SEBI relaxes OFS, IPP mechanism

The Securities and Exchange Board of India (SEBI) has relaxed offer for sale (OFS) and institutional placement programme (IPP) mechanisms to help companies smoothly conduct share-sales to achieve the required minimum 25 per cent public shareholding requirement.

The minimum offer size for OFS and IPP would be now Rs25 crore.

Issues of lower than Rs25 crore will also be allowed to achieve minimum public shareholding in a single tranche. Earlier, the offer size had to be the higher amount of one per cent of market capitalisation or Rs25 crore.

In a move that would enable companies sell shares in more tranches, the market regulator has reduced the mandatory 12-week gap required between sales. Promoters would now be able to sell shares using the OFS or IPP routes with a gap of just two weeks.

It also has provided institutional investors an option of bidding with 'ad hoc margin', as against the existing 100 per cent upfront margin in cash. The ad hoc margins would be decided by the stock exchanges.

SEBI also said modification or cancellation of bids will not be allowed during the last 60 minutes from the close of the bidding session, instead of only the last 30 minutes.