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FPO/ OFS

Check out all related info to FPO/OFS here. Calling on experts in the field to share your understanding, knowledge and experience of investing in these offerings, pros and cons, thereby enlightening first- time investors make informed decisions
We have listed some of the Frequently Asked Questions and the mode of applying for OFS with us. If you're looking for additional information, go ahead and post them on the forum

Procedure to subscribe to FPO/ OFS-

Investor/ Client- To bid for self
- Login to www.nowonline.in or www.now-online.in
- Retail clients can login by using your investor id
- Click on MBP to view Market by Price for each OFS
- Click on Depth to view NSE Bid details for each OFS • Selects OFS and Apply OFS option
- All OFS securities available for bids are displayed
- Select the security to bid and hit Enter. View the details of your bid in the Order Book
- To modify/cancel an order, select a valid order from Order Book and click on Modify/ cancel
- View order confirmation / rejection or order modification confirmation/ rejection messages in the OFS –Exchange Messages window

FAQ’s-

What is an OFS?

Offer for Sale (OFS) is another 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. Except the promoters of the company, all market participants like individuals, mutual funds, foreign institutional investors (FIIs), insurance companies, corporates, other qualified institutional bidders (QIBs), HUFs and others can bid/participate in the OFS process or buy the shares. The promoters of the company can only participate as the sellers in the process

How is OFS different from an IPO?

In an IPO or Initial Public Offering, a private company issues shares to the general public at large, for the first time. The shares are either in the form of new shares/ equity being offered or could be partly sold by the original owner/s or a combination of both.
In the case of a FPO or OFS, additional shares are offered to the public by a company already listed on the Stock Exchange with the sole purpose of raising capital

Can a Retail Investor participate in the OFS announced by listed corporate?

Yes. All investors registered with a NSE Trading member can participate in the OFS mechanism offered by NSE

How will I come to know about an upcoming OFS?

As per SEBI guidelines, it is mandatory for a company to inform the stock exchanges two days prior to their OFS. NSE disseminates the announcement / notice on its website on receipt of the information. This information is made available on the NSE website

How can I buy shares in OFS?

Retail Investors can buy shares in OFS through existing Trading Members of NSE. They will have to provide bids to the Trading Member specifying the quantity and the price they are willing to pay for a given issue

Is it mandatory to have a trading account to participate in an OFS?

Trading account with a member of NSE is mandatory to participate in an OFS offered through the NSE platform

Do I need to sign any agreements / undertakings with trading members to participate in OFS?

If the investor is already registered with a member, no additional documents / agreements will be required to participate in the OFS process

How is OFS different from buying shares in the normal market?

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

Is there a minimum amount specified to be part of the OFS?

There is no minimum amount specified for participating in an OFS. An investor can bid for a single share through the OFS mechanism

Are there any discounts offered to retail clients in OFS?

SEBI has specified as part of its guidelines that issuers may offer discount to retail investors. The issuer as part of their notification to the exchange will also specify the details of the discount on T-2. The discount can be either on the bid price or on the final allotment price.

Will there be any minimum reservation for retail investors in OFS?

SEBI has made it mandatory to offer minimum 10% reservation to the retail investors in OFS. The reservation shall be applicable for all retails investors who
- Bid for a value less than Rs. 2 Lacs, across Exchanges
- Have their PAN category as 'Individual'
If the value of bids across exchanges from an investor increases to more than Rs. 2 Lacs, then these bids entered in retail category will not be considered as valid bid

How will the shares be allotted to me?

The designated Stock Exchange will allot the shares either at a single price or at multiple prices, as specified by the issuer. The allotted shares will be credited to the account in a manner similar to the existing equity market transactions. The shares will be credited to the trading members account on T+1

When will the retail investor get to know of the allotment status?

Stock Exchanges share allotment report with Trading Members at the end of the day i.e. after 6:00 P.M. on the day of OFS. Retail investors can receive information from their trading members on the same day

Are the margins in OFS different from normal market transactions?

In OFS, the entire bid amount of the investor should be backed by 100% upfront cash margin. Bids placed by retail investors will be rejected if 100% cash margin is not made available upfront. Any excess funds due to non- allotment or partial allotment shall be refunded back to the Trading Member on the same day post 6:00 P.M.

Is it required to pay STT on the OFS transaction?

STT is applicable similar to the secondary market

Will the Trading member issue a contract note for the OFS transaction?

Trading Members will have to issue contract notes to the investor in the OFS segment. The contract note is issued by the Trading Member at the end of the day on the allotted quantity & price

How do I monitor the quantity/price information of an OFS?

On the OFS day, information will be published by the Exchange at regular intervals on the website. Indicative prices shall be displayed for the issue separately for retail as well as the general category after consolidating the information from both the Exchanges. Demand graph at each price point shall also be displayed by the Exchange for the bids collected by them

What is Indicative Price?

Indicative Price is the volume weighted average price of all the valid/confirmed bids. The indicative price shall be separate for Retail Bids and Non-Retail bids.

Is normal trading of the security available on the OFS day?

On the OFS day, normal trading in the shares of the company will continue even when the bidding process is on

Is there a restriction on the number of orders from a single retail investor?

Under OFS, there is no restriction on the number of bids from a single buyer. However for retail investors, all the retail bids will get rejected if the bid value across all Exchanges exceeds Rs. 2 lakhs

Can a retail investor modify/ cancel the bid after providing it to the Trading Member?

Yes. Retail Investors can modify/ cancel the bids anytime during the OFS market hours

What are the brokerage charges for a OFS?

Regular brokerage charges will continue to apply