SEBI Notifies Zero Coupon Zero Principal Instruments as Securities under Securities Contracts (Regulation) Act 1956

The Securities and Exchange Board of India(SEBI) Vide Notification F. No. 1/16/SM/2021 dated 15th July 2022 Notifies Zero Coupon Zero Principal Instruments as Securities under Securities Contracts (Regulation) Act 1956.

Securities Market and Investors in Securities Market fall under SEBI’s purview. The phrase “Securities” so assumes significance. Section 2 of the Securities Contracts (Regulation) Act, 1956 defines securities under clause (h).

This definition now includes the new phrase ZERO COUPON ZERO PRINCIPAL INSTRUMENT. Companies formed in accordance with Section 8 of the Companies Act are exempt from paying dividends; as a result, a Not-for-Profit Organization will issue a Zero Coupon Zero Principal Instrument and register it with the Social Stock Exchange segment of a reputable Stock Exchange in accordance with SEBI regulations.

The Notification is Given Below:

S.O.3210(E).— In exercise of the powers conferred by sub-clause (iia) of clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Central Government hereby declares “zero coupon zero principal instruments” as securities for the purposes of the said Act.

Explanation.– For the purpose of this notification, “zero coupon zero principal instrument” means an instrument issued by a Not for Profit Organisation which shall be registered with Social Stock Exchange segment of a recognised Stock Exchange in accordance with the regulations made by the Securities and Exchange Board of India.

For Official Notification Download PDF Given Below: