1. SEBI TAKEOVER CODE AN OVERVIEW & RECENT CHANGES VNS Legal, Advocates VNS Legal

2. BACKGROUND  The SEBI Takeover Code aims to regulate acquisition of shares of a listed Company / acquiring control over a listed Company  Effective October 22, 2011  Earlier Takeover Code revamped post recommendations of advisory committee  Constantly evolving code in line with international practices. VNS Legal

3. APPLICABILITY OF THE CODE  Applies in case of “substantial acquisition” of  Shares; or;  voting rights; or;  control,  By an acquirer by itself or together with Persons Acting in Concert.  Applies to direct and indirect acquisitions (global acquisitions also covered) VNS Legal

4. IMPORTANT DEFINITIONS zAcquirer yAny Person acquiring, directly or indirectly yShares or Voting Rights or Control yIn the Target Company yBy himself or Persons Acting in Concert zControl yRight to appoint majority of Directors or control the policy decisions of the company yBy means of their share holding, or management rights or share holders agreements or any other manner VNS Legal

5. IMPORTANT DEFINITIONS zPerson Acting in Concert yPersons who for a common objective yDirectly or indirectly cooperate yTo acquire shares or voting rights or control over the Target Company yBy means of an agreement or understanding yCertain cases of deemed PAC VNS Legal

6. EARLIER PROVISION zUpto 5% - no disclosures z5% to 14.9% - disclosures z15% & above – Open Offer for 20% zAbove 15% holders – permitted upto 5% p.a upto 54.9% zTo hold 55% - Open Offer (subject to min pub shldg) zAbove 55% holders – Open offer (subject to min pub shldg) VNS Legal

7. NEW PROVISIONS zUpto 5% - no disclosures z5% upto 25% - disclosure to S.Exch zTo cross 25% - open offer of min 26% zAbove 25% - upto 5% p.a upto 75% zShareholding is Acq + PAC in aggregate zIncrease in threshold & offer size VNS Legal

8. TRIGGER OF OPEN OFFER zReg 3 (1) – If holding >= 25% zReg 3 (2) – for a person already holding above 25%, - if acq is more than 5% p.a zBetween 25% to 75% - upto 5% p.a allowed. zCannot acq more than permitted holding zOnly Gross Acqn considered zDiff between post & pre allot – computation zIndividual plus aggregate holding considered now. zPromoter treated on par with any other acquirer VNS Legal

9. ACQN OF CONTROL zReg 4 – separate regulation for acqn of control zApplicable irrespective of whether there is acqn of shares or not zEarlier exemption of postal ballot resolution, is now removed. VNS Legal

10. INDIRECT ACQUISITION zReg 5 (1) – defining indirect acqn yAcq of shares, voting rts, control yOver any company or other entity yThat would enable the person + PAC to yExercise voting right or control over target co ySuch that it would attract open offer zDirect (vs) percentage rule zReg 5 (2) - Indirect is construed as Direct if proportionate value of target is - > 80% of acquired entity’s value VNS Legal

11. VOLUNTARY OFFERS zMin eligibility – 25% zOffer size – minimum of 10% zLast 52 week voluntary acqn by self & PAC – - cannot make a volunt offer zCannot acq shares from open market during offer period zCannot acquire for 6 months post offer period except thro another volun offer zVolun acq by Promoters – whether hit by the bar on earlier acqn rule ? VNS Legal

12. OFFER SIZE zReg 7 - Offer Size – yAt least 26% of total shares as of 10 th day of PA (including shares to be acq through PA) yIf shareholding would exceed the max limit, undertaking to bring it down within time given under SCR Act. ySuch person who has exceeded the max limit, cannot make a voluntary delisting offer for a period of 12 months post offer period VNS Legal

13. OFFER PRICE zIn case of direct acqns – as per Reg 8(2) zIn case of indirect acqns – as per Reg 8 (3) zIf acq has any outstanding convertible instrument, conversion price of those also to be computed zNon-compete fee to be added zHigher price paid during offer period – offer price will stand revised VNS Legal

