Cutting down the advance notice period in OFS by markets regulator Sebi has provided operational flexibility to issuers while fully protecting the interest of retail investors, Disinvestment Secretary Neeraj Gupta said today.
Sebi had cut down advance notice period for Offer For Sale (OFS) to one day and allowed retail investors to place their bids a day later for such share sales.
"We find, it (the regulatory changes) will take care of some of the operational issue which OFS issue has been facing and the process can be run efficiently. The interest of retail shareholders have been fully protected," Gupta told PTI.
The Department of Disinvestment has been demanding for a long time from Sebi that the advance notice should be allowed till evening of the day before OFS, as the share prices of many PSUs appeared to get hammered down due to longer notice.
Currently, the listed companies need to give an advance notice for share sales through this OFS route two banking days in advance, while the bids need to be placed by retail as well as non-retail investors in a single day during market hours.
Under the modified norms, companies will inform the stock exchanges about their intention for sale of shares latest by 5 pm a day before the day of the OFS.
While institutional investors would bid on the first day, the bidding for retail investors would open on the second day. The settlement for the OFS would happen on the third day (T+3). T refers to the day of the OFS.
"Transaction will continue for two days and offers better flexibilities. It's a good thing for OFS scheme," Gupta said.
Explaining the scheme, Gupta said if the retail investors portion remains subscribed, the same will be alloted to the institutional investors.
In the current fiscal the government has mopped up over Rs 13,300 crore through stake sale in 5 PSUs -- IOC, PFC, REC, Engineers India and Dredging Corp -- through the OFS mechanism. But it is far behind its disinvestment target of Rs 69,500 crore set for the current fiscal.
Sebi has been of the view that retail investors need to be given more time to arrange funds to participate in the OFS, which was introduced in 2012 as an easy and faster route for sale of shares by already-listed firms to the public shareholders.
