NOTICE
Dated: August 29, 2014
Trading
members are hereby informed that the Exchange has received a Circular from SEBI
vide Ref. No. CIR/MRD/DP/
24 /2014, August 08, 2014 regarding, Expanding the framework of Offer
for Sale (OFS) of Shares through stock exchange mechanism. The contents of the said Circular are
reproduced hereunder for information of trading members.
CIRCULAR
CIR/MRD/DP/ 24 /2014
August 08, 2014
To
All Stock Exchanges Dear Sir / Madam,
Sub: Expanding the framework of Offer for
Sale (OFS) of Shares through stock exchange mechanism
1. Comprehensive guidelines on sale of
shares through Offer for Sale mechanism were issued vide circular no
CIR/MRD/DP/18/2012 dated July 18, 2012. These guidelines have been modified
vide circulars dated CIR/MRD/DP/04/2013 dated January 25, 2013 and
CIR/MRD/DP/17/2013 dated May 30, 2013.
2. While the OFS mechanism has been
successfully used to divest promoter stake, market feedback indicated that there
is a need to take measures to encourage retail participation in OFS, enable
other large shareholders to use the OFS mechanism and expand the universe of
companies to use this framework.
3. Accordingly, the OFS framework shall
be modified as under.
3.1.
The OFS mechanism shall be available to top 200 companies by market
apitalization in any of the last four completed quarters.
3.2.
Any non-promoter shareholder of eligible companies holding at least 10% of
share capital may also offer shares through the OFS mechanism.
3.3.
In case a non-promoter shareholder offers shares through the OFS echanism,
promoters/ promoter group entities of such companies may participate in the OFS
to purchase shares subject to compliance with applicable provisions of SEBI (Issue
of Capital and Disclosure Requirements) Regulations, 2009 and SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011.
3.4. Minimum 10% of the offer size shall
be reserved for retail investors. For this purpose, retail investor shall mean
an individual investor who places bids for shares of total value of not more
than Rs.2 lakhs aggregated across the exchanges. If the cumulative bid value
across exchanges exceeds Rs.2 lakhs in the retail category, such bids shall be
rejected.
3.5.
Individual retail investors shall have the option to bid in the retail category
and the general category. However, if the cumulative bid value of such
investors exceeds Rs.2 lakhs, the bids in the retail category shall become
ineligible.
3.6.
The cut off price i.e. the lowest price at which the entire offer gets sold,
shall be determined based on all valid bids. The cut off price shall be
determined separately for bids received in the retail category and for bids
received in the non-retail category.
3.7.
Upon determining the cut-off price, the offer size reserved for retail
investors shall be allocated to eligible bids of retail investors. Any
unutilized portion shall be offered to non-retail category of investors. In
case of excess demand in retail category at the cut-off price, allocation shall
be on proportionate basis.
3.8.
Indicative price for retail and non-retail portion shall be displayed
separately.
3.9.
Seller shall announce intention of sale of shares latest by 5 pm on T-2 day (T
day being the day of the OFS) to the stock exchange. Stock exchanges shall
inform the market immediately upon receipt of notice.
3.10.
In case of disclosure of the floor price, seller shall disclose the floor price
latest by 5 pm on T-1 day to the stock exchange. Stock exchanges shall ensure
that the same is informed to the market immediately.
3.11. Seller may offer discount to retail
investors. The details of discount and ercentage of reservation for retail
investors shall be disclosed upfront in the notice of OFS to the exchange.
3.12. Discount to retail investors may be
offered as follows:
Multiple Clearing price OFS-
3.12.1.
Retail investors may be allocated shares at a discount to the cut-off price
determined in the retail category, irrespective of the bid price entered by
them. Or
3.12.2. Retail investors may be allocated
shares at a discount to the bid price entered by them.
Single clearing price OFS-
3.12.3. Retail investors shall be
allocated shares at a discount to cut off price determined in the retail
category.
3.13. In case of both of the above
methodologies, the discounted price which shall be the final allocation price
to the retail investors may be below the floor price.
4. Para 1, 2, 5 and para 7 of OFS
circular dated July 18, 2012 stand accordingly modified. All other conditions
for sale of shares through OFS framework
ontained in the circulars CIR/MRD/DP/18/2012 dated July 18, 2012,
CIR/MRD/DP/04/2013 dated January 25, 2013 and CIR/MRD/DP/17/2013 dated May 30,
2013 remain unchanged.
5. Stock Exchanges are advised to:
5.1. take necessary steps and put in
place necessary systems for implementation of above within three weeks from the
date of this circular.
5.2. take steps to implement para 3.9 and
3.10 above with immediate effect.
5.3. make necessary amendments to the
relevant bye-laws, rules and regulations for the implementation of the above
decision.
5.4. bring the provisions of this
circular to the notice of the member brokers of the stock exchange to also to
disseminate the same on their website.
6. This circular is being issued in
exercise of powers conferred under Section 11 (1) of the Securities and
Exchange Board of India Act, 1992 to protect the interests of investors in
securities and to promote the development of, and to regulate the securities
market.
Yours faithfully,
Maninder Cheema
Deputy General
Manager
Email: maninderc@sebi.gov.in
Trading
Members are requested to take note of the aforesaid guidelines of SEBI and act
accordingly.
M.A.V. Raju
General
Manager