An offer for sale, often written OFS in an offer document, is the part of an IPO in which existing shareholders sell shares. The company does not receive that money. The selling shareholders do. A fresh issue is the other part: new shares, and the cash from those shares comes into the company.
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Open calculatorThe objects of the issue apply to the money the company receives. If the headline is large and the fresh issue is small, the factories, the debt repayment and the working capital are funded only by the fresh piece. General corporate purposes still cannot exceed 25% of the amount being raised. That cap is about the company’s raise, not about how large the offer for sale is.
Regulation 8 requires the shares in the offer for sale to have been held by the sellers for at least 1 year before the draft is filed. Bonus shares and shares from a court or tribunal scheme are among the exceptions the regulation spells out. The capital structure is where you see who is selling, and whether the promoters are selling a part of their holding while a minimum contribution stays locked.
A sketch, not a filing
Company X is not a real issuer. Suppose the fresh issue is ₹40 crore and the offer for sale is ₹60 crore. The issue people quote is ₹100 crore. The sellers receive 60% of that total. The company receives the rest. If you only remember ₹100 crore, you have remembered the wrong cash figure for the business.
Nothing in that sketch is a grey market premium, and nothing in it is a live price band. The offer-document guide uses the same illustration next to the objects and the lock-in. When you sell shares you were allotted, tax is a separate question, on the capital gains calculator. Allotment itself is not taxed.
What to look for
- The rupee split, fresh issue against offer for sale, in the first pages.
- The names of the selling shareholders, and whether they are promoters.
- The objects, which can only spend the fresh-issue money.
- The holding period of the shares being sold.
A large offer for sale can be a fair exit for early shareholders. It can also mean the listing raises little new money. Read the split before you decide which of those it is. The ICDR text used here is amended up to 21 March 2026, checked on 2 November 2026.
Questions
Does the company receive offer-for-sale money?
No. An offer for sale is a sale of shares the sellers already hold. The cash goes to them. A fresh issue is new shares, and that cash goes to the company for the objects in the offer document. Add the two only when you want the size of the issue. Do not add them when you want the cash the business will receive.
How long must offer-for-sale shares have been held?
Regulation 8 says the sellers must have held the shares for at least 1 year before the draft offer document is filed. There are stated exceptions, including a bonus issue and shares received under a court or tribunal scheme. The offer document is where that holding is disclosed.
Is a large offer for sale banned?
The regulations do not set a maximum share for an offer for sale on this page’s reading. A large offer for sale is a reason to see who is selling and what the company itself will receive. It is not, by itself, a rule that stops the issue.
Sources
Figures checked 2 Nov 2026.