SEBI Extends NPO Registration Validity on Social Stock Exchange to 3 Years, Eases Fundraising Norms

The Securities and Exchange Board of India (SEBI) has announced an extension of the registration validity for not-for-profit organisations (NPOs) on the Social Stock Exchange (SSE) from 2 years to 3 years, as per the PTI report.  

This move aims to facilitate easier fundraising and encourage greater participation by NPOs. 

Extended Registration Validity for NPOs 

SEBI's decision to extend the registration validity period from 2 to 3 years allows NPOs to remain registered on the SSE without the immediate pressure to raise funds.  

This extension acknowledges the practical challenges faced by NPOs, such as delays in obtaining statutory and regulatory approvals.  

SEBI has specified that NPOs may register on the SSE and not raise funds for 2 years from the registration date, with a possible extension of 1 additional year subject to SSE approval. 

Lowered Subscription Requirement for ZCZP Instruments 

In a bid to enhance fundraising flexibility, SEBI has reduced the minimum subscription requirement for Zero Coupon Zero Principal (ZCZP) instruments from 75% to 50%.  

This relaxation applies to projects where costs and outcomes can be implemented on a clearly identifiable per-unit basis.  

SEBI mandates that SSEs conduct due diligence to ensure that funds raised at the lower subscription threshold can still be meaningfully deployed towards the stated objectives. 

Read More: SEBI Allows Companies to Reduce IPO Size Due to Middle East Conflicts! 

Ensuring Project Viability 

SEBI has outlined that funds will be refunded to investors if the minimum subscription requirement is not met.  

The SSE must undertake due diligence before granting in-principle approval for partial fundraising, ensuring that the funds raised align with the disclosed objectives of the issue and that project implementation remains viable. 

Conclusion 

SEBI's extension of NPO registration validity and the reduction in the ZCZP subscription requirement are significant steps to promote the Social Stock Exchange. These measures aim to facilitate ease of fundraising and encourage greater participation by NPOs, ensuring that projects are implemented effectively and meaningfully. 

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