The regulator said the measures are intended to “further strengthen the SSE framework, facilitate fundraising and encourage greater participation from NPOs”.As per the current Alternative Investment Fund (AIF) regulations, individual investors are required to invest a minimum of Rs 2 lakh in a social impact fund that invests exclusively in securities of NPOs listed or registered on the SSE.
Sebi has now proposed lowering this threshold to Rs 1,000 to bring it in line with the existing minimum application size for Zero Coupon Zero Principal Instruments (ZCZP) under ICDR norms, thereby enabling broader retail participation in social impact investments.
On the registration front, Sebi has proposed to extend the period during which NPOs can remain registered with the SSE without raising funds from the existing two years to three years.
The proposal takes into account practical challenges faced by NPOs, including delays in statutory and regulatory approvals, and would be subject to approval by the SSE. In addition, the regulator has proposed to reduce the minimum subscription requirement for ZCZP issues from 75 percent to 50 percent in certain cases.
This relaxation would apply only to projects where costs and outcomes can be implemented on a clearly identifiable unit basis so that partial enrollment does not adversely impact project execution, Sebi said.
In such cases, SSEs would be required to conduct due diligence to ensure that funds raised at the lower subscription threshold can still be meaningfully deployed towards the stated objectives.
The regulator also said money would be refunded to investors if the minimum subscription requirement is not met.
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