Institutional Placement Programme (IPP) and Offer for Sale (OFS) are two fast-track stake sale programmes available for share sale through auction method, as against the long-drawn processes involved in traditional avenues like Follow-on Public Offers (FPOs).
Various amendments have been notified by Sebi in its regulations pursuant to decisions taken at its last board meeting on August 16, where it decided that retail investors would be assured a minimum lot of shares and rules would be relaxed for promoters to meet minimum public holding norms.
However, the earlier regulations did not allow the promoter of a company to launch an IPP if any of the promoter group entities had purchased and/or sold shares in a 12-week period prior to the offer. Besides, the promoters were also not allowed to purchase and/or sell in the 12-week period after the offer.
While retaining this restriction, Sebi has amended rules to provide some relaxation to the promoters seeking faster dilution of their shareholding through IPP or OFS routes.
Now, such promoters may offer their shares through IPP or OFS routes within this 12-week period, subject to a condition that there shall be a gap of minimum two weeks between the two successive OFSs and/or IPPs.
In another amendment to its regulations mandating a minimum of 10 per cent net offer to public in IPOs and FPOs, and of 25 per cent in certain cases, Sebi has done away with the exemptions given to the government entities and certain infrastructure sector firms.
In a separate amendment to its ICDR (Issue of Capital and Disclosure Requirements) regulations, Sebi has amended rules that require minimum 90 per cent subscription in an issue.
Now, this minimum subscription requirement for IPOs would be subject to allotment of a minimum number of securities.
This requirement would also apply in case of shares being sold through OFS scheme.
However, other minimum subscription related requirements would not apply to shares offered through OFS. These requirements include those related to refund of application money within a given time frame in the event of non-receipt of minimum subscription.