Now Reading: SEBI: off-market sale of unlisted shares to 200 buyers not public issue
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SEBI: off-market sale of unlisted shares to 200 buyers not public issue
SEBI: off-market sale of unlisted shares to 200 buyers not public issue
Markets regulator SEBI on Friday clarified that an existing shareholder selling unlisted equity shares through private negotiations to up to 200 purchasers in a financial year will not be treated as a…
The Story in Brief
Markets regulator SEBI on Friday clarified that an existing shareholder selling unlisted equity shares through private negotiations to up to 200 purchasers in a financial year will not be treated as a deemed public issue. The guidance came in an informal letter to IDBI Bank, which had sought clarity on its proposed divestment of unlisted investments to non-qualified institutional buyers through off-market transactions, The Hindu reports.
SEBI said these are secondary transfers by an existing shareholder, not an offer by the company, so public issue rules do not apply as long as the buyer limit is met. The regulator added that contractual rights such as right of first refusal for promoters can be honoured, and transfers to qualified institutional buyers are excluded from the 200-person count.
The Indian Opinion
Some may see this as a regulatory loophole for mass unlisted share sales, but SEBI has kept the 200-purchaser cap and the QIB exclusion intact. The clarification merely confirms existing law, not a relaxation. The real test will be whether SEBI later issues a circular mandating disclosure of such transfers to prevent abuse. Until then, watch for any large block deals that try to skirt the spirit of the limit.
Source: thehindu.com
This story was synthesised by AI from the source linked above.
