![]() ![]() However, they would have to make necessary disclosures about the same. The NPO may choose to register on the SSE and not raise funds through it but via other means. The minimum issue size is presently prescribed as Rs 1 crore and minimum application size for subscription at Rs 2 lakhs for ZCZP issuance. It must also demonstrate the requisite expertise through their performance in similar projects in the past, thus, acquiring investor confidence and tackle concerns about potential default. The instrument must have a specific tenure and can only be issued for a specific project or activity that is to be completed within a specified duration as mentioned in the fund-raising document (to be submitted to the SSE). It is mandatory that the NPO is registered with the SSE for facilitating the issuance. ![]() The latter provisions a fixed interest (or repayment) on the funds raised through varied contractual agreement, whereas ZCZP would not provision any such return instead promising a social return.Īlso read | ‘Can allow non-profit organisations to list on social stock exchanges’ ZCZP bonds differ from conventional bonds in the sense that it entails zero coupon and no principal payment at maturity. Thus, there was a need to provide NPOs a direct access to securities market for raising funds. SEBI had earlier recognised that NPOs by their very nature have primacy of social impact and are non-revenue generating. NPOs can raise money either through issuance of Zero Coupon Zero Principal (ZCZP) Instruments from private placement or public issue, or donations from mutual funds. Corporate foundations, political or religious organisations or activities, professional or trade associations, infrastructure and housing companies (except affordable housing) would not be identified as an SE.Īdditionally, NPOs would be deemed ineligible should it be dependent on corporates for more than 50% of its funding. This is to be established by enumerating that, in the immediately preceding three-year period, either 67% of its average revenue came from the eligible activities, expenditure (in the same proportion) was incurred towards attaining the objective or the target population constitute 67% of the overall beneficiary base. ![]() At least 67% of their activities must be directed towards attaining the stated objective. The seventeen plausible criteria as listed under Regulations 292E of SEBI’s ICDR (Issue of Capital and Disclosure Requirements) Regulations, 2018 entail that enterprises must be serving to eradicate either hunger, poverty, malnutrition and inequality promoting education, employability, equality, empowerment of women and LGBTQIA+ communities working towards environmental sustainability protection of national heritage and art or bridging the digital divide, among other things. What about eligibility?Īny non-profit organisation (NPO) or for-profit social enterprise (FPSEs) that establishes the primacy of social intent would be recognised as a social enterprise (SE), which will make it eligible to be registered or listed on the SSE. In all other cases, only institutional investors and non-institutional investors can invest in securities issued by SEs. Retail investors can only invest in securities offered by for-profit social enterprises (SEs) under the Main Board. It would serve as a medium for enterprises to seek finance for their social initiatives, acquire visibility and provide increased transparency about fund mobilisation and utilisation. The SSE would function as a separate segment within the existing stock exchange and help social enterprises raise funds from the public through its mechanism. She had argued that it was time “to take our capital markets closer to the masses and meet various social welfare objectives to inclusive growth and financial inclusion.” The proposal was cleared in September 2021. Finance Minister Nirmala Sitharaman, presenting the Union Budget back in 2019, had proposed to initiate steps for creating a stock exchange under the market regulator’s ambit. ![]() The story so far: On February 22, the National Stock Exchange of India received the final approval from the markets regulator Securities and Exchange Board of India (SEBI) to set up a Social Stock Exchange (SSE). ![]()
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