OFS stands for Offer for Sale & serves the same purpose as traditional mechanism of Follow-On Public Offer (FPOs). OFS enables promoters to dilute their holdings in listed companies in a transparent manner with a wider participation through exchange based bidding platform
Offer for Sale (OFS) is a segment wherein Promoter/Promoter Group Entities/ Non Promoters can sell their shares in a transparent manner through the bidding platform for the Exchange. The OFS segment earlier allowed only Promoter/Promoter Group Entities of Listed Companies to act as “Sellers” to dilute/offload their holding to achieve Minimum Public Shareholding of 25% whereas, now the segment has been extended to Non Promoters of eligible Companies holding at least 10% of share capital of the Company.
The Sellers have to inform the Stock Exchange a trading day prior to the opening of the OFS issue. Trading day prior means on T-2 day (T being the OFS issue day), the sellers will inform the Exchanges their intention to open an OFS issue via an OFS announcement notice. The announcement will be disseminated by the Exchange on its website immediately to inform the market.
The announcement notice will have the name of the company, name of sellers, seller members, shares offered, floor price (if any), retail investor reservation and discount etc
The Floor Price is the price at and above which investors can place their orders. The Sellers have to provide a provide floor price on T-2/T-1 day (T being day of OFS)
Who are the Buyers/Investors and which categories of Investors can participate in OFS? All investors registered with the brokers of BSE Ltd. Can participate in the OFS Segment
How Can Retail Investors place orders in OFS? Retail Investors should approach trading members of NSE with whom they have a registered trading account. There are no other documents required. The retail investor needs to provide the price and quantity they are willing to pay for an ongoing OFS issue. How is OFS different from normal market? The OFS system is an order collection system, where the orders are collected via the Exchange bidding platform at and above the floor price mentioned by Sellers. There is no order matching system. Orders below the floor price will not be accepted by the bidding system. Investors can only place buy orders via their trading members but cannot place sell orders