Sebi modifies norms for Offer for Sale

MUMBAI: Market regulator Sebi on Friday issued modified guidelines for Offer for Sale (OFS) mechanism or auction route, preferred by companies to offload shares in order to comply with minimum shareholding norms.
To make the OFS process more transparent, Sebi has said that indicative price of the offer should be disclosed throughout the trading session and the same should be calculated on the basis of “all valid bids/orders”.
Further, institutional as well as non-institutional investors -- who pay 100 per cent margin requirement upfront -- while bidding in an OFS issue would be allowed to modify or cancel their orders.
Currently, all investors are required to pay upfront margin and the bids cannot be modified later.
Only promoters of top 100 companies by market capitalisation, in any of the last four completed quarters, are eligible for selling shares through auction route.
“With the deadline of June 2013 to achieve minimum public shareholding approaching, to encourage promoters to offload their shares through OFS route and based on market feedback, it has been decided to modify the OFS framework to make it more economical, efficient and transparent,” Sebi said in a circular. Sebi said that OFS has been found to be useful by market participants and popular for offloading shares to achieve minimum public shareholding.