SEBI rules out public issue status for IDBI Bank's private share sales to up to 200 investors

Prelims-testable facts

• 01SEBI clarifies that off-market sales of unlisted shares to up to 200 buyers will not be deemed a public issue.
• 02The clarification was made in response to IDBI Bank's query regarding the regulatory treatment of its proposed divestment of unlisted equity investments.
• 03Off-market transactions involving share sales are distinct from public issues, particularly when current shareholders opt to sell unlisted equity shares privately.
• 04A limit of 200 purchasers per financial year must be adhered to for off-market sales of unlisted shares not to be deemed a public issue.
• 05SEBI's clarification applies to existing shareholders selling unlisted equity shares through private negotiations.
• 06The sale of unlisted shares to up to 200 buyers by an existing shareholder is not considered a public issue under SEBI regulations.

Trap alerts

• Most people think that off-market sales of unlisted shares are always exempt from regulatory scrutiny, but actually they must adhere to specific thresholds and conditions.
• Most people think that only listed companies can engage in off-market transactions, but actually existing shareholders can also sell unlisted equity shares privately.