Sebi unveils norms for zero coupon instruments by NPOS

Last Updated30/12/2023

The SEBI recently introduced a roadmap for the public issuance of 'zero coupon zero principal' instruments by not-for-profit organizations (NPOs) and their listing on the Social Stock Exchange (SSE).
In 2022, the government classified 'zero coupon zero principal instruments' as securities.

The instruments will be issued in dematerialized form only and are non-transferable.
Minimum issue size: Rs 50 lakh
Minimum application size: Rs 10,000
Minimum subscription required: 75% of the funds proposed to be raised.

NPOs, through the lead manager, must file a draft fundraising document with the SSE.
It must also file an application seeking in-principle approval for listing the instrument on the SSE.
SSE will provide observations on the document within 30 days of filing or receipt of clarifications from the NPO.
NPO will incorporate the observations of the SSE in a draft document and file the final papers to the SSE prior to opening the issue.
The SSE will have to specify the details to be incorporated in the fundraising document.

In case of under subscription, NPOs must detail how balance capital will be raised and the potential impact on achieving social objectives.
If subscription is less than 75% of the issue size, funds will be refunded.

Required to maintain the details of the allotment following the issuance of zero coupon and zero principal instruments by an NPO.
Specify the additional norms with respect to the issue procedure, such as agreements with depositories, banks, ASBA-related matters, duration for public issuance, allocation methodology etc.