1. 10 July 2007 PRELIMINARY LEGAL CONSIDERATIONS ON THE LISTING OF AN INDIAN BUSINESS ON AIM

2. 2 Table of Contents  Introduction  Overview of the Forms of Offerings  Options for AIM Listing  Recent e.g.’s of Alternative Structures  Overview of Fund Structure  Foreign Direct Investment Regime  Investment/Holding Company Route  Fund Route  GDR Route  Offshore Jurisdictions

3. 3 Table of Contents (contd…)  Key Stages  Pre-Flotation Legal Due Diligence  About A.R.A. LAW  Why A.R.A. Law ?  About Steptoe & Johnson  Why Steptoe & Johnson ?  Contact details

4. 4 Introduction The purpose of this joint presentation is to provide a preliminary legal overview of the local, regulatory and structure issues for consideration on an AIM listing of an Indian business.

5. 5 Overview of the Forms of Offerings Domestic IPOFPOLoans/Debt Public Deposit Private Placements QIP Offshore FCCBECB GDR / Sponsored GDR ADR / Sponsored ADR FDI

6. 6 Options for AIM Listing AIM Market Fund Route Investment/Holding Company Route GDR Route Note: The above is an indicative list of possible options, each option, needs to be analyzed and structured considering tax, regulatory, legal and specific business and commercial requirements of the Issuer Company. Following slides will deal with each of the options in further detail especially from Indian legal perspective/issues.

7. 7 Promethean India Recent e.g.s of Alternative Structures Great Eastern Noida Toll Bridge AIM Eros International Foreign Co with Indian assets Isle of Man Fund Model Isle of Man Issuance of GDRs Indian Co Indian Company Mauritius

8. 8 Alternative Structures (contd…)  IPO of shares in overseas entity holding Indian assets -applicable in the case of significant overseas presence; international acquisitions; globalisation at early stage; start up businesses not fully valued in India; equity stories with better acceptance overseas i.e. Hardy Oil & Gas KSK Power Ventur Eros International

9. 9 Alternative Structures (contd…)  Investment company to finance Indian projects in the case of investment company - i.e. Ishaan Real Estate – structured via Isle of Man with Mauritius subsidiary holding Indian domiciled operating company

10. 10 Alternative Structures (contd…)  IPO of shares in overseas subsidiary of Indian company -possible applications in the case of international business has separate entity; equity story of international business more attractive to global than domestic investors; risk profiles overseas / at home differ; capital for overseas is large relative to parent

11. 11 Alternative Structures (contd…)  Use of GDR offering by listed applicable Indian company -in the case equity story only attractive overseas; issuer targets overseas investors only i.e. Great Eastern Energy Corporation Noida Toll Bridge

12. 12 Overview of Fund Structure AIM LISTING OF SHARES Issuer Company Holdco UK Isle of Man / Guernsey Mauritius India Investment Management Agreement Asset manager Advisory Consultant Advisory Services Agreement A B C 100% Assets / Entities

13. 13 Foreign Direct Investment Regime  Foreign direct investment (FDI) can be under:  automatic route, or  approval route  Regulated primarily by Foreign Exchange Management Act (FEMA), Guidelines by Reserve Bank of India (RBI), Ministry of Finance, concerned ministry (say, MIB, MIC..)  FDI up to 100% is allowed under the automatic route in all activities/sectors except the following:  activities/items that require Industrial license or reserved for SSI  purchase of shares in financial services sector (in case the SEBI Takeover Code is not attracted, in cases where RBI / SEBI / IRDA approvals are not required)  Proposal in which the foreign collaborator has an existing financial/technical collaboration in India in the ‘same’ field and continues to hold more than 3% of its capital  Proposals falling outside the notified sectoral policy/caps or under sectors in which FDI is not permitted  Prohibited Sectors:  Gambling and betting  Lottery business  Atomic energy  Retail trading (except single brand)  Approval required:  Defense  Broadcasting  News, etc Note: FDI issues are applicable to all options indicated above and any foreign investment in an Indian company

