GAMMON INDIA LIMITED

agreement, within the time period mentioned therein. Further, the Takeover Code contains penalties for the
violation of any provisions.
The Takeover Code permits conditional offers and provides specific guidelines for the gradual acquisition
of shares or voting rights. Specific obligations of the acquirer and the board of directors of the target
company in the offer process have also been set out.
Acquirers making a public offer are also required to deposit a percentage of the total consideration for such
offer in an escrow account. This amount will be forfeited in the event that the acquirer does not fulfil
his/her obligations.
The general requirements to make such a public announcement do not, however, apply entirely to bailout
takeovers when a promoter (i.e. a person or persons in control of the company, persons named in any offer
document as promoters and certain specified corporate bodies and individuals) is taking over a financially
weak company but not a “sick industrial company” pursuant to a rehabilitation scheme approved by a
public financial institution or a scheduled bank. A “financially weak company” is a company which has at
the end of the previous financial year accumulated losses which have resulted in the erosion of more than
50% but less than 100% of the total sum of its paid up capital and free reserves as at the beginning of the
previous financial year. A “sick industrial company” is a company registered for more than five years
which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.
The public offer provisions of the Takeover Code (subject to certain specified conditions), do not apply, inter alia,
to certain specified acquisitions, including the acquisition of shares (i) by allotment in a public and rights issue
subject to the fulfilment of certain conditions, (ii) pursuant to an underwriting agreement, (iii) by registered
stockbrokers in the ordinary course of business on behalf of clients, (iv) in unlisted companies (unless such
acquisition results in an indirect acquisition of shares in excess of 15% in a listed company), (v) pursuant to a
scheme of arrangement or reconstruction including an amalgamation or demerger, under any law or regulation of
India or any other country, (vi) pursuant to a scheme under section 18 of SICA, (vii) resulting from transfers
between companies belonging to the same group of companies or between promoters of a publicly listed company
and their relatives, provided the relevant conditions are complied with, (viii) through inheritance or succession, (ix)
resulting from transfers by Indian venture capital funds or foreign venture capital investors registered with the SEBI,
to their respective promoters or to other venture capital undertakings, (x) by companies controlled by the Indian
Government unless such acquisition is made pursuant to a disinvestment process undertaken by the Indian
government or a state government, (xi) pursuant to a change in control by the takeover/restoration of the
management of a borrower company by a secured creditor under the terms of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002, (xii) by acquisition of shares by a person in
exchange for equity shares received under a public offer made under the Takeover Code, and (xiii) in terms of
guidelines and regulations relating to delisting of securities as specified by SEBI. The Takeover Code does not apply
to acquisitions in the ordinary course of business by public financial institutions, either on their own account or as a
pledgee. An application may also be filed with the SEBI seeking exemption from the requirements of the Takeover
Code.
Insider Trading Regulations
The SEBI (Prohibition of Insider Trading) Regulations 1992, as amended (“Insider Trading Regulations”) have
been notified by SEBI to prohibit and penalize insider trading in India. The Insider Trading Regulations prohibit an
“insider” from dealing, either on his own behalf or on behalf of any other person, in the securities of a company
listed on any stock exchanges when in possession of unpublished price-sensitive information. The terms “insider”
and “unpublished price-sensitive information” are defined in the Insider Trading Regulations. The insider is also
prohibited from communicating, counselling or procuring, directly or indirectly, any unpublished price-sensitive
information to any other person who while in possession of such unpublished price-sensitive information is
prohibited from dealing in securities. The prohibition under the Insider Trading Regulations extends to all persons,
including a company dealing in the securities of a company listed on any stock exchange or associate of that other
company, while in the possession of unpublished price-sensitive information. Pursuant to recent amendments to the
Insider Trading Regulations, the definition of the term insider has been broadened to include any person who has
received or has had access to unpublished price sensitive information of the company.
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