An Offer-for-Sale is a procedure that allows a company’s promoter to lower their shareholding by offering their existing shares to the general public. If the company's promoters own more than 75% of shares, they usually opt for the OFS method to reduce their shareholding to a certain level. This method is required to meet the regulatory standard of keeping at least 25% shares with the public.
The OFS announcement is made one or two days before the issue opening, in which a reserved 10% of the issue is set aside for retail investors. Either the Proportionate Basis or the Price Priority Method may be used for share allocation. If investors do not receive any of the shares they applied for, the non-allotted funds will be returned on the same day after 6:00 p.m.
The first day of OFS (T day) is for non-retail investors, and the second day (T+1 day) is for retail investors. The OFS process is only for 2 days. Investors are only allowed to apply for a limit order between 9:15 AM and 3:30 PM during this time. It is a quick and transparent process, giving both retail investors and institutional investors an opportunity to take part.
The OFS announcement is made one or two days before the issue opening, in which a reserved 10% of the issue is set aside for retail investors. Either the Proportionate Basis or the Price Priority Method may be used for share allocation. If investors do not receive any of the shares they applied for, the non-allotted funds will be returned on the same day after 6:00 p.m.
The first day of OFS (T day) is for non-retail investors, and the second day (T+1 day) is for retail investors. The OFS process is only for 2 days. Investors are only allowed to apply for a limit order between 9:15 AM and 3:30 PM during this time. It is a quick and transparent process, giving both retail investors and institutional investors an opportunity to take part.
How Offer For Sale Works
- First, the company announces the OFS 1 or 2 days before opening.
- A 10% portion is usually reserved for retail investors
- T day, the first day of OFS is for non-retail investors, and T + 1 is for retail investors to place their orders.
- Orders can be placed between 9:15 AM and 3:30 PM with limited orders only.
- Either the Proportionate Basis or the Price Priority Method may be used for share allocation.
- Non-allotted funds will be returned to the investors the same day after 6:00 PM.
- The allotted funds can be traded just like regular shares on the stock exchange.
Offer for Sale FAQs
What is an OFS?
The process by which the promoters of the company sell their existing shares to the general public via the stock exchange is known as an OFS.
What is an Example of OFS?
Let’s say ABC is a big company that is already listed on the stock exchange. And the promoter of the company wants to lower their stake from 80% to 60%, then they choose to use the OFS procedure to meet SEBI’s requirement.
What is the difference between IPO and OFS?
In an IPO, the company issues new shares to the public to raise funds for itself. While in OFS, the promoters sell their existing shares to the public to exit.
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