Latest News | OFS: Sebi Says Cos' Promoters Can Offer Shares to Staff Through Stock Exchange Mechanism
Get latest articles and stories on Latest News at LatestLY. In a move aimed at ensuring ease of compliance and lower costs, Sebi on Tuesday said promoters of companies can give shares to their employees under the Offer For Sale (OFS) through the stock exchange mechanism.
New Delhi, Jan 23 (PTI) In a move aimed at ensuring ease of compliance and lower costs, Sebi on Tuesday said promoters of companies can give shares to their employees under the Offer For Sale (OFS) through the stock exchange mechanism.
At present, shares under OFS are offered to the staff outside the stock exchange mechanism.
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Based on the feedback received from stakeholders, Sebi noted it is observed that the said procedure is time-consuming, and involves additional costs and multiple activities.
Against this backdrop, the Securities and Exchange Board of India (Sebi) has decided on a new system that will be in addition to the existing one with respect to OFS for companies' employees.
Under the new system, OFS to employees would be on T+1 day along with the retail category under a new category 'Employee'.
"In order to enhance efficiency, ease of compliance and reduce cost, based on deliberations in the Secondary Market Advisory Committee of Sebi and discussions with stock exchanges and clearing corporations, it has been decided that the promoters can also offer the shares to employees in OFS through the stock exchange mechanism," the regulator said.
According to Sebi, for employee OFS, a certain number of shares should be reserved for the staff and the same should be mentioned in the OFS notice to the stock exchanges by the promoters.
Among other requirements, the maximum bid amount would be Rs 5,00,000, and the employees should pay upfront the margin to the extent of 100 per cent of the order value in cash or cash equivalents.
The bid book of the 'Employee' category would be segregated from the retail category book for allotment.
"The procedure for OFS to employees through the stock exchange mechanism is an additional option to the existing procedure of OFS to employees outside the exchange mechanism," the circular said.
The provisions of the circular "shall come into effect from the 30th day" of the issuance.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)