Sebi allows non-promoters to sell shares via offer for sale

Notably, the facility of OFS shares will be available on BSE, NSE, and the Metropolitan Stock Exchange of India (MSEI).

Sebi said, all promoters or promoter group entities of such companies that are eligible for trading and are required to increase public shareholding to meet the minimum public shareholding requirements of the regulator.

Under the modified guidelines, Sebi said, OFS mechanism shall also be available to companies with market capitalization of ₹1,000 crore and above, with the threshold of market capitalization computed as the average daily market capitalization for six months’ period prior to the month in which the OFS opens.

“Any promoter or promoter group entity or non-promoter shareholder of such companies may offer shares through this mechanism,” it said.

All investors who are registered with the brokers of stock exchanges other than promoters are eligible to participate under the OFS to buy shares.

In the case of non-promoter shareholders offering shares through the OFS mechanism, Sebi said, “promoters or promoter group entities of such companies may participate in the OFS to purchase shares.”

Also, Sebi directed that promoters of eligible companies are permitted to sell shares within a period of two weeks from the OFS transaction to the employees of such companies. This would be considered part of the said OFS transaction.

The cooling-off period under the OFS mechanism are — around 2 weeks for most liquid shares; around 4 weeks for liquid shares; and 12 weeks for illiquid shares.

“Notwithstanding the cooling off period… the promoter(s)or promoter group entities of companies whose shares are either liquid or illiquidcan offer their shares only through OFSor Qualified Institutional Placement (QIP) with a gap of 2 weeks between successive offers,” Sebi’s guidelines added.

In case the shares are undersubscribed in the OFS either liquid or illiquid shares and if the original OFS is made for compliance with Minimum Public Shareholding (MPS) norms, then promoter or promoter group entities are allowed to offer the unsubscribed portion of the OFS in the open market with a gap of 2 weeks from the closure of the OFS.

The size of the offer for sale will be a minimum of ₹25 crore. However, the size of the offer can be less than ₹25 crore by promoter or promoter group entities to achieve minimum public shareholding in a single tranche.

The seller is required to announce the intention of the OFS latest by 5 pm on T-1 days which can be extended till 6 pm in certain cases. Also, the floor price should be announced by this time period on ‘T-1’ day to the stock exchange.

Sebi directed sellers to offer a discount to retail investors.