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Sebi proposes CSR rule changes, considers allowing donations through social stock exchange

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In Short:

Sebi has proposed to change CSR rules to allow companies to donate through social stock exchanges. Currently, companies must spend 2% of their profits on social activities. SSEs list non-profit organizations for fundraising. Amendments would enable companies to fulfill CSR obligations through SSEs. SSEs aim to increase transparency and credibility for social enterprises. They focus on social impact rather than financial returns. Compliance costs and lack of standardized metrics may pose challenges.

Sebi’s Proposal for CSR Rule Amendments

Hey there, folks! Exciting news from New Delhi where the Securities and Exchange Board of India (Sebi) has made a move to shake things up in the corporate social responsibility (CSR) landscape.

An official from Sebi revealed that they have proposed a change to the Companies Act, 2013, to incorporate donations made by companies through Social Stock Exchanges (SSEs). The Companies Act might just get a makeover!

The Rise of Social Stock Exchanges

Have you heard about Social Stock Exchanges (SSEs)? They are the new talk of the town! Finance Minister Nirmala Sitharaman introduced these in her FY20 budget speech. Now, SSEs are a special segment under stock exchanges where non-profit organizations working for social welfare can register and raise funds. Exciting stuff!

What the Proposed Amendments Mean

As per the current CSR rules, companies must allocate at least 2% of their net profit over the last three years towards specific social welfare activities mentioned in the Companies Act, 2013. Now, Sebi suggests that companies should also be allowed to donate through SSEs to fulfill their CSR obligations. Big changes on the horizon!

Impacts of SSEs on Social Sector

As of now, eight non-profit organizations are listed on the NSE SSE. Imagine a future where donors prefer organizations registered with SSEs before making contributions. The SSEs are set to expand significantly, aiming for over 100 listings by the end of FY25. It’s a wave of transformation!

Social Impact Reporting and Challenges

All enterprises listed on an SSE will need to file a social impact report, outlining their activities to donors. But, the road ahead may not be a smooth ride for social welfare organizations due to high compliance costs and the need for capacity building. Challenges lead to growth, right?

The Vision of SSEs

SSEs are not about financial gains but a commitment to social returns. It’s all about investing in the welfare of society, as per Sebi. A new era of giving back and creating impact is upon us!

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