Stock market regulator SEBI has notified guidelines that enable promoters to sell their stake through stock exchanges and increase minimum public shareholding in their companies to the stipulated 25 per cent.
This facility would be available only on the BSE and the NSE and only to the top 100 companies by average market capitalisation in the preceding quarter. Promoters should not have bought or sold their shares 12 weeks prior to and should not buy or sell 12 weeks after the offer period, said SEBI.
Investors other than promoters and the promoter group are eligible to buy at a single clearing price if the allotment is made on a proportionate basis. If the price priority method is used, allocation would be done at multiple clearing prices. If the offer uses an indicative price, it denotes the price at which the quantity of shares offered is exhausted. A floor price if used denotes the minimum price at which the company wishes to offer its shares for sale.
The minimum offer size should be one per cent of the company's paid-up capital or Rs 25 crore which ever is lower.
If one per cent of the paid-up capital is less than Rs 25 crore (at the closing price on the specified date-the last trading day of the preceding quarter), the stake dilution would be at least 10 per cent of the paid-up capital or that percentage which enables the company to achieve minimum public shareholding in a single tranche.
Sellers are expected to bear all expenses related to advertising and the offer for sale.
Brokers
Companies are expected to appoint a broker for this and announce the offer for sale one trading day prior to offer opening.
The notice should contain details of company, selling shareholders (promoter/promoter group), and the exchanges where the orders should be placed. If orders can be placed on both the BSE and the NSE, one of them should be declared as the Designated Stock Exchange.
If the seller does not declare a floor price in an announcement or notice, it should be given in a sealed envelope to the designated stock exchange just before the offer opens. The selling broker (s) should also not be in the know of this price and the DSE should open the envelope to disseminate the floor price only after the offer closes. The offer should not exceed one trading day and trading members are allowed to place orders only during trading hours.
Stock exchanges should create a separate window for this purpose, said SEBI.
Orders may be modified or cancelled only up to half an hour before the offer closes.