The Securities and Exchange Board of India (SEBI) by a circular
no CIR/MRD/DP/ 04 /2013 dated 25th January 2013 and CIR/MRD/DP/ 18 /2012
dated 18 July 2012, has permitted the Stock Exchanges to provide a separate
window, i.e. apart from the existing trading system for the normal market
segment, to facilitate promoters of listed companies to dilute/offload
their holding in listed companies in a transparent manner with wider participation.
The comprehensive guidelines on Offer For Sale (OFS) of Shares by Promoters
through the Stock Exchange Mechanism are as follows:
The facility of offer for sale of shares shall be available on Bombay
Stock Exchange(BSE) and National Stock Exchange (NSE).
(i) All promoter(s)/ promoter group entities of such companies that are
eligible for trading and are required to increase public shareholding
to meet the minimum public shareholding requirements in terms Rule 19(2)(b)
and 19A of Securities Contracts (Regulation) Rules, 1957 (SCRR), read
with clause 40A (ii) (c) of Listing Agreement.
(ii) All promoters/promoter group entities of top 100 companies by market capitalisation
in any of the last four completed quarters, market capitalisation being calculated as
average market capitalisation in a quarter. For (i) and (ii) above, the
promoter/promoter group entities should not have purchased and/or sold
the shares of the company in the 12 weeks period prior to the offer and
they should undertake not to purchase and/or sell shares of the company
in the 12 weeks period after the offer. However, within the cooling off
period of +12 weeks, the promoter(s)/promoter group entities can offer
their shares only through OFS/ Institutional Placement Programme (IPP)
with a gap of 2 weeks between successive offers. The above shall also
be applicable on promoter(s) /promoter group entities who have already
offered their shares through OFS/IPP.
All investors registered with the brokers of the aforementioned stock
exchanges other than the promoter(s)/ promoter group entities
a) "Single Clearing Price" is the price at which the shares
are allocated to the successful bidders in a proportionate basis methodology.
b) "Multiple Clearing Prices" are the prices at which the shares
are allocated to the successful bidders in a price priority methodology.
c) Indicative Price is the volume weighted average price of all the valid
d) "Floor Price" is the minimum price at which the seller intends
to sell the shares.
3. Size of Offer for sale of shares
The size of the offer shall be a minimum of Rs. 25 crores. However, size
of offer can be less than Rs. 25 crores so as to achieve minimum public
shareholding in a single tranche.
4. Advertisement and offer expenses
a) Advertisements about the offer for sale of shares through stock exchange(s)
, if any, shall be made after the announcement/ notice of the offer for
sale of shares to the stock exchanges in accordance with para 5 (b) below
and its contents shall be restricted to the contents of the notice as
given to the stock exchange under Para 5 (b).
b) All expenses relating to offer for sale of shares through stock exchange(s)
shall be borne by the seller(s).
5. Operational Requirements
(a) Appointment of Broker
The Seller(s) will appoint broker(s) for this purpose. The Seller’s broker(s)
may also undertake transactions on behalf of eligible buyers.
(b) Contents of the announcement/ Notice of the Offer for sale of shares
Seller(s) shall announce the intention of sale of shares at least one
clear trading day prior to the opening of offer, along with the following
(iii) Name of the seller(s) (promoter/ promoter group) and the name of
the company whose shares are proposed to be sold.
(iv) Name of the Exchange(s) where the orders shall be placed. In case
orders are to be placed on both BSE and NSE, one of them shall be declared
as the Designated Stock Exchange ("DSE").
(v) Date and time of the opening and closing of the offer.
(vi) Allocation methodology i.e. either on a price priority (multiple
clearing prices) basis or on a proportionate basis at a single clearing
(vii) Number of shares being offered for sale.
(viii) The maximum number of shares that the seller may choose to sell
over and above the offer made at point (v) above. The name of the broker(s)
on behalf of the seller(s).
(ix) The date and time of the declaration of floor price, if the seller(s)
chooses to announce it to the market. Alternatively, a declaration to
the effect that the floor price will be submitted to the DSE in a sealed
envelope that shall be disclosed post closure of the offer.
(x) Conditions, if any, for withdrawal or cancellation of the offer.
(c) Floor price
(i) In case the seller chooses to disclose the floor price, the seller(s)
shall declare it after the close of trading hours and before the close
of business hours of the exchanges on T-1 day else the seller(s) shall
give the floor price in a sealed envelope to DSE before the opening of
the offer. (T day being the day of the offer for sale).
(ii) The floor price if not declared to the market, shall not be disclosed
to anybody, including the selling broker(s). Sealed envelope shall be
opened by the DSE after the closure of the offer for sale and the floor
price suitably disseminated to the market.
(i) The duration of the offer for sale shall be as per the trading hours
of the secondary market and shall not exceed one trading day.
(ii) Orders shall be placed during trading hours.
