The Securities and Exchange Board of India (SEBI) has lowered the minimum investment requirement for individual investors in social impact funds from Rs 2 lakh to Rs 1,000. This change aims to boost retail participation on the Social Stock Exchange (SSE). Small investors can now engage in Social Impact Funds (SIFs), which are Alternative Investment Funds (AIFs) focusing on social or environmental impacts.
The SEBI amended AIF regulations to implement this adjustment, aligning the minimum application size for subscribing to certain instruments with the minimum investment value for individual investors in the Social Impact Fund. The move is intended to enhance capital flow for Not-for-Profit Organizations (NPOs) and social enterprises listed on the NSE and BSE Social Stock Exchange.
By reducing the minimum investment requirement, SEBI seeks to democratize impact investing, making it more accessible akin to retail equity investing. This initiative forms part of SEBI’s broader efforts to strengthen the SSE ecosystem, including simplifying registration norms for NPOs.
The SEBI also announced that AIFs, which do not retain funds after their fund life expires, may be allowed to seek an “inoperative” status, subject to specified conditions. This step is based on the principle that while entry into the securities market has eligibility criteria, the exit framework should be clear, predictable, and operationally efficient for entities seeking to discontinue activities.
Earlier, SEBI extended the registration validity for not-for-profit organizations on the Social Stock Exchange to three years without fundraising obligations. Additionally, the minimum subscription requirement for issuing zero-coupon zero-principal instruments was reduced to 50% from 75% to provide fundraising flexibility for NPOs. This relaxation applies to projects with identifiable per-unit costs and outcomes to ensure project execution is not adversely affected by partial subscriptions.
