SEBI mulls online bidding platform for Social Stock Exchanges

In terms of issue of instruments on the platform, regulator has suggested any single ZCZP issue of Rs 50 lakh or more; or a shelf issue, consisting of multiple tranches, with each issue of Rs 50 lakh or more with the validity of the shelf document being one year.

The Securities and Exchange Board of India (SEBI) is planning to put in place an electronic book provider platform for issuance of instruments by Not for Profit Organizations (NPOs) on Social Stock Exchanges (SSE).

In a consultation paper issued on Thursday, the capital market regulator stated that there is a need for such an online platform in order to streamline the whole process of fund raising on Social Stock Exchanges.

"... a not for profit organization (NPO) is permitted to raise funds on Social Stock Exchange (SSE) by issuing Zero Coupon Zero Principal (ZCZP) Instruments. In order to streamline the issuance of ZCZP instruments issued by NPOs on SSE, and such other instruments as may be specified from time to time for issuance by NPOs, a need is felt to provide for a mechanism of SSE Electronic Book Provider (SSE-EBP) platform," stated the draft circular issued by SEBI.

According to the SEBI consultation paper, the obligations and duties of SSE-EBP would include providing an online platform for placing bids while ensuring that participants are notified about every draft fund raising document (DFRD) filed. Further, the DFRD, term sheet and other issue related information should be made available to the eligible participants on the platform immediately on receipt of the same from the issuer, as per the SEBI paper.

"Have adequate backup, disaster management and recovery systems... Ensure safety, secrecy, integrity and retrievability of data... SSE-EBP shall ensure that all details regarding the issuance is updated on its website," the SEBI paper further stated as part of the obligations of the platform.

Meanwhile, the list of eligible participants on the SSE-EBP platform include qualified institutional buyers (QIBs) as defined under Regulation 2 (ss) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) and any non-QIB, including non-institutional investors and retail individual investors (except foreign portfolio investors, foreign funds and foreign investor backed funds), who wants to participate in a particular issue on the SSE-EBP platform.

"Participants, prior to entering into a bidding process shall be required to enrol with SSE-EBP. Such enrolment of a participant on an SSE-EBP will be onetime exercise and shall be valid till the time such enrolment is annulled or rescinded," stated the SEBI consultation paper.

In terms of issue of instruments on the platform, regulator has suggested any single ZCZP issue of Rs 50 lakh or more; or a shelf issue, consisting of multiple tranches, with each issue of Rs 50 lakh or more with the validity of the shelf document being one year.