10 July 2007
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
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


 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.

Overview of the Forms of Offerings


    QIP                    FPO

                                      FDI                                      ECB

              Domestic                                  Offshore

                                                                     GDR /
              Public                                               Sponsored
              Deposit                       Sponsored

 Options for AIM Listing

                                                  AIM Market

       Fund Route                                                                           GDR Route
                                            Company 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.

Recent e.g.s of Alternative

    Foreign Co         Fund Model         Issuance
        with           Isle of Man         of GDRs
   Indian assets                          Indian Co
    Isle of Man

                      Promethean India
 Eros International     Mauritius         Great Eastern
                                         Noida Toll Bridge

                      Indian Company

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

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

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

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

Overview of Fund Structure

                   LISTING OF SHARES                     UK

                       Issuer Company           Isle of Man /
                         100%                   Guernsey
Management Agreement
                           Holdco                Mauritius
 Asset manager

           Advisory Services Agreement           India

 Advisory Consultant                    A   B   C
                                            Assets / Entities

    Foreign Direct Investment Regime
   Foreign direct investment (FDI) can be under:

            automatic route, or
            approval route
                                                                                Prohibited Sectors:
                                                                                      Gambling and
   Regulated primarily by Foreign Exchange Management Act (FEMA),
    Guidelines by Reserve Bank of India (RBI), Ministry of Finance,                    betting
    concerned ministry (say, MIB, MIC..)
                                                                                      Lottery business
   FDI up to 100% is allowed under the automatic route in all
    activities/sectors except the following:
                                                                                      Atomic energy
             activities/items that require Industrial license or reserved            Retail trading
              for SSI
             purchase of shares in financial services sector (in case the             (except single
              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
                                                                                  Approval required:
              and continues to hold more than 3% of its capital                       Defense
              Proposals falling outside the notified sectoral policy/caps or
              under sectors in which FDI is not permitted                           

                                                                                      News, etc
    Note: FDI issues are applicable to all options indicated above
    and any foreign investment in an Indian company

    Investment/Holding Company Route

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

  Fund Route

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

   GDR Route

   Overseas                                    Issue of Foreign Currency Convertible Bonds and Ordinary Shares
   Investors                                    (Through Depository Receipt Mechanism) Scheme, 1993 as amended
                   GDRs Listed on AIM          from time to time
                                               FDI Policy and sector specific guidelines
                                               Listing Agreements
                                               SEBI (Disclosure and Investor Protection) Guidelines, 2000 (SEBI DIP
 Overseas                                       Guidelines)
 Depository         Proceeds                   Companies Act, 1956
 Bank                                          Some important considerations:
                                                         Listing: Requires to be prior or simultaneously listed in India
                                                         Investors: OCBs and Indian residents (other than mutual funds)
                                                          cannot subscribe
 Instructions to                                         Issue Expenses: capped at 4% of the issue size
 issue GDR                                               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
Domestic                                                  exchange during the six months preceding the relevant date; (b)
                          Indian Company                  average of the weekly high and low of the closing prices of the
Bank                     (Issuer Company)                 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
              Equity Shares
                                                         SEBI Takeover Code: not triggered on mere holding of GDRs
                                                         Dual Fungibility

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 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

Key Stages

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

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
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

About A.R.A. LAW

A.R.A. LAW is a vibrant and           The sharp growth rate and excellent reputation
dynamic first generation law           enjoyed by the Firm has been achieved in a short span
firm established in February           of time
1996 and having its offices at::
                                      The Firm's enviable domestic and multinational client
                                       base includes commercial banks, financial institutions, equity
     Mumbai                            funds, government and public authorities and industrial and
     Bangalore, and                    commercial companies in a variety of business sectors ranging
                                       from market leaders and large corporate to fledgling operations
     an Affiliate office in New
                                       and start-up ventures

                                      We are dedicated to providing high quality legal services to all
                                       our clients. We customize teams from various practice
A.R.A. LAW has a team of               areas to address specific issues and needs of clients, which
about 25 professionals which           enables us to advise on a wide range of transactions.
includes Lawyers, Solicitors,
Company Secretary                     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.

Why A.R.A. LAW ?

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

                                                          High level of ethics and avoidance of conflicts.

About Steptoe & Johnson


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

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.

Why Steptoe & Johnson ?

 International law firm – offices in London, New York,
    Washington, Chicago, Los Angeles, Phoenix and
   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
Contact Details

 Michael Thompson                            Rajesh Begur
          Partner                                    Partner

     Steptoe & Johnson                             A.R.A. Law
      99 Gresham Street              3/F, Mahatma Gandhi Memorial Building
     London EC2V 7NG           7, Netaji Subhash Road, Charni Road (West), Mumbai
             UK                                        India

                                          Tel:          +91 222 281 1700
  Tel:      +44 207 367 8070              Fax:          +91 222 284 1800
  Fax:      +44 207 367 8001           


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