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The government plans to reduce the notice period for conducting offer for sale by promoters through stock exchanges.
This is to avoid putting the companies into a situation like Coal India’s where the stock took a hammering in the run up to the share sale date.
Last year revisionCurrently, the seller has to give notice about intention of selling the stocks two days prior to the actual sale. It was in last August that the government had revised the notice period to two days from the earlier one day to give retail investors some time.
Disinvestment Secretary Aradhana Johri has said that the department has given suggestions regarding reducing the notice period, besides recommendations on aggressive strategy to attract retail investors into OFS.
“Two days means stocks get beaten down for actually three days because day before that people know it is happening, so little bit of reforms on that,” she said while adding that she will shortly meet SEBI to discuss the issue. In case of Coal India, the Centre, on January 28, had informed the stock exchanges about a 5 per cent stake sale along with the option of selling another 5 per cent on January 30. It announced the floor price on January 29.
CIL experienceThe CIL stock took a drubbing from January 25, the day when the stock market got the first indication of the disinvestment set to take place in a couple of days.
Though there was some respite on January 28, the fall continued thereafter. On Tuesday, in fact, the closing price was below the floor price of ₹358.
SEBI has prescribed a minimum 10 per cent reservation in OFS along with a discount of 5 per cent for retail investors.
This development is taking place at a time, when the government is readying itself to take to the OFS route for disinvestment in ONGC, Power Finance Corporation and NHPC, besides others. In queue for disinvestment through OFS are Indian Oil, BHEL, NMDC and Nalco.
A senior SEBI official said the regulator is yet to receive a formal communication in this regard. However, he declined to comment on whether SEBI will consider such a request or not. Though, he did say that notice period was upped only on request from the government.
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