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OFS, introduced by the Securities and Exchange Board of India,(SEBI) in February 2012, helps promoters of listed companies dilute stake through an exchange platform. The promoters are the sellers. The bidders can include market participants such as individuals, companies, qualified institutional buyers, and foreign institutional investors. The facility is available on the Bombay Stock Exchange and the National Stock Exchange (NSE). Only the top 200 companies by market capitalization in any of the four completed quarters can use the facility. OFS bids require a 100% cash margin.
First, there is no need to fill the application form as the system is platform-based. In the case of no allotment, the money is refunded the same day. The process is more transparent than that for initial public offers (IPO) as the system runs on a real-time basis. "Also, an investor can put multiple bids above the floor price set by the company, unlike in IPOs, where the bid price cannot be more than one. He can also modify/cancel the bid anytime during OFS market hours.
In an OFS, a buyer has to provide a bid in order to acquire the shares. The company sets a ‘floor price.’ Buyers cannot bid at a price below the floor price rather can place above Bid price or at the cut off price. Bidding at Floor price and above ensures that the bids will be considered. Allocation in such cases shall be subject to final price discovery. Bidding at "cut-off" ensures that the retail investor will get an allotment where the allotted quantity will depend upon the demand at various price points Once the bids are placed, shares are allocated to the different buyers, with SAS ONLINE, OFS can be applied in Retail category only and Application amount should be minimum of Rs.10,000 and maximum of Rs.2 lakh.
For more information on Offer For Sale kindly refer to the attached document.