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Sunrise Shiksha Trust, a registered public charitable trust in Pune, plans to raise funds through the Social Stock Exchange (SSE) in India. Its trustees ask what must be true of the entity before it can be identified as a social enterprise eligible for the SSE. Which statement is correct?

An entity must establish primary social intent and impact, such as by undertaking eligible social activities for target beneficiaries. Listed parentage, dividend payouts or foreign ownership are not conditions for being identified as a social enterprise on the Social Stock Exchange.

  1. AIt must establish primary focus on social intent and impact, for example by showing that it works for eligible social activities and serves target beneficiariesCorrect
  2. BIt must be a company with a listed parent on the main board of a stock exchange
  3. CIt must distribute at least half its surplus as dividends to its funders
  4. DIt must be a for-profit company with at least 51 percent foreign ownership

Explanation

Under SEBI's framework for the SSE, a non-profit organisation or for-profit social enterprise must establish primary social intent and impact, typically through eligible activities and target population served. Dividend payout or foreign ownership are not eligibility tests, and a trust need not have a listed parent.

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