SEBI in its board meeting held on 25th November,2023 made some important changes like reducing the minimum application size for issuances by Non-profit organizations (NPOs) on SSE from Rs 2 lakh to Rs. 10,000. Here are some of the key highlights:
Flexibility in the framework for the Social Stock Exchange (SSE)
-
Reduction in minimum issue size in case of public issuance of Zero Coupon Zero Principal Instruments (ZCZP) by NPOs on SSE from Rs. 1 Crore to Rs. 50 lakh.
-
Reduction in minimum application size in case of public issuance of ZCZP by NPOs on SSE from Rs 2 lakh to Rs. 10,000, thereby enabling wider participation of subscribers including retail.
-
Permitting NPOs to disclose past social impact reports in the fundraising document as per their existing practice, subject to the disclosure of key parameters such as the number of beneficiaries, cost per beneficiary, and administrative overhead.
-
More entities (NPOs) are to be made eligible for registration and fundraising through the issuance and listing of ZCZP on SSE by permitting entities registered under section 10(23C) of the Income Tax Act, 1961 which covers not-for-profit educational institutions substantially financed by the Government and 10(46) of the Income Tax Act, 1961 which covers those organizations that were established or created as per a Central, State, or Provincial Act, or that was established by the Government or a State Government to govern or manage any activity for the benefit of the general public and is not engaged in any commercial activity,.
Our team recently caught up with Hemant Gupta who heads the SSE at the Bombay Stock Exchange. You will get a detailed explanation of what SSE aims to achieve in this video
Amendment to SEBI (Alternative Investment Funds) Regulations, 2012
-
Previously, outstanding units issued by an AIF were held in physical form. SEBI slowly started phasing out the physical form by mandating AIFs with more than Rs 500 crore corpus, to convert outstanding units into demat form and issue fresh units only in this form, with effect from November 1, 2023.
-
On November 25th, SEBI announced that from September 2024, Any fresh investment made by an AIF shall be held in dematerialized form.
-
The existing investments made by AIFs have been exempted from the said requirement, except in cases where the applicable law mandates it, liquidation schemes of AIFs, and Schemes of an AIF whose tenure ends within 12 months from the date of notification in this regard.
This will make compliance easier and strengthen the protection of the interests of investors in AIFs.
Facilitation of Small & Medium REITs (SM REITs)
-
The board has announced the creation of a regulatory framework for facilitating SM REITs, with an asset value of at least Rs. 50 crore compared to the minimum asset value of Rs. 500 crore for existing REITs.
-
SM REITs can create separate scheme(s) for owning real estate assets through special purpose vehicle(s) constituted as companies.
-
The regulatory framework approved by the Board for SM REITs provides for the structure of SM REITs, migration of existing structures meeting certain specified criteria, obligations of the investment manager including net worth, experience, and minimum unitholding requirements, investment conditions, minimum subscription, distribution norms, valuation of assets, etc.
Introduction of Regulatory Framework for Index Providers
-
The Board approved a regulatory framework for Index Providers to foster transparency and accountability in the governance and administration of financial benchmarks in the securities market.
-
The regulations will provide a framework for the registration of Index Providers that license âSignificant Indicesâ that shall be notified by SEBI based on objective criteria.
-
The regulatory framework which is with International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks shall only apply to âSignificant Indicesâ.