11/08/10

By Andrew Holt

Support charity CAN is collaborating with the Social Stock Exchange (SSE) on a research project to support the development of a Financial Services Authority-regulated global social stock exchange that will allow investors to trade exclusively in companies with social and environmental goals.

The exchange, when it becomes operational, will be designed for companies, both large and small, that specialise in providing goods and services explicitly for a social purpose who need to raise significant amounts of capital for growth and expansion.

The objective is to help these socially-minded companies – essentially market-led business that prioritise social mission rather than just profits – to raise equity and gain access to capital in order to fulfil their social goals.

The research, which is being funded by the Calouste Gulbenkian Foundation, is focusing on the production of a set of rulebooks for the Exchange that will require companies to be more transparent about their social impact.

Rulebooks are important legal and procedural documents that govern the conduct of companies listed on exchanges and of corporate advisers that bring companies to market.

The trading and admissions rules will be unique to the SSE and very different to normal exchanges.

CAN will draw up and publish guidance notes for issuers, corporate advisers and investors who will operate on the new exchange.

These will cover guidance on trading rules and governance structures such as measures against short-selling, share register publication, poison-pill defences and the issue of preference shares.

Andrew Croft, chief executive of CAN, said: “Partnering with the Social Stock Exchange on this research is an important step in encouraging investment in companies trading for financial and social benefit.”

Pradeep Jethi, chief executive officer of SSE, added: “What makes a social stock exchange different from normal stock exchanges is that it is able to authenticate its issuers as being primarily for social or environmental purpose.

"The research into and development of a unique set of admissions rules, trading rules and disclosure rules is fundamental to this differentiation.”

Andrew Barnett, director of the Calouste Gulbenkian Foundation, in the UK said: “One of our core objectives is to build the capacity of civil society to improve impact through the clear measurement of outcomes; the development and implementation of the Social Stock Exchange rulebooks offer an innovative model to achieve this objective and represents the first time so many social enterprises will have been assessed on such a scale.”

Before the Social Stock Exchange can be launched the rulebooks and guidance notes will need to be approved by the Financial Services Authority.

CAN and the Social Stock Exchange will solicit views from social enterprises, social impact investors, social capital market participants and law firms who advise the sector.

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