Offer for Sale (OFS) to Public

# Offer for Sale (OFS) to Public

## What is an OFS?

Members of a company (typically promoters), in consultation with the Board, may offer their existing shares to the public — as opposed to the company issuing fresh shares.

## Key Features

### 1. Board Approval

The Board of Directors must approve the OFS arrangement.

### 2. Document = Deemed Prospectus

Any document by which shares are offered for sale to the public is considered a prospectus issued by the company. Laws on misstatements, contents, and omissions apply.

### 3. Authorisation of Company

Members selling shares (whether individuals, bodies corporate, or both) shall authorize the company to:

• Take all actions on their behalf for the transaction; and
• Be reimbursed for any related expenses.

### 4. Exceptions Applicable

Certain provisions do NOT apply to OFS:

• Minimum subscription requirements;
• Minimum application value;
• Provisions for board statements on utilization of funds (because no funds flow to the company).

### 5. Disclosure of Cost-Bearer

The OFS document must disclose:

• Who bears the cost of the sale; and
• Reasons for this allocation.

## OFS vs IPO/FPO — The Big Difference

## When is OFS Used?

OFS is generally used for:

• Promoter stake dilution (e.g., to meet minimum public shareholding norms);
• PSU disinvestment by the Government;
• Exit by private equity / strategic investors.