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TMI BlogComprehensive guidelines on Offer For Sale (OFS) of Shares by Promoters through the Stock Exchange MechanismX X X X Extracts X X X X X X X X Extracts X X X X ..... ruary 27, 2012 on the captioned subject. Several representations/suggestions have been received from the market participants on few provisions of the above circulars. After due examination and deliberation with the market participants it has been decided to replace the procedures and instructions contained in the aforementioned circulars by the following: 1. Eligibility (a) Exchanges The facility of offer for sale of shares shall be available on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). (b) Sellers (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)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntends to sell the shares. 3. Size of Offer for sale of shares The size of the offer shall be a minimum of ` 25 crores. However, size of offer can be less than ` 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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). (iii) 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. (d) Timelines (i) The duration of the offer for sale shall be as per the trading hours of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 (a) Clearing Corporation/ Clearing house shall collect 100% of the order value in cash from non-institutional investors at the order level for every buy order/ bid. Institutional investors shall have an option to pay either 25% of the order value or 100% of the order value in cash at the order level for every buy order/ bid to the Clearing Corporation/ Clearing house. Such funds shall neither be utilized against any other obligation of the trading member nor co-mingled with other segments. (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be intimated to the brokers on T day. b. The settlement shall take place similar to trade for trade basis and shall be completed on T + 1 day. There shall be no netting of settlement at broker's end. 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 mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ller(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. 12. This circular shall supersede the circulars no. CIR/MRD/DP/05/2012 dated February 1, 2012, CIR/MRD/DP/07/2012 dated February 23, 2012 and CIR/MRD/DP/8/2012 dated February 27, 2012. 13. Stock Exchanges are advised to: . a. take necessary steps and put in place necessary systems for implementation of the above. b. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision. c. bring the provisions of this circular to the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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