Analysis and Insights into the world of IPOs and investing in India

Saturday, December 10, 2016

How is OFS different from normal market?

An Offer for Sale (OFS) is a form of share sale. OFS mechanism facilitates the promoters of an already listed company to sell or dilute their existing shareholdings through an exchange based bidding platform to meet the minimum public shareholding requirements in terms of Securities Contracts (Regulation) Rules.

Any nonpromoter shareholder of eligible companies (top 200 companies by market capitalization) holding at least 10% of share capital may also offer shares through the OFS mechanism.

OFS platform is an order collection system. Here the buyer needs to provide with a bid. There is a floor price, decided by the company, below which the bids cannot be placed. At the end of the bidding process the shares are allocated to the bidders. In OFS transactions, Investors can only buy shares, but cannot sell shares unlike the normal market
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