EN
An Offer for Sale (OFS) enables promoters or qualifying shareholders of a listed company to sell shares directly via the stock exchange bidding platform. During the OFS period, investors can apply for OFS by placing their bids at certain prices or at the cut-off price using their trading account.
SEBI permits both promoters and non-promoters to use the OFS route without any minimum shareholding requirement, subject to exchange conditions such as minimum offer size and specified reservation categories.
Key Takeaways
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OFS offers rapid liquidity to promoters of eligible listed companies without the need for a new share issue.
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Retail investors receive a 10% reservation (up to ₹2 lakh offer) with possible floor price concessions.
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Bidding employs only limit orders; cutoff at 3:30 PM (NSE) and 2:30 PM (BSE); funds are refunded the same day at 6 PM if unallotted.
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Allotment by proportional or price priority; T+1 settlement allows for instant trade.
What is OFS?
OFS is an efficient means for promoters and promoter entities to dilute their shares in a public company. By opting for OFS, promoters can utilise the bidding platform of the exchange for price discovery.
Earlier, only promoters and promoter group companies were allowed to use OFS as ‘sellers’ for offloading shares. However, later, the OFS facility was extended to non-promoters without minimum shareholding norms.
The OFS system was introduced by the Securities and Exchange Board of India (SEBI) in 2012 to help promoters comply with minimum shareholding norms. Companies eligible for OFS include those with an average market capitalization of ₹1,000 crore or more over the previous six months.
Also Read: What is a Shareholder?
How to Apply for OFS?
Using your broker's platform, a demat and a trading account with sufficient funds, you can easily apply for OFS. The procedure is similar to IPO bidding, except it takes only one day (T-day for non-retail, typically a T+1 extension for retail), and limit orders are accepted only between 9:15 AM and 3:30 PM (NSE cutoff).
Learn how to apply for OFS in these simple steps:
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Log in to your trading account and go to the Corporate Actions or OFS/IPO section.
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Choose the active OFS from the list (released 1-2 days ago and check NSE/BSE sites for floor price and demand).
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Choose from the Retail (≤ ₹2 lakhs total bid for 10% quota) and Non-Retail categories.
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Enter quantity and bid price (above floor) or choose cut-off (shown after 3 PM based on demand).
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Multiple bids at varying prices are permitted, and changes can be made until the cutoff.
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To submit, make sure your funds cover the total bid amount (non-refundable costs may apply, such as ₹20 per order).
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Allotment is declared at the end of the day, and excess is refunded after 6 PM, with T+1 settlement. However, the time may vary by exchange or broker.
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Monitor subscriptions via exchange websites for indications of demand at various price ranges.
Points to Remember
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If the bid is below the floor price, no allocation will be made.
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As per SEBI regulations, a minimum of 25% of the shares on offer are reserved for mutual funds and insurance companies.
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Except for mutual funds and insurance companies, no single bidder can be allocated more than 25% of the shares on offer.
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An OFS order can be placed between 9.15 AM and 3:30 PM.
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The settlement of an OFS is done on a T+1, trade-for-trade basis.
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Minimum 10% reserved for retail investors (bids ≤ ₹2 lakhs).
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Retail may receive a discount on the floor price (disclosed upfront, common in PSUs).
How Many Bids Can be Placed?
An investor can place multiple bids at different price points. To get allotment through an OFS, it is mandatory to have the total bid amount in the account. The bids can be changed during the day, and the final allotment is declared at the end of the day. Just like an IPO, in the case of partial allotment, the excess fund is returned to the investors on the same day. In case of oversubscription, the allotment is made on a proportionate basis for bids placed at the cut-off price.
Conclusion
An Offer for Sale is a transparent and exchange-driven approach for shareholders of publicly traded companies to dilute their holdings through a regulated bidding process. Investors can simply participate using their trading accounts and earn allocations based on price discovery at the cut-off.
SEBI's new OFS framework abolished the previous minimum ownership requirement for non-promoters, established clearer eligibility based on minimum offer size, and codified categories such as retail, institutional, and staff involvement. These adjustments have made the OFS route more flexible while ensuring fairness and transparency in share allocation.
