The Securities and Exchange Board of India (SEBI) has introduced new rules to make it easier for not-for-profit organisations (NPOs) to raise funds through the Social Stock Exchange (SSE).
These changes are aimed at reducing challenges faced by NPOs and encouraging more organisations to participate in social funding initiatives.
Easier Registration for NPOs on Social Stock Exchange
SEBI has extended the registration validity for NPOs on the Social Stock Exchange from 2 years to 3 years.
This means organisations now get an extra year without the pressure of raising funds immediately after registration.
However, this extension is subject to approval from the exchange.
The move comes after recognising that many NPOs face delays due to regulatory approvals and compliance requirements.
With more time in hand, these organisations can plan better and operate more smoothly.
Lower Fundraising Requirement Brings More Flexibility
Another major change is in the minimum subscription requirement for zero-coupon zero-principal (ZCZP) instruments.
SEBI has reduced this requirement from 75% to 50%.
This makes it easier for NPOs to successfully raise funds even if they don’t reach the earlier higher threshold.
However, before allowing partial fundraising, the Social Stock Exchange will carry out proper checks to ensure that the funds raised are sufficient for meaningful use.
If the subscription remains too low, the collected money will be refunded to investors.
What is the Social Stock Exchange?
The Social Stock Exchange (SSE) is a special platform that allows organisations working for social causes to raise funds.
Both non-profit and for-profit social enterprises can use this platform to collect money through instruments like debt, equity, or zero-coupon zero-principal instruments.
To qualify, at least 67% of an organisation’s work must be focused on eligible social activities.
More Steps to Encourage Small Investors
In a recent move, SEBI also reduced the minimum investment amount in social impact funds from ₹2 lakh to just ₹1,000.
This step aligns with the minimum amount required for investing in ZCZP instruments and opens the door for more small investors to participate.
Overall, these changes are designed to simplify fundraising, reduce entry barriers, and boost participation in social impact investing.
It also helps ensure that more funds reach organisations working for meaningful social change.
