Sebi tweaks Offer For Sale norm

To bring in more flexibility in the Offer For Sale (OFS) framework, regulator Sebi on Friday decided to make major modifications, including doing away with the minimum shareholding requirement for non-promoter shareholders.

OFS has emerged as among the favoured options for share sales.

Currently, non-promoter shareholders holding at least 10 per cent stake in a company and willing to offer shares worth at least Rs 25 crore are eligible to participate in the OFS mechanism.

During Sebi's board meeting on Friday, it was decided to do away with the requirement of minimum 10 per cent shareholding for the non-promoter shareholders for offering shares through the OFS mechanism.

Also, ''the existing cooling off period of +12 weeks for OFS has been reduced to a range of + 2 weeks to +12 weeks based on the liquidity of securities of such eligible companies,'' Sebi said in a release.

Retail investors have been allowed to bid for the unsubscribed portion of non-retail segment as well.

Another change is that the OFS mechanism will be available to unit holders/ sellers of listed REITs (Real Estate Investment Trusts)/ InvITs (Infrastructure Investment Trusts) to offer their holdings.

''These changes are aimed at bringing in more flexibility and efficiency to the OFS framework,'' the release said.

In a move aimed at ensuring more transparency, the utilisation of proceeds raised through preferential issue and Qualified Institutions Placement (QIP) issue would be monitored by credit rating agencies. This would be applicable for issues worth over Rs 100 crore.

Presently, monitoring of utilisation of issue proceeds is required for all public and rights issues of size above Rs 100 crore.

The release said the board has approved the proposal to introduce monitoring of utilisation of proceeds raised through preferential issue and QIP through credit rating agencies as monitoring agencies for issue size exceeding Rs 100 crore.

''This will enable shareholders to know the status of the utilisation of funds raised by the company as against the disclosed objective of the funds mobilised by the issuer company,'' it said.

Sebi board has also cleared the proposal to introduce provisions pertaining to schemes of arrangement for debt-listed entities, handling of unclaimed amounts pertaining to non-convertible securities of listed entities which do not fall within the definition of 'company' under the Companies Act, 2013.

Any amount lying unclaimed in the escrow account for more than seven years would be transferred to the Investor Protection and Education Fund created by Sebi.

Besides, provisions would be introduced for continuous disclosure norms for entities with listed non-convertible securities, pertaining to financial results and related requirements.

According to the release, provisions will be introduced with respect to schemes of arrangement for entities which have listed non-convertible debt securities/ non-convertible redeemable preference shares.

All these proposals were approved at the board meeting.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)