SEBI, the market regulator, has introduced a new avenue for employees to participate in the Offer for Sale (OFS) of shares, allowing bidding through the stock market mechanism in addition to the existing outside-the-exchange method.
As outlined in a circular by SEBI, a specific portion of shares must be reserved for employees, and the maximum bid amount in this category is set at Rs 5 lakh. This move aims to enhance efficiency, streamline compliance, and reduce costs. The circular specifies that promoters can now offer shares to employees in OFS through the Stock Exchange Mechanism, introducing an additional channel to the existing one.
The OFS to employees will follow the T+1 day timeline, aligning with the retail category but under a new classification named “Employee.” Promoters are required to transfer total OFS shares, including those reserved for employees, to the designated clearing corporation on T-1 day.
Employees have the flexibility to bid through the “Employee” category and other applicable categories, subject to specified limits. Each employee is eligible for the allotment of equity shares up to Rs 2 lakh. In case of undersubscription in the employee portion, the remaining portion may be allotted proportionately to employees whose bid amounts exceed Rs 2 lakh, up to a value not exceeding Rs 5 lakh.
Allotment under the “Employee” category will be based on PAN details provided by the company on T-1 day. Employees participating in the OFS are required to pay an upfront margin equivalent to 100% of the order value in cash or cash equivalents. This new initiative from SEBI aims to broaden employee participation in OFS transactions, providing a more inclusive and efficient mechanism for stock market involvement.