(e) Order Placement
(i) A separate window for the purpose of sale of shares through OFS shall be created. The following orders shall be valid in the OFS window:
A. Orders with 100% of margin paid upfront by institutional investors and non-institutional investors. Such orders can be modified or canceled at any time during the trading hours.
B. Orders without paying upfront margin by institutional investors only. Such orders cannot be modified or cancelled by the investors or stock brokers, except for making upward revision in the price or quantity.
(ii) Cumulative bid quantity shall be made available online to the market throughout the trading session at specific intervals in respect of orders with 100% upfront margin and separately in respect of orders placed without any upfront margin. Indicative price shall be disclosed to market throughout the trading session. The indicative price shall be calculated based on all valid bids/orders.
(iii) If the security has a price band in the normal segment, the same
shall not apply for the orders placed in the offer for sale. Stock specific
tick size as per the extant practice in normal trading session shall be
made applicable for this window.
(iv) In case of shares under offer for sale, the trading in the normal
market shall also continue. However, in case of market closure due to
the incidence of breach of 'Market wide index based circuit filter', the
offer for sale shall also be halted.
(v) Only limit orders/ bids shall be permitted.
(vi) Multiple orders from a single buyer shall be permitted.
(vii) In case floor price is disclosed, orders/ bids below floor price
shall not be accepted.
6. Risk Management
(i) Clearing Corporation shall collect 100% margin in cash from non-institutional
investors. In case of institutional investors who place orders/bids with
100% of margin upfront, custodian confirmation shall be within trading
hours. In case of institutional investors who place orders without upfront
margin, custodian confirmation shall be as per the existing rules for
secondary market transactions. The funds collected shall neither be utilized
against any other obligation of the trading member nor co-mingled with
(ii) In case of order/bid modification or cancellation, such funds shall
be released/ collected on a real time basis by clearing corporation.
(iii) The seller(s) shall deposit the entire quantity of shares offered
for sale including the additional shares disclosed at Para 5(b)(vi) as
pay-in with the clearing corporation/clearing house of DSE prior to the
commencement of the offer. No other margin shall be charged on the seller(s).
(i) Minimum of 25% of the shares offered shall be reserved for mutual
funds and insurance companies, subject to allocation methodology. Any
unsubscribed portion thereof shall be available to the other bidders.
(ii) The orders shall be cumulated by the DSE immediately on close of
the offer. Based on the methodology for allocation to be followed as disclosed
in the notice, the DSE shall draw up the allocation. i.e. either on a
price priority (multiple prices) basis or on a proportionate basis at
a single clearing price.
(iii) No allocation will be made in case of order/ bid is below floor
(iv) No single bidder other than mutual funds and insurance companies
shall be allocated more than 25% of the size of offer for sale.
(v) The allocation details shall be shared by the DSE with the other exchange
after the allocation is crystallized.
8. (i) Settlement
a) The allocation and the obligations resulting thereof shall be intimated
to the brokers on T day.
b) Settlement shall take place on trade for trade basis. For non-institutional
orders/bids and for institutional orders with 100% margin, settlement
shall take place on T+1 day. In case of orders/bids of institutional investors
with no margin, settlement shall be as per the existing rules for secondary
c) Funds collected from the bidders who have not been allocated shares
shall be released after the download of the obligation.
d) On T+1 day, to the extent of obligation determined, the clearing Corporation/
Clearing house of DSE shall transfer such number of shares to the clearing
corporation/clearing house of the other stock exchange, without consideration
of money. Excess shares, if any, shall be returned to seller broker(s).The
direct credit of shares shall be given to the demat account of the successful
bidder provided such manner of credit is indicated by the broker/bidder.
(ii) Handling of default in pay-in
a.In case of default in pay-in by any investor, 10% of the order value
shall be charged as penalty from the investor and collected from the broker.
This amount shall be credited to the Investor Protection Fund of the stock
b. The price at which allotments have been made based on the allocation
on T day shall not be revised as a result of any default in pay-in.
c. Issuer shall have the option to cancel in full or conclude the offer.
d. Allotment details after settlement shall also be disseminated by the
e. Allocation details after settlement shall be consolidated by the DSE
and excess shares, if any, shall be returned by the respective Clearing
Corporation/ Clearing house to the seller(s) broker(s).
f. Settlement Guarantee Fund shall not be available for OFS through stock
9. Issuance of Contract Notes
The brokers shall be required to issue contracts note to its clients based
on the allotment price and quantity in terms of conditions specified by
10. Withdrawal of offer
The offer for sale may be withdrawn prior to its proposed opening. In
such a case there will be a cooling off period of 10 trading days from
the date of withdrawal before an offer is made once again. The stock exchange(s)
shall suitably disseminate details of such withdrawal.
11. Cancellation of offer
Cancellation of offer shall not be permitted during the bidding period.
If the seller(s) fails to get sufficient demand at or above the floor
price, he may choose to either conclude the offer or cancel it in full.
The seller may also choose to conclude the offer or cancel it in full,
in case of defaults in settlement obligation.