TMI BlogComprehensive Framework on Offer for Sale (OFS) of Shares through Stock Exchange MechanismX X X X Extracts X X X X X X X X Extracts X X X X ..... s forming part of Group I securities as per SEBI circular No.MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 and having mean impact cost of greater than 0.05 percent and less than or equal to 0.10 percent for a trade of Rupees One Lakh. 1.5 Most Liquid Shares are listed securities forming part of Group I securities as per SEBI Circular No.MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 and having mean impact cost of up to 0.05 percent for a trade of Rupees One Lakh. 1.6 Multiple Clearing Prices are the prices at which the shares are allocated to the successful bidders in a price priority methodology. 1.7 Shares are the listed equity shares of the company. 1.8 Single Clearing Price is the price at which the shares are allocated to the successful bidders in a proportionate basis methodology. 1.9 Size of the Offer is the number of shares offered * floor price. 1.10 T day is first day of OFS. 1.11 Units are the listed units of Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs). 2.0 Eligibility 2.1 Exchanges: The facility of OFS of shares shall be available on Bombay Stock Exchange (BSE), National Stock Exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on exchanges and are as under: i. For most liquid shares: +2 weeks ii. For liquid shares: +4 weeks and iii. For illiquid shares: +12 weeks 2.4.2 Notwithstanding the cooling off period mentioned above, the promoter(s) or promoter group entities of companies whose shares are either liquid or illiquid can offer their shares only through OFS or Qualified Institutional Placement (QIP) with a gap of 2 weeks between successive offers. 2.4.3 In case of under subscription of OFS of a company whose shares are either liquid or illiquid and if the original OFS is made for compliance with Minimum Public Shareholding (MPS) norms, the promoter(s) or promoter group entities are allowed to offer the unsubscribed portion of the OFS only for the purpose of MPS compliance in the open market with a gap of 2 weeks from the closure of OFS, subject to compliance with all other applicable conditions. 3.0 Size of OFS of Shares The size of the offer shall be a minimum of INR 25 Cr. However, size of offer can be less than INR 25 Cr. by promoter(s) or promoter group entities so as to achieve minimum public shareholding in a single tranche. 4.0 Advertisement and Offer Expenses 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame is informed to the market immediately. 5.3.2 The promoters may at their discretion offer these shares to employees at the price discovered in the said OFS transaction or at a discount to the price discovered in the said OFS transaction. 5.3.3 Promoters shall make necessary disclosures in the OFS notice to the exchange including number of shares offered to employees and discount offered, if any. 5.4 Discount by Seller 5.4.1 Seller may offer discount to retail investors. The details of discount and percentage of reservation for retail investors shall be disclosed upfront in the notice of OFS to the exchange. 5.4.2 Discount to retail investors may be offered as follows: a) Multiple Clearing Price OFS i. Retail investors may be allocated shares at a discount to the cut-off price determined in the retail category, irrespective of the bid price entered by them. Or, ii. Retail investors may be allocated shares at a discount to the bid price entered by them. b) Single Clearing Price OFS i. Retail investors shall be allocated shares at a discount to cut off price determined in the retail category. c) In case of both of the above methodologies, the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the bid. f) Bidding by retail investors on T+1 Day shall be based on the cut-off price determined in the non-retail category. In case of under subscription in the non-retail category, the retail investors shall be allowed to place their bids at floor price on T+1 day. g) Seller may offer discount to retail investors on the cut off price determined based on the bids received on T+1 day. h) Retail bids below the cut-off price of T day or the floor price, whichever is applicable, shall be rejected. Retail bids at cut-off price shall be allocated on proportionate basis in case of over subscription. i) Any unsubscribed portion of non-retail category after allotment shall be eligible for allocation in the retail category and vice versa. 5.6.4 Cumulative bid quantity shall be made available online to the market throughout the trading session at specific intervals in respect of orders with 100% upfront margin and separately in respect of orders placed without any upfront margin. Indicative price shall be disclosed to market throughout the trading session for non-retail bids. The indicative price shall be calculated based on all valid bids or orders. 5.6.5 If the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value in cash or cash equivalents. Pay-in and pay-out for retail bids shall take place as per normal secondary market transactions. 6.3 In case of order or bid modification or cancellation, such funds shall be released or collected on a real time basis by the clearing corporation. 6.4 The seller(s) shall deposit the entire quantity of shares offered for sale including the additional shares disclosed, in terms of paragraph 5.2.6 above, as pay-in with the designated clearing corporation under the framework of interoperability of clearing corporations prior to the commencement of the offer. No other margin shall be charged on the seller(s). 7.0 Allocation 7.1 Minimum of 25% of the shares offered shall be reserved for mutual funds and insurance companies, subject to allocation methodology. Any unsubscribed portion thereof shall be available to the other bidders. 7.2 Minimum 10% of the offer size shall be reserved for retail investors. For this purpose, retail investor shall mean an individual investor who places bids for shares of total value of not more than INR 2 lakhs aggregated across the exchanges. If the cumulative bid value across exchanges exceeds INR 2 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r institutional orders with 100% margin, settlement shall take place on T+1 day. In case of orders or bids of institutional investors with no margin, settlement shall be as per the existing rules for secondary market transactions. 8.3 Settlement for bids received on T+1 day shall be carried out as per the existing rules for secondary market transactions. 8.4 Funds collected from the bidders who have not been allocated shares shall be released after the download of the obligation. 8.5 On the day prior to settlement, to the extent of obligation determined, the designated clearing corporation of the seller broker(s) under the framework of interoperability among clearing corporations shall transfer such number of shares to the other interoperable clearing corporations. The other interoperable clearing corporation(s) shall transfer funds consideration to designated clearing corporation on settlement day. Excess shares, if any, shall be returned to seller broker(s). The direct credit of shares shall be given to the demat account of the successful bidder provided such manner of credit is indicated by the broker or bidder. 9.0 Handling of Default in Pay-in 9.1 In case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision on OFS issued through various SEBI circulars mentioned as under shall be rescinded with effect from the date of implementation of this circular: i. Circular No.CIR/MRD/DP/18/2012 dated July 18, 2012, ii. Circular No.CIR/MRD/DP/04/2013 dated January 25, 2013 , iii. Circular No.CIR/MRD/DP/17/2013 dated May 30, 2013 , iv. Circular No.CIR/MRD/DP/24/2014 dated August 08, 2014, v. Circular No.CIR/MRD/DP/32/2014 dated December 01, 2014 , vi. Circular No.CIR/MRD/DP/12/2015 dated June 26, 2015 , vii. Circular No.CIR/MRD/DP/36/2016 dated February 15, 2016 , viii. Circular No.CIR/MRD/DP/65/2017 dated June 27, 2017 and ix. Circular No.SEBI/HO/MRD/DOP I/CIR/P/2018/159 dated December 28, 2018 D. Stock Exchanges are advised to: i. take necessary steps and put in place necessary systems for implementation of above. ii. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above. iii. bring the provisions of this circular to the notice of the member brokers of the stock exchange and also to disseminate the same on their website. E. This circular is issued in exercise of the powers co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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