OFS payment default to attract penalty of 10% of order value
According to the regulator, the penalty will be collected from the broker and the amount will be credited to the Investor Protection Fund (IPF) of the stock exchange.
On Friday, the regulator issued the comprehensive guidelines on the OFS mechanism after incorporating the changes announced in its board meet on January 18. Sebi has allowed institutional investors to bid without paying any up-front margin, but has barred such bids to be modified or cancelled.
The Sebi board met in Chennai last week and decided on further relaxing the OFS rules to make it easier for companies to comply with the minimum public shareholding norms wherein promoter holding has to be reduced to 75% (90% in case of government-owned entities).
“With the deadline of June 2013 to achieve minimum public shareholding approaching, to encourage promoters to off-load their shares through OFS route and based on market feedback, it has been decided to modify the OFS framework to make it more economical, efficient and transparent,” Sebi said in a circular.
While announcing the new norms, Sebi chairman UK Sinha stressed on the fact that the deadline of June 2013 for complying with the public shareholding norms is “sacrosanct” and even the government has agreed to abide by the requirements.
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