NEW DELHI, Feb 19: Leading stock exchange BSE has issued a new set of guidelines for bidding in the Offer for Sale segment, reducing advance notice period to one day and allowing retail investors to place their bids a day later.
Government has been demanding from Sebi that the advance notice should be allowed till evening of the day before OFS, as the share prices of many state-owned companies on the disinvestment list get hammered down due to longer notice.
The government is far behind its disinvestment target of Rs 69,500 crore set for the current fiscal and is not likely to meet it.
Currently, listed companies need to give the OFS notice two banking days in advance, while the bids need to be placed by retail as well as non-retail investors on a single day during the market hours.
Under the new norms, retail investors would place their bids a day later while the companies would be allowed to notify the stock exchanges about their intention for sale of shares latest by 5 pm a day before the day of the OFS.
Stock exchange will have to inform the market immediately upon receipt of such notice.
The notice would detail the name of the firm, seller(s) — promoters, non-promoter shareholder — number of shares being offered, bid time, allocation methodology, seller member(s), discount (if any) and percentage of reservation for retail investors, BSE said in a circular.
The new norms will help in encouraging greater participation of all investors including retail investors.
Only non-retail investors will be permitted to place their bids on the first day of the OFS through stock exchanges, while retail investors can bid on T+1 day and they may place a price bid or opt for bidding at cut off price. T or trade refers to the day of the OFS.
Settlement for bids received on T+1 day will take place on T+3 days. In case of any discount to retail investors, the same will be applicable to bids received on T+1 day.
To ensure that shares reserved for retail investors do not remain unallocated due to insufficient demand by the retail investors, the bids of non-retail investors will be allowed to carry forward to T+1 day.
Unsubscribed portion of the shares reserved for retail investors will be allocated to non-retail bidders on T+1 day at a price equal to cut off price or higher as per the bids. In this regard, option will be provided to such non-retail bidders to indicate their willingness to carry forward their bids to T+1 day.
If the non-retail bidders choose to carry forward their bids to T+1 day, then, they may be permitted to revise such bids. Settlement for such bids shall take place on T+3 day.
Cut off price will be determined based on the bids received on T-day.
According to BSE, minimum 25 per cent of the shares offered shall be reserved for mutual funds and insurance companies, any unsubscribed portion will be available to the other bidders, while at least 10 per cent of the offer size will be reserved for retail investors.
The offer size would be a minimum of Rs 25 crore. However, it can be less than Rs 25 crore so as to achieve minimum public shareholding in a single tranche. (PTI)
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