At present, OFS can be used by promoter and non-promoter shareholders subject to certain conditions. Existing norms said non-promoter shareholders holding at least 10% of the share capital of any eligible company and willing to sell at least ₹25 crore of shares were allowed to use the OFS mechanism. These limits stood in the way of the following transaction, for instance. A non-promoter shareholder with 5% of the capital in an eligible company, with the value of holding at ₹100 crore, could not offer shares through the OFS mechanism.
Sebi has sought to remove such anomalies. “So far, what used to happen, when institutional investors were selling through negotiated blocks via brokers, retail investors had no way to participate and buy such stocks even though it was available at a discount,” said Jimeet Modi, CEO, SAMCO Group. “As these deals with discounts were executed through block windows, it was not available for retail investors in the earlier setup, but now the field has been levelled and if retail investors wish to participate in such deals, they will not miss the bus of discounted price.” Sebi said the OFS mechanism would also be available to companies with market capitalization of ₹1,000 crore and above.
The regulator has allowed promoters to sell shares within a period of two weeks from the OFS transaction to their employees.
The offer to employees shall be considered a part of the said OFS transaction, Sebi said.
The cooling-off period under the OFS mechanism for most liquid shares is around two weeks, for liquid shares around four weeks and for illiquid shares it is around 12 weeks.
“Notwithstanding the cooling-off period… 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,” Sebi said on Tuesday.The size of offer should be a minimum of ₹25 crore. But the size of offer can be less than ₹25 crore by promoter or promoter group entities so as to achieve minimum public shareholding in a single tranche, the regulator said.
