SEBI Mandates Demat Before DRHP – Expands SSE NPO Eligibility

PR No.33/2025, Dated: 18.06.2025

1. Introduction

The Securities and Exchange Board of India (SEBI), in its 210th Board Meeting, approved crucial amendments to streamline public offerings and enhance participation of Not-for-Profit Organisations (NPOs) under the Social Stock Exchange framework. The two major decisions include:

2. Mandatory Dematerialisation of Existing Securities Prior to DRHP Filing

To further promote dematerialisation and strengthen transparency in the listed space, SEBI has amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. As per the amendment:

• Select shareholders will now be required to dematerialise their existing securities before the company can file the Draft Red Herring Prospectus (DRHP).
• This move ensures that all public issue participants are aligned with the dematerialisation framework, reducing risks related to physical shareholding.
• The measure is aimed at enhancing investor protection and improving governance in the capital markets.

3. Expansion of NPO Eligibility Under the Social Stock Exchange (SSE) Framework

To widen the scope and reach of the Social Stock Exchange, the SEBI Board has approved the inclusion of the following entities as eligible NPOs:

• Trusts registered under the Indian Registration Act, 1908
• Charitable societies registered under relevant State legislation
• Companies registered under Section 25 of the erstwhile Companies Act, 1956

This move will:

• Allow a broader range of social entities to raise funds through the SSE platform.
• Encourage greater participation in social impact initiatives by improving access to capital.
• Ensure parity between older and newer legal entities operating with similar not-for-profit objectives.

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