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In a move to increase retail investor participation and reduce volatility ahead of an offer-for-sale (OFS), securities market regulator SEBI on Friday tuned the procedure in sync with bank working days.
The Securities and Exchange Board of India has directed companies that opt for share sales through the OFS window to disclose the details ahead of two banking days. Currently, companies disclose advance notice for OFS ahead of two stock exchange trading days.
SEBI also made it mandatory for companies to provide the option to retail investors to place their bids at cut-off price in addition to placing price bids.
SEBI, in a circular on Friday, said, “OFS notice shall continue to be given latest by 5 p.m. on T-2 days. However, T-2 days shall be reckoned from banking day, instead of trading day.”
Check on volatilityThe move may also help the government’s divestment programme, as the Centre can now announce the details on Friday closing hours thus avoiding the volatility ahead of the OFS.
In the past, shares of a host of companies that were to be divested were beaten down ahead of actual sales through OFS.
Now with this announcement, the share price may remain stable as Saturday can be counted as an intermediate banking day, if the government decides to divest its stake through the OFS window on Monday.
However, this notification will not have any impact if the OFS takes place on days other than Mondays, except where banks are open on days closed for trading.
SEBI rolled out the OFS guideline in 2012, mainly to help promoters of companies to dilute their stakes in order to meet the regulator’s minimum public shareholding norm. According to SEBI mandate, companies should have a minimum public shareholding of 25 per cent. This had forced many promoters to dilute their stakes.
The Centre too, has divested its stake in ONGC, Hindustan Copper, Oil India, NMDC, NTPC, National Aluminium, SAIL, MMTC, STC and Coal India, among others.
Prominent other companies include Wipro, Blue Dart Express, JP Ventures, Eros International, Tata Teleservices (Maharashtra), Oracle Financial Services, JSW Energy, Sun TV, Styrolution (ABS), Bharti Infratel and L&T Finance Holdings.
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