Framework for Offer for Sale (OFS)of Shares to Employees through Stock Exchange Mechanism

LegalitySimplified

SEBI vide circular dated January 23, 2024 has issued Framework for Offer for Sale (OFS)of Shares to Employees through Stock Exchange Mechanism. Promoters of eligible companies shall be permitted to sell shares within a period of 2 (two) weeks from the OFS transaction to the employees of such companies. The offer to employee shall be considered as a part of the said OFS transaction. The promoters may at their discretion offer these shares to employees at the price discovered in the said OFS transaction or at a discount to the price discovered in the said OFS transaction.

The procedure for offering shares to the employees in OFS through stock exchanges is as under:

  1. OFS to employees shall be on T+1 day along with the retail category undera new category called as “Employee”.
  2. While bidding, the employee shall select “Employee” category for employee bids. However, the employees can also bid for other categories, as per the applicable limits.
  3. For employee OFS, certain number of shares shall be reserved for the employees. The same shall be mentioned in the OFS notice to the stock exchanges by the promoter(s).
  4. Bidding shall be allowed during trading hours on T+1 day only.
  5. Floor price of the retail category shall be disclosed to the participants under the “Employee” category.
  6. Employees shall place bids only at cut-off price ofT+1 day. The allotment price shall be based on the Cut-off of the retail category, subject to discount, if any.
  7. The maximum bid amount shall be INR 5,00,000.
  8. Each employee is eligible for allotment of equity shares up to INR 2,00,000. Provided that in the event of under-subscription in the employee portion, the unsubscribed portion may be allotted to such employees whose bid amount is more than INR 2,00,000, on a proportionate basis, for a value in excess of INR 2,00,000,subject to the total allotment to an employee not exceeding INR 5,00,000.
  9. The employees shall pay upfront the margin to the extent of 100% of the order value in cash or cash equivalents.
  10. Bids for “Employee” category shall not be displayed on the stock exchange website.
  11. The bid book of “Employee” Category shall be segregated from Retail Category book for allotment.
  12. Allotment under the “Employee” category shall be based on the PAN details of employees shared by the company on T-1 day. The PAN mis-matched bids shall be rejected.
  13. The promoters shall transfer the total shares of OFS on T-1 day including shares reserved for “Employee” category, to the designated clearing corporation.

The provisions of this circular shall come into effect from 30thdayof issuance of this circular.

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