SEBI Revises ‘Offer for Sale’ Framework, Mandates Employees to Place Bids on T+1 at T Day’s Cut-off Price

Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/82; Dated: 14.06.2024

Earlier, SEBI vide circular dated January 23, 2024, issued a framework for an ‘Offer for Sale’ (OFS) of shares to employees via a stock exchange mechanism. Paragraph 5 of the circular prescribed the procedure for offering shares to the employees in OFS via stock exchanges. As per the procedure, employees must place bids only at the cut-off price of T+1 day.

SEBI has now revised the framework for the ‘offer for sale’ of shares to employees via the stock exchange mechanism. As per the revised norms, SEBI now mandates that employees must place bids on T+1 day at the cut-off price of T day. Accordingly, the allotment price must be based on the cut-off of T day, subject to discount, if any.

Further, all Market Infrastructure Institutions (MIIs) are advised to take the necessary steps and put the necessary systems in place to implement the circular. The circular shall be effective from the 30th day of its issuance, i.e., July 14, 2024.

This change aims to enhance transparency and consistency by requiring employees to place bids at the T-day cut-off price, thereby streamlining the bidding process and ensuring a more accurate valuation in the offer for sale mechanism.

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