The Securities and Exchange Board of India (SEBI) has introduced a new framework for the Offer for Sale (OFS) of shares to employees through the stock exchange mechanism. This framework allows promoters of eligible companies to sell shares to employees within two weeks of the OFS transaction. The procedure is considered as part of the OFS transaction, and promoters may offer these shares to employees at the price discovered in the OFS transaction or at a discount.
To streamline the process and reduce costs, SEBI has decided to allow promoters to offer shares to employees through the Stock Exchange Mechanism. This new procedure is an additional option to the existing method of OFS to employees outside the exchange mechanism.
Key features of the OFS to employees through the Stock Exchange Mechanism include:
Employee bids are categorized under "Employee" on T+1 day, coinciding with the retail category.
Promoters must reserve a specific number of shares for employees, disclosed in the OFS notice to the stock exchanges.
Bidding is allowed during trading hours on T+1 day, with a disclosed floor price for the "Employee" category.
Maximum bid amount and allotment criteria are outlined, with employees required to pay upfront margins.
Bids for "Employee" category are not displayed on the stock exchange website.
The bid book for the "Employee" category is separate from the Retail Category book.
Allotment is based on PAN details shared by the company on T-1 day.
The circular comes into effect 30 days from its issuance, and recognized stock exchanges and clearing corporations are advised to implement necessary systems, make relevant amendments to bye-laws, rules, and regulations, and inform market participants about these changes. This circular is issued under the powers conferred by the Securities and Exchange Board of India Act 1992 to protect investors' interests and regulate the securities market.