The Securities and Exchange Board of India (SEBI) has relaxed regulations for offer for sale (OFS) of shares through stock exchange, among other reform measures. OFS is a financial tool used to issue additional stocks in a listed company held by its promoter.
According to SEBI, the reviewed framework will expand the number of companies, which can avail the use of OFS mechanism.
"In order to expand the universe of companies to whom OFS mechanism is available, presently being top 200 companies by market capitalisation, and to bring clarity relating to the conditions laid down for cancellation of OFS...
"OFS mechanism shall be available for shareholders of companies with market capitalisation of Rs1,000 crore and above, with the threshold of market capitalisation computed as the average daily market capitalisation for six months prior to the month in which the OFS opens," SEBI said in a statement released after a board meeting.
In case of any increase or decrease in estimated issue size by more than twenty percent, fresh filing of the offer document with the board is required. At present, such requirement is for both fresh issues and offer for sale.
Here are the modification in existing OFS mechanism...
1. Expanding the list of eligible companies
OFS mechanism shall be available for shareholders of companies with market capitalization of Rs1,000 crore and above, with the threshold of market capitalization computed as the average daily market capitalisation for six months prior to the month in which the OFS opens.
2. Cancellation of Offer
If the seller fails to get sufficient demand from non-retail investors at or above the floor price on T day, then the seller may choose to cancel the offer, post bidding, in full (both retail and non-retail) on T day and not proceed with offer to retail investors on T+1 day.
In another key decision SEBI decided to relax the regulations to list startups on stock exchanges.
Accordingly, the market regulator decided to rename the institutional trading platform as the innovators growth platform (IGP).
"In order to be eligible for listing on the IGP, the issuer shall be a company which is intensive in the use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology to provide products, services or business platforms with substantial value," the statement said.
As per the statement, 25% of the pre-issue capital of the issuer company for at least a period of two years shall be held by qualified institutional buyers, family trust with net-worth of more than Rs500 crore, category III foreign portfolio investor (FPI), a pooled investment fund with minimum assets under management of $150 million and registered with a financial sector regulator in the jurisdictions where it is resident.
Accredited investors for the purpose of IGP would include any individual with total gross income of Rs50 lakh annually and who has minimum liquid net worth of Rs5 crore or any corporate body with net worth of Rs25 crore, SEBI says.
SEBI board also decided to clubb investment limit of foreign portfolio investors (FPIs) on the basis of common ownership of more than 50% or common control. "However, in the case of appropriately regulated public retail funds, investment limits will not be clubbed on the basis of common control," it added.
The market regulator said it will carry out necessary amendments and issue circular or guidelines.