14. PRICING zIndirect acq – if delay in PA more than 5 days, int @ 10% p.a zPayment of diff in price if acq / PAC acquire post offer for a period of 26 weeks at a price higher than the offer price except for another open offer, delisting, market purchases other than thro negotiated deal. If Promoter subsc to Pref Offer @ higher price – impact ? VNS Legal

15. EXEMPTIONS zUnder Reg 10 (1) – for exemption u/ 3 & 4 yInterse transfer of shs amongst qualifying persons – between relatives, PAC, Promoters etc yAcqn in the ord course of business by broker, Merch Banker, Bank / FI as pledgee yPursuant to scheme of merger / BIFR etc ySARFAESI yDelisting yTransmission VNS Legal

16. EXEMPTIONS zUnder Reg 10 (2) – acqn of shares without change in control pursuant to CDR Scheme zUnder Reg 10 (3) - Increase in voting right beyond 25% pursuant to a buyback if the shareholding is not reduced < 90 days of buyback. VNS Legal

17. EXEMPTIONS zReg 10 (4) – Exemption under Creeping Acqn of 3(2) yRights issue yBuy back – as long as not participated yAcqn by promoter from State Fin Corp pursuant to agmt yAcqn by promoter from VC Fund / FVCI pursuant to agmt VNS Legal

18. RECENT CHANGES – PROCESS & PROCEDURE zPublic Announcement – on the date of acqn / agreeing to acquire. In case of market purchases – prior to order placing. zIn case of Indirect acqn – within 4 days. zwithin 4 days of intent / acqn – notify to S.Exch zDetailed Public Statement – within 5 days of PA VNS Legal

19. PROCESS & PROCEDURE zDetailed PA to be sent to all S.Exch, SEBI & to Company plus publication in papers. zFile Draft Letter of Offer to SEBI within 5 days of Detailed PS. zCreate escrow a/c within 2 days of Detailed PA yFirst 500 crs – 25% yExcess – 10% of the balance zSend LOO to shareholders < 7 days of SEBI observations VNS Legal

20. PROCESS zAcq + PAC to disclose their acq during the offer period < 24 hrs of acqn zAcq + PAC cannot acquire during the period 3 days prior to open of offer & till close of offer zOffer period – 10 days open zOnce tendered cannot withdraw zAcq to complete formalities < 10 days of closure of offer VNS Legal

21. OTHER ISSUES zCompletion of acquisition yCan be made only after completion of offer process yExemption for pref allotment yIn case of 100% Escrow, can be completed after 21 days of Detailed PA yWhat happens to Open Offers triggered by Market purchases ? zBoard appt – only after offer closes or 100% escrow after 15 days of Det PA VNS Legal

22. OBLIGATIONS OF TARGET COMPANY zNo matl changes during offer period unless spl resln thro postal ballot zConstitute committee of Indp Dirs to recommend on open offer & publish in papers + send to SEBI / S.Exch zMake available all info to acquirer VNS Legal

23. DISCLOSURES zDisclosure to S.Exch & Company < 2 days of yAcqn exceeding 5% aggregate yOnce above 5%, every acqn or disposal > 2% aggregate zAcqn includes pledge. Except for Bk/FI zPersons holdg > 25% and Promoters shd disclose their aggregate holdg to S.Ex & Co within 7 days of 31 Mar Promoter to disclose creation / invocation / disposal of pledge < 7 days by Promoter / PAC VNS Legal

24. IMPACT OF THE NEW CODE zCost of open offers increases zHostile takeover – quite remote zExemptions – rationalised & clarified zProcess & procedures – rationalised zForeign acquirer – require FIPB clearances zRole of SEBI in processing offer docs – needs rationalisation & clarity VNS Legal

25. ROLE OF PRACTICSING COMPANY SECRETARIES zRole of CS – crucial / critical in listed entities zApart from ensuring compliance, can also assist in structuring transactions zRole as advisor to Open Offers zSEBI to consider empanelling CS to certify smaller offers. VNS Legal

26. CONCLUSION zObjective of SEBI regulations - increasing transparency and protecting interest of the investors in the Capital Markets zNeed to distinguish between large / small companies & role of intermediaries zFlexibility to be given to Promoters to increase holding zInternational practices to be adapted to Indian context. VNS Legal