platform dedicated to connecting social enterprise with mission-aligned investment. In addition to the goals followed by any CSE, the IX focus on bettering the world which requires a strong mission, vision, and beneficiary protections.

Listing Requirements

It is broken down into two categories i.e. social and financial categories. The Social Category requisites are:

  1. Specify social or economic impact as the reason for their primary existence.
  2. Articulate the purpose and intent of the company in the form of a theory of change- basis for demonstrating social performance.
  3. Commit to ongoing monitoring and evaluation of impact performance assessment and reporting.
  4. Minimum 1 year of impact reports prepared as per IX reporting principles.
  5. Certification of impact reports by an independent rating body 12 months prior listing.

The financial requirements are:

  1. Use a market-based approach to achieve its purpose.
  2. Publication of financial statements in internationally accepted standards at least one year before listing.
  3. The minimum market capitalization of $700000.

SSE in India- Legislative Framework and Updates

The Hon’ble Finance Minister in the Budget Speech for Financial Year 2019-20 has announced as follows:

“It is time to take our capital markets closer to the masses and meet various social welfare objectives related to inclusive growth and financial inclusion. I propose to initiate steps towards creating electronic fundraising platform-a social stock exchange-under the regulatory ambit of Securities and Exchange Board of India for listing social enterprises and voluntary organizations working for the realization of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund.”

On the same, a working group was constituted under the Chairmanship of Shri. Ishaat Hussain on 19th September 2019.

Like SSX of London and SVX of Canada, SSE of India does not offer a platform for trading but it caters listing and regulatory aspects. India has brought the idea of implementing SSE as a measure to mitigate COVID-19 social and financial collapse. Presently there is no outright legal framework to portray and picture the working of Social Stock Trading in India. 

My next article within no time will be exclusively dealing with SSE India. is now on Telegram. Follow us for regular legal updates and judgments of the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

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