Comprehensive guidelines on Offer For Sale (OFS) of Shares by Promoters through the Stock Exchange Mechanism
Summary
This circular establishes comprehensive guidelines for the Offer for Sale (OFS) of shares by promoters through stock exchange mechanisms. It defines eligibility criteria for sellers, buyers, and exchanges, while providing specific definitions for pricing and allocation methodologies. The document outlines operational requirements, risk management protocols, and allocation rules to ensure orderly trading. This section outlines the settlement procedures, including timelines and share transfers between clearing corporations. It details penalties for default in pay-in and grants the issuer options to cancel or conclude the offer under specific circumstances. Finally, it mandates the issuance of contract notes, withdrawal protocols, and the supersession of previous circulars.
Text
The facility of offer for sale of shares shall be available on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
All promoter(s)/ promoter group entities of such companies that are eligible for trading and are required to increase public shareholding... or top 100 companies based on average market capitalization.
The promoter/promoter group entities should not have purchased and/or sold the shares... in the 12 weeks period prior to the offer and they should undertake not to purchase and/or sell shares... in the 12 weeks period after the offer.
All investors registered with the brokers of the aforementioned stock exchanges other than the promoter(s)/ promoter group entities.
'Single Clearing Price' is the price at which shares are allocated proportionately; 'Multiple Clearing Prices' refers to price priority methodology; 'Indicative Price' is VWAP of valid bids; 'Floor Price' is the minimum selling price.
The size of the offer shall be a minimum of ` 25 crores. However, size of offer can be less than ` 25 crores so as to achieve minimum public shareholding in a single tranche.
Advertisements shall be made after announcement to exchanges and restricted to notice contents. All expenses relating to offer for sale shall be borne by the seller(s).
The Seller(s) will appoint broker(s) for this purpose. The Seller’s broker(s) may also undertake transactions on behalf of eligible buyers.
Seller(s) shall announce the intention of sale... at least one clear trading day prior to the opening of offer, along with specified information including seller name, exchange, dates, allocation methodology, number of shares, floor price details, and withdrawal conditions.
In case the seller chooses to disclose the floor price, the seller(s) shall declare it after close of trading hours on T-1 day else give in sealed envelope to DSE before opening. Undisclosed floor price shall not be disclosed to anybody.
The duration of the offer for sale shall be as per trading hours... and shall not exceed one trading day. Placing of orders and funds shall take place only during trading hours.
A separate window shall be created. Modification/Cancellation allowed only for bids with 100% upfront margin, except during last 60 minutes. Only limit orders permitted. Multiple orders from single buyer permitted.
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Source: SecMarx — Comprehensive guidelines on Offer For Sale (OFS) of Shares by Promoters through the Stock Exchange Mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.