When Zero Coupon Zero Principal Instruments (ZCZP) are listed on a stock exchange in India, such as those issued by Not-for-Profit Organizations (NPOs) under the Social Stock Exchange (SSE) framework, several intermediaries are involved to ensure regulatory compliance, transparency and smooth operations.
SSE is a separate segment under exchanges like BSE & NSE that provides NPOs a platform to list ZCZPs for raising social funds. SSE ensures NPOs meet the eligibility, disclosure and reporting compliance norms.
Stock exchanges like NSE & BSE that host the SSE segment and facilitate the listing, trading and distribution of ZCZPs, along with maintaining investor grievance redressal.
Merchant bankers are SEBI-registered entities that manage the issue process and help in preparing offer documents, getting approval, liaising with SEBI/SSE and marketing the issue.
Social auditors or impact assessors are responsible for evaluating and verifying the intended social impact of the Non-Profit Organization (NPO) and the use of Zero Coupon Zero Principal Instruments (ZCZPs).
Although CRAs are not mandatory for ZCZPs since there is no repayment obligation, credit rating agencies may still be involved to provide ratings for the NPO or the impact of the project.
Depositories like CDSL and NSDL play a vital role in the dematerialization of ZCZPs. They maintain records of investor holdings, enable electronic transfer of these instruments and are responsible for recording all corporate actions and beneficiary positions related to the ZCZPs.
Registered brokers or trading members may be involved in the distribution of ZCZPs to potential donors or investors. They act as intermediaries in executing transactions, especially if these instruments are made tradable in the future, thereby facilitating wider market access.
The RTA manages the investor interface during the ZCZP issuance process. This includes handling investor applications, maintaining detailed records, overseeing the allotment process, managing refunds and facilitating all communications with ZCZP holders.
Legal advisors play an essential role in structuring the ZCZP instrument and preparing all required documentation. They ensure compliance with regulatory frameworks, including those of SEBI, the Companies Act and other applicable legal provisions, safeguarding the legality and enforceability of the issue.
Financial auditors certify the financial statements submitted by the NPO during the listing process. They are also involved in monitoring post-issue fund utilization to ensure that the proceeds are being used effectively and transparently for the declared social objectives.
