SEBI Proposes Reducing Minimum Investment in Social Impact Funds

India’s market regulator has proposed a set of changes aimed at broadening investor participation in social impact investing and easing fundraising conditions for eligible projects. 

Lower Entry Threshold for Individual Investors 

The Securities and Exchange Board of India has proposed reducing the minimum investment amount for individual investors in social impact funds to ₹1,000 from ₹2 lakh.  

In a discussion paper, SEBI said the change is intended to help social impact funds attract smaller investors and channel investments into securities issued by not for profit organisations through the SIF framework. 

Highlighting the objective, SEBI said the proposal would enable SIFs to bring in a wider base of investors by lowering the entry barrier for participation. 

Alignment with Social Stock Exchange Instruments 

The regulator said the proposed minimum investment is also aimed at aligning SIF participation norms with the minimum subscription size applicable to Zero Coupon Zero Principal(ZCZP) instruments listed on the social stock exchange.  

In addition, SEBI has proposed extending the registration period for not for profit organisations to 3 years from the current 2 years, provided they do not undertake fundraising through the social stock exchange during this period. 

Changes to ZCZP Subscription Requirements 

SEBI has also suggested reducing the minimum subscription requirement for the issuance of ZCZP instruments to 50% from 75% for projects where the cost of the disclosed objectives can be allocated proportionately on a per unit basis.  

The proposal is subject to appropriate due diligence being carried out by the social stock exchange. 

Read More: SEBI Stalls New Exchanges Entry into Equity Derivatives Market! 

Conclusion 

The proposed measures seek to lower participation thresholds, improve alignment across social investment instruments and provide greater flexibility for eligible projects and organisations within the social impact investing ecosystem. 

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