SEBI may allow PE & other investors to sell stake in listed firms through OFS mechanism

Market regulator Securities and Exchange Board of India (SEBI) Wednesday said it is considering a proposal to allow large investors of publicly listed firms to sell their stake through the offer-for-sale (OFS) mechanism.

"We are considering a proposal to allow large investors in publicly traded firms to sell their stakes through the OFS mechanism," SEBI Chairman U K Sinha told reporters on the sidelines of a conference here.

At present, OFS mechanism enables only promoters of already listed companies to sell or dilute their existing shareholdings through an exchange-based bidding platform.

Sinha said SEBI is also considering allowing more companies to tap the OFS route. At present, only the top 100 companies by market capitalisation are allowed to sell shares through this route.

While acknowledging regulatory hurdles to IPOs, Sinha pointed out that reluctance of companies to comply with prescribed governance norms is equally responsible for the lacklustre IPO market.

He advised companies not to push back but adopt best practices to attract domestic and international investors.

Sinha said SEBI is adopting measures to ensure that filing of information just once with the SEBI would be adequate compliance through the Annual Information Memorandum, which is likely to be operational within three months.

He said Know Your Customer (KYC) norms across the financial sector would be integrated with the co-operation of all other financial sector regulators.

He said revised ESOP guidelines which would soon be issued by SEBI would be progressive and would resolve existing anomalies. He also mentioned that minimum public shareholding norms would be made neutral vis-a-vis ownership.

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