Framework for Offer for Sale (OFS) of Shares to Employees through Stock Exchange Mechanism
Summary
This circular establishes a framework allowing promoters of eligible companies to offer shares to employees via the Stock Exchange Mechanism. It introduces an 'Employee' category for bidding on T+1, with specific pricing, allotment, and payment rules. The provisions aim to enhance efficiency and reduce costs compared to the previous off-exchange procedure.
Text
it has been decided that the promoters can also offer the shares to employees in OFS through the Stock Exchange Mechanism.
OFS to employees shall be on T+1 day along with the retail category under a new category called as "Employee".
For employee OFS, certain number of shares shall be reserved for the employees. The same shall be mentioned in the OFS notice to the stock exchanges by the promoter(s).
Bidding shall be allowed during trading hours on T+1 day only.
Employees shall place bids only at cut-off price of T+1 day. The allotment price shall be based on the Cut-off of the retail category, subject to discount, if any.
The maximum bid amount shall be INR 5,00,000.
Each employee is eligible for allotment of equity shares up to INR 2,00,000. Provided that in the event of under-subscription... unsubscribed portion may be allotted... subject to the total allotment to an employee not exceeding INR 5,00,000.
The employees shall pay upfront the margin to the extent of 100% of the order value in cash or cash equivalents.
Allotment under the “Employee” category shall be based on the PAN details of employees shared by the company on T-1 day. The PAN mis-matched bids shall be rejected.
The promoters shall transfer the total shares of OFS on T-1 day including shares reserved for "Employee” category, to the designated clearing corporation.
The provisions of this circular shall come into effect from 30th day of issuance of this circular.
All recognized stock exchanges and clearing corporations are advised to: take necessary steps... make necessary amendments... bring the provisions... to the notice of the market participants
Source: SecMarx — Framework for Offer for Sale (OFS) of Shares to Employees through Stock Exchange Mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.