14. 14 Investment/Holding Company Route SPV 3 Indian Company Investment Company (Issuer Company) India Preferred Jurisdiction Holding Company (Issuer Company) Preferred Jurisdiction Tax Beneficial Jurisdiction India SPV 1SPV 2 ICo 1ICo 2ICo 3 Similar to Blank Cheque / SPIC Companies model FDI Policy Press Note 1 of 2005 Sector specific guidelines, like, real estate, telecom, etc Indian legal perspective: Variant: A variant structure could be to list the subsidiary of Indian company

15. 15 Fund Route  FDI Policy and sector specific guidelines  Investment Restrictions:  Invest at least 66.67% in unlisted equity shares or equity linked instruments  Investment in real estate is an area of concern  Cannot invest in preferential allotment by listed companies  Cannot invest in Indian companies engaged in: Non-banking financial services Gold financing Activities not permitted under industrial policy ICo 2 Fund (Issuer Company) Preferred Jurisdiction Tax Beneficial Jurisdiction India SPV ICo 1ICo 3

16. 16 GDR Route  Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 as amended  from time to time  FDI Policy and sector specific guidelines  Listing Agreements  SEBI (Disclosure and Investor Protection) Guidelines, 2000 (SEBI DIP Guidelines)  Companies Act, 1956  Some important considerations:  Listing: Requires to be prior or simultaneously listed in India  Investors: OCBs and Indian residents (other than mutual funds) cannot subscribe  Issue Expenses: capped at 4% of the issue size  End-use: Proceeds cannot be used for investments in ‘stock market’ or ‘real estate’  Pricing: not less than (a) Average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date; (b) average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.  Voting Rights: in line with companies act and applicable regulations in case of banking company  SEBI Takeover Code: not triggered on mere holding of GDRs  Dual Fungibility Equity Shares Indian Company (Issuer Company) Domestic Custodian Bank Overseas Depository Bank Overseas Investors Overseas India Issue Proceeds Instructions to issue GDR GDRs Listed on AIM

17. 17 Offshore Jurisdictions  Choice of off shore holdco - entities – preference for Isle of Man also Jersey / Guernsey  18 related Indian entities on AIM from Isle of Man i.e. KSK Power Venture / Promethean  Requirement for tax neutral environment / reduce tax costs - profits made by companies investing in India not liable to any form of taxation  Central management and control to be maintained outside of UK – board meetings etc to be held offshore

18. 18 Offshore Jurisdictions (contd…)  Requirement for high fiscal standards  No requirement for regulatory approval for the incorporation of a listed company in Isle of Man  Access to UK familiarity with regulations - well regulated same time zone as London in Isle of Man  Lack of tax treaties – companies with operating activities in several jurisdictions not so attractive

19. 19 Key Stages  Appointment of Advisers -Nomad -Broker -Legal Counsel (x4) -Reporting Accountants -Financial PR -Printers / Registrars / Administrator -Specialist Reports -Depositary

20. 20 Key Stages (contd…)  Initial decisions - Timing / timetable / list of responsibilities - Structure - Investment companies - GDR issues/structure - Due Diligence - Legal - Commercial - Legal opinions / third party reports - Approvals

21. 21 Pre-Flotation Legal Due Diligence  Due diligence report  Action to be taken arising from due diligence  Restructure /Reorganisation - terminate shareholders agreement - need for holdco / plc status - reorganise business -adopt new articles of association -obtaining third party consents

22. 22 About A.R.A. LAW  The sharp growth rate and excellent reputation enjoyed by the Firm has been achieved in a short span of time  The Firm's enviable domestic and multinational client base includes commercial banks, financial institutions, equity funds, government and public authorities and industrial and commercial companies in a variety of business sectors ranging from market leaders and large corporate to fledgling operations and start-up ventures  We are dedicated to providing high quality legal services to all our clients. We customize teams from various practice areas to address specific issues and needs of clients, which enables us to advise on a wide range of transactions.  Our clients tell us that they value our detailed understanding of the regulatory framework and government decision- making process in India.  Our Team offers wide-ranging transactional and advisory capability to major corporations and financial institutions. A.R.A. LAW is a vibrant and dynamic first generation law firm established in February 1996 and having its offices at:: Mumbai Bangalore, and an Affiliate office in New Delhi A.R.A. LAW has a team of about 25 professionals which includes Lawyers, Solicitors, Company Secretary

