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CS Professional · CSR and Social Governance · Social Stock Exchange

Sahyog Foundation, an NPO, has raised ₹80 lakh through a ZCZP public issue on the Social Stock Exchange for a rural health project. What obligation applies to it after the issue?

The NPO must use the funds for the purpose declared in the offer document and make periodic disclosures on fund utilisation and social impact. Although ZCZP investors receive no returns, transparency and accountability to the contributors continue after the issue.

  1. ANo further obligation, as ZCZP investors have no financial claim
  2. BIt must utilise funds for the stated purpose and disclose use of funds and project impact through periodic reportingCorrect
  3. CIt must pay investors a dividend equal to the surplus generated
  4. DIt must delist from the Social Stock Exchange within one year

Explanation

Even though ZCZP investors get no returns, the NPO must use proceeds for the purpose stated in the offer document and make periodic disclosures on fund utilisation and social impact. The absence of financial return does not remove reporting duties.

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