What is Offer for sale – Eligibility, Pricing, Allocation, Payment


By VRP

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Offer for sale (OFS): Sell is a separate window assisted in by the stock exchanges in which Promoter/Promoter Group Entities/ Non Promoters of an already noted business can offer their shares through an exchange based bidding platform.

This was at first allowed by SEBI to make it possible for the Promoters of listed business to satisfy the minimum public shareholding requirements in regards to Securities Agreements (Guideline) Guidelines by way of diluting/offloading their holding in listed business in a transparent way. Now the sector has been extended to Non Promoters of eligible Business holding at least 10% of share capital of the Company.

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Who are eligible to get involved?

All market individuals who are registered with trading brokers of the stock exchange can take part/bid in the offer for sale. This consists of:

1 Retail Financiers
2 Shared Funds
3 Foreign Portfolio Financier (FPIs)
4 Insurer
5 Certified institutional Buyers (QIBs)
6 Non Resident Indians (NRIs)
7 Trusts, HUFs, Body Corporates, Proprietary etc.
Offer for sale

Prices of the securities:

Interested participants will need to give quotes to the Trading Member specifying the quantity and the price at which they want to bid for an offered issue. Also, the retail investors can bid at cut off price by picking the same in application while bidding. The seller must inform the exchange of the flooring rate a minimum of a day before the day of real problem

Allowance under Sell:

Bids that are not less than the flooring rate specified by the seller are accepted by the exchange. Rest all is declined. If a minimum lot has actually been defined by the sellers while announcing the OFS, then the exact same will be disclosed by the exchange to the public whose quotes are accepted just when their order size is not listed below the minimum lot. If there is no such minimum lost specified by the sellers, one can bid for even a single share. Quotes matching with the cut off price will be allotted the shares proportionally and any excess amount will be refunded.

As per the SEBI standards on offer for sale, it is necessary for the sellers to offer at least 10% appointment for retail financiers and 25% for Insurance Provider and Mutual Funds, subject to the allocation approach. No single bidder other than shared funds and insurance companies will be assigned more than 25% of the size of OFS.

By the end of the OFS open day after closure, the Exchange will share the allocation report with the Trading Members. Bidders can contact these members of the exchange to understand the statistics of their allotment.

Payment:

As per SEBI OFS guidelines, all financier bids should be backed by 100% cash up front. Otherwise, the quotes will not be accepted by the exchange.

Discount for Retail Investors:

As per the SEBI guidelines on deal for sale, the Sellers can provide discounts to retail investors.

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