23. 23 Why A.R.A. LAW ?  A.R.A. LAW’s capital market team is recognized as one of the leading teams in India.  Our capital market team offers a leading capability in Indian law and functions as a one- stop service to clients looking to access Indian markets and investors.  A.R.A. LAW regularly advises on IPOs, Euro Issues, takeovers/acquisitions, etc. and works closely with lead managers, foreign law firms, and various regulatory agencies.  A.R.A. LAW assists in all areas of offerings including advise on regulatory provisions, reviewing offer documents, conducting due diligence, providing legal opinion, drafting transaction documents, interacting with international law firms, etc.  A.R.A. LAW has over 10 years experience in capital markets and cross-border deals;  High-quality services at international standards;  Experience of issues arising from overseas listings;  Appreciation of local issues faced by client;  Cost competitive and Ability to work within budgets;  Guarantee of personal involvement of partners;  Prompt and timely service;  High level of ethics and avoidance of conflicts.

24. 24 About Steptoe & Johnson Overview Steptoe & Johnson’s Corporate, Securities and Finance Group in London advises clients ranging from large international corporations to small owner managed businesses on a wide range of domestic and international corporate and commercial matters. We pride ourselves on the quality of our advice and the responsiveness of our service. We combine these guiding principles with a value added, commercial approach in which we aim to gain a genuine understanding of our clients’ businesses and the markets in which they operate. We seek to combine the role of traditional lawyers with business advisers, remembering that the law should be a tool rather than an obstacle in assisting clients to achieve their commercial objectives. We are committed to delivering excellent and focused service of the highest calibre. At Steptoe & Johnson we believe in combining a partner-led approach with fielding the right team for each particular transaction, depending on the specific requirements of each case. The partners in our group have all gained previous experience at leading City of London firms and make themselves available by phone and email 24 hours a day in recognition of the pressures in which our clients operate. We realise that high quality legal services can be an expensive necessity rather than a desirable luxury and we are always willing to discuss a variety of fee structures as well as the more traditional fee estimate/recorded hours approach. The Firm Steptoe & Johnson is a multi-national partnership in the City of London that offers clients the close collaboration of a boutique firm with the depth and breadth of legal expertise found in a leading US-UK law firm. The firm has gained an international reputation for vigorous representation of clients before governmental agencies, exceptional advocacy in litigation and arbitration, and creative and practical advice in guiding business transactions. With more than 450 lawyers, the firm has offices in London, Brussels, Washington, New York, Chicago, Phoenix and Los Angeles. We regularly guide overseas clients through complex regulatory matters in the UK, the US and across the EU.

25. 25 Why Steptoe & Johnson ?  International law firm – offices in London, New York, Washington, Chicago, Los Angeles, Phoenix and Brussels  Focus on inward and outward investment in respect of India corporates  Proactive / partner led service  Ability to provide UK/US input on securities issues  Experience on AIM and public related transactions  Close working relationship with A.R.A. Law – awareness of local issues  Strong network of contacts in financial and professional community

26. 26 Contact Details Michael Thompson Partner Steptoe & Johnson 99 Gresham Street London EC2V 7NG UK Tel: +44 207 367 8070 Fax: +44 207 367 8001 mthompson@steptoe.com Rajesh Begur Partner A.R.A. Law 3/F, Mahatma Gandhi Memorial Building 7, Netaji Subhash Road, Charni Road (West), Mumbai India Tel: +91 222 281 1700 Fax: +91 222 284 1800 rajesh@aralaw.com