Team Blitz India
THE recent norm revision by market regulator Securities and Exchange Board of India (Sebi) is aimed at helping expand fundraising opportunities for not-forprofit organisations (NPOs) through Social Stock Exchange (SSE), besides improving the accessibility and protection of investors.
At its Board meeting in Mumbai on November25, the Sebi decided to tweak regulation norms on SSE, Index Providers, small and medium real estate investment trusts (SM REITs), and Alternative Investment Funds (AIF) to enhance their accessibility and transparency, while also improving investor protection.
The market watchdog announced reduction in the minimum issue size in case of public issuance of Zero Coupon Zero Principal Instruments (ZCZP) by NPOs on SSE from Rs 1 crore to Rs 50 lakh.
It also announced reduction in the minimum application size in case of public issuance of ZCZP from Rs 2 lakh to Rs 10,000, thereby enabling wider participation of subscribers, including retail.
The Finance Ministry had earlier declared ZCZP as securities, which will be issued only by an NPO registered on the SSE. These will have zero coupon rate and no principal amount will be payable on maturity.
The Sebi Board also approved a regulatory framework for Index Providers with the objective of fostering transparency and accountability in governance and administration of financial benchmarks in the securities market.
Such regulations “will provide a framework for registration of Index Providers which license ‘Significant Indices’ that shall be notified by SEBI based on objective criteria,” the statement explained.
The creation of Social Stock Exchange was proposed by Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2019-20.
“I propose to initiate steps towards creating an electronic fund-raising platform – a social stock exchange – under the regulatory ambit of Securities and Exchange Board of India – for listing social enterprises and voluntary organisations working for the realisation of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund,” she had told Parliament on July 5 that year.
An SSE is an electronic platform that allows alternative fund-raising for social enterprises. The SSE aims to attain the idea of a holistic one-stop dais where credible social enterprises are listed that have the systemic capacity in creating and reporting measurable social impact, according to an explainer brought out by KPMG last year.
