The Securities and Exchange Board of India (Sebi) has modified the existing framework for conducting an offer for sale (OFS) of securities by companies by allowing non-promoter stakeholders to opt for the same.

Until now, only promoter and promoter group entities were allowed to sell stake through the offer for sale on bourses.

In case a non-promoter shareholder of a company offers scrips through the OFS mechanism, promoter or promoter group entities can participate in the same to purchase shares subject to compliance of certain provisions, the market regulator said in a release.

The OFS mechanism will now be available to companies with a market capitalisation of Rs 1,000 crore and above. The threshold of the market cap will be computed as the average daily market cap for 6 months’ period prior to the month in which the OFS opens.

According to the revised framework, the minimum size of an OFS must be Rs 25 crore. However, the size of the offer can be lesser than Rs 25 crore for promoter and promoter group entities to meet minimum public shareholding norm in a single tranche, the regulator said.

The seller of shares in the OFS must appoint a broker for this purpose, stated the regulator guidelines. .

Investors opting to buy shares offered in the OFS too can hire a broker. In this case, the broker to the seller can also undertake transactions on behalf of eligible buyers. In line with the previous norms, the seller in the OFS can offer a discount to retail investors. The details of discount and percentage of the reservation for retail investors must be disclosed upfront in the notice of OFS to the bourses.

To make it easier for retail investors to participate in the OFS, Sebi has made it mandatory for the sellers to provide the option to place their bids at the cut off price, in addition to placing price bids.

The unitholders of listed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) are also allowed to conduct an OFS through the exchanges. The OFS framework for REITs and InvITs will be equivalent to the OFS framework for the listed companies.

The revised framework will come into effect from February 9, Sebi said.

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