Securities and Exchange Board of India extends Social Stock Exchange NPO registration window and lowers minimum subscription threshold for ZCZP issuances

The Securities and Exchange Board of India (SEBI) has revised key requirements under the Social Stock Exchange (SSE) framework to ease participation and fundraising by not for profit organizations (NPOs). The changes extend the period an NPO may remain registered on an SSE without raising funds from two years to up to three years, and allow a lower minimum subscription threshold for issuances of zero coupon zero principal instruments (ZCZP) in specified circumstances. Under the updated framework, the initial two-year no-fundraising period may be extended by one additional year, subject to approval by the SSE. For ZCZP issuances, the minimum subscription remains 75% of the amount proposed to be raised, but may be reduced to 50% where the funds raised can still be deployed in line with the disclosed object of the issue so that the project remains viable and meaningful; in such cases, the SSE must conduct due diligence before granting in-principle approval, taking into account subscription scenarios disclosed in the fund raising document. SEBI also updated under-subscription disclosures, requiring NPOs to explain how the balance capital will be raised where the applicable minimum is achieved and the impact if it is not arranged, and requiring refunds where the minimum subscription is not achieved; the circular takes effect immediately.