Comprehensive Framework on Offer for Sale (OFS) of Shares through Stock Exchange Mechanism
Summary
This section establishes the comprehensive regulatory framework for Offer for Sale (OFS) of shares through stock exchange mechanisms in India. It defines key terms such as floor price, liquid shares, and clearing prices to standardize OFS operations. The text outlines eligibility criteria for exchanges, sellers, and buyers, including specific cooling-off periods and size requirements. This section details the procedural timelines for Order Placement, specifying distinct bidding windows and margin requirements for retail versus non-retail investors. It outlines risk management protocols, including mandatory 100% cash margins from clearing corporations and share deposit obligations for sellers. Finally, it establishes allocation rules, reserving specific percentages for mutual funds, insurance companies, and retail investors, while defining cut-off price determination and carry-forward mechanisms. This section details the settlement mechanics for T+1 days, handling of defaults in pay-in, and requirements for issuing contract notes. It further outlines procedures for withdrawing or cancelling an Offer for Sale (OFS) and extends the framework to REITs and InvITs. Finally, it specifies
Text
Section 1.0 provides definitions for terms used in the OFS framework.
“Floor Price” is the minimum price at which the seller intends to sell the shares.
“Illiquid Shares” are securities not forming part of “Most liquid shares” and “Liquid shares”.
“Indicative Price” is the volume weighted average price of all the valid bids.
“Liquid Shares” are listed securities forming part of Group I securities... having mean impact cost of greater than 0.05 percent and less than or equal to 0.10 percent...
“Most Liquid Shares” are listed securities forming part of Group I securities... having mean impact cost of up to 0.05 percent...
“Multiple Clearing Prices” are the prices at which the shares are allocated to the successful bidders in a price priority methodology.
“Shares” are the listed equity shares of the company.
“Single Clearing Price” is the price at which the shares are allocated to the successful bidders in a proportionate basis methodology.
“Size of the Offer” is the number of shares offered * floor price.
“T day” is first day of OFS.
“Units” are the listed units of Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs).
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Source: SecMarx — Comprehensive Framework on Offer for Sale (OFS) of Shares through Stock Exchange Mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.