SEBI Approves Minimum Investment Requirement for Social Impact Funds, Streamlines Regulations for Non-Profit Organizations on Social Stock Exchange

SEBI Approves Key Reforms for Social Stock Exchange Framework

On March 19, the Securities and Exchange Board of India (SEBI) approved significant reforms aimed at broadening investor participation and facilitating smoother fundraising for social enterprises. The measures include a reduction in the minimum investment threshold for individual investors in Social Impact Funds (SIFs) and easing compliance requirements for not-for-profit organisations (NPOs) under the Social Stock Exchange (SSE) framework.

Key Reforms:

• The minimum investment amount for individual investors in SIFs has been reduced from Rs 2 lakh to Rs 1,000, provided such funds invest exclusively in securities issued by NPOs registered or listed on the SSE.
• The registration validity period for NPOs on the SSE has been extended from two years to three years without the requirement to raise funds during this period, subject to approval by the social stock exchanges.
• The minimum subscription requirement for Zero Coupon Zero Principal (ZCZP) issuances has been relaxed from 75 percent to 50 percent in cases where project costs and outcomes can be implemented on a per-unit basis.

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Objectives:

The reforms aim to attract a wider base of retail and small investors into the social impact investment space, thereby improving capital flows to the sector. The changes are expected to enhance fundraising efficiency, improve accessibility for investors, and support the growth of social enterprises in India.