Making it easier to buy and sell shares, the Securities and Exchange Board of India, on Friday, allowed a larger set of companies and entities, including non-promoters, to use the offer for sale (OFS) mechanism for selling shares while providing for discount and reserved quota to retail investors.
Revising its OFS regulations, in line with board approval in June, SEBI said the OFS mechanism would now be available to top 200 companies by market capitalisation in any of the last four completed quarters. So far, top 100 companies were allowed to tap this fast-track route, while only promoter shareholders could sell their shares.
Following the changes, any non-promoter shareholder with at least 10 per cent stake in eligible companies would be allowed to offload shares through the OFS route.
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A minimum of 10 per cent of the offer size will be reserved for retail investors. For this purpose, retail investor would mean an individual who places bids for shares of the total value of not more than Rs.2 lakh aggregated across the exchanges.
Individual retail investors will have the option to bid in the retail category and the general category as well. However, if the cumulative bid value of such investors exceeds Rs.2 lakh, the bids in the retail category will become ineligible.
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The cut-off price, or the lowest price at which the entire offer gets sold, would be determined based on all valid bids. The cut-off price would be determined separately for bids received in the retail category and for bids received in the non-retail category.
Upon determining the cut-off price, the offer size reserved for retail investors would be allocated to eligible bids of retail investors. Any unutilised portion would be offered to non-retail category of investors.
In case of excess demand in the retail category at the cut-off price, the allocation would be on a proportionate basis.