Sebi mulls sharp lower in minimal funding for social affect funds to widen retail participation
In its session paper, Sebi additionally proposed extending the registration interval for NPOs on the SSE with out fundraising and decreasing the minimal subscription requirement for issuing Zero Coupon Zero Principal Devices (ZCZP).
The regulator mentioned the measures are supposed to “additional strengthen the SSE framework, facilitate ease of fund elevating and encourage better participation by NPOs”.
Underneath the present Different Funding Fund (AIF) Rules, particular person buyers are required to speculate a minimal of Rs 2 lakh in a social affect fund that invests solely in securities of NPOs listed or registered on the SSE.
Sebi has now proposed decreasing this threshold to Rs 1,000 to align it with the present minimal utility measurement for Zero Coupon Zero Principal Devices (ZCZP) underneath the ICDR norms, thereby enabling wider retail participation in social affect investments.
On the registration entrance, Sebi has recommended extending the interval throughout which NPOs can stay registered on the SSE with out elevating funds from the present two years to 3 years.
The proposal has taken into consideration sensible challenges confronted by NPOs, together with delays in statutory and regulatory approvals, and could be topic to approval by the SSE.As well as, the regulator has proposed lowering the minimal subscription requirement for ZCZP issuances from 75 per cent to 50 per cent in choose circumstances.
This rest would apply solely to tasks the place prices and outcomes may be carried out on a clearly identifiable per-unit foundation, guaranteeing that partial subscription doesn’t adversely have an effect on challenge execution, Sebi mentioned.
In such circumstances, SSEs could be required to hold out due diligence to make sure that funds raised on the decrease subscription threshold can nonetheless be meaningfully deployed in direction of the acknowledged goals.
Additionally, the regulator mentioned that funds could be refunded to buyers if the minimal subscription requirement just isn’t met.
