This is a template of key observations of a red flags legal due diligence report for understanding drafting and summarising

some of the key issues in a

legal due diligence report.
The template will vary basis the nature of the proposed transaction, data furnished and factual situation of the Target.

Privileged & Confidential

KEY OBSERVATIONS ARISIGN FROM RED FLAGS LEGAL DUE DILIGENCE OF [●] ON [●]

Dated [●]

1
 INTRODUCTION

1. The following is a list of key observations (“Observation List”) arising out of our review of documents and information provided until [•], 2022 (“Cut-
Off Date”) as part of the red flags legal due diligence undertaken by [●] (“us” or “we”) on [•] (“Target”) for the review period of April 1, 2018 to [•],
2022 unless specified otherwise, in this Observation List, in accordance with the instructions received from [•] (“Acquirer” or “you”).

2. As requested by you, the objectives of this Observation List are to provide you an insight into important aspects of the business of the Target from a legal
and regulatory perspective and to highlight the key concerns to be considered by you for the purposes of your proposed acquisition of a majority/
controlling stake in the Target (“Proposed Transaction”). This Observation List is subject to the assumptions, qualifications and limitations mentioned
in Schedule II below.

3. The risk associated with the observations below are categorised as follows:

= Significant Risk
= Medium Risk
= Low Risk

4. Key corporate details of the Target have been set out at Annexure A to this Observation List. The current shareholding pattern of the Target has been set
out at Annexure B (“Shareholding Pattern”) to this Observation List and Annexure C summaries the Litigation.

5. All capitalised terms used but not defined herein, have the meanings ascribed to them in Schedule I below.
________________________

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 OBSERVATION LIST

Sr. Caption Observation and Implication Recommendation

No.

Section I - Corporate

1. Unavailability of In terms of FEMA Regulations, the Target was required to file with the RBI i. The Acquirer may
acknowledgment Form FC-GPR for each instance of securities of the Target being allotted to a commercially consider
and confirmation person resident outside India, within 30 days of such allotment having been requiring the Target to
issued by the RBI made. obtain the RBI’s
for a Form FC- acknowledgment and
GPR filing Upon filing having been made by the Target with the RBI, the Target should confirmation for the
have received a written acknowledgement from the RBI confirming receipt of, identified Form FC-GPR
and accepting, the filings. filing as a condition
precedent to the
Based on our review of the records of the Target, the Target does not have in its consummation of the
records the acknowledgment issued by the RBI for two Form FC-GPR filings Proposed Transaction.
made by the Target for the securities allotted to [•] on [•] and on [•].
ii. Appropriate
We understand from the Target that it is in the process of procuring the RBI’s representations,
acknowledgment for the Form FC-GPR filings referred to above. warranties should be
obtained from the
At the time the above mentioned issuance and allotment of securities was made Promoters in relation to all
by the Target, under the extant FEMA Regulations, Form FC-GPR filed by a issuances and transfers of
company through the AD Bank was typically acknowledged and approved by the Target since
the RBI, post which, a letter allotting a registration number with respect to the incorporation and all filings
allotment of shares reported through such form FC-GPR, was issued by RBI to made pursuant thereto with
the company. Kindly note that in case of the proposed transfer of shares between the RBI and AD Banks,
a person resident outside India and a person resident in India, typically, AD having been made in
Banks require such registration number allotted by the RBI, in respect of the compliance with applicable
shares proposed to be transferred. In the absence of such registration number, FEMA Regulations.
AD Banks typically do not approve the transfer of shares.
iii. In the event that the parties
Further, in the event of any contravention under FEMA Regulations, the RBI agree that it would not be
may impose a penalty of up to 3 times the amount involved. Additionally, in the necessary for the Target to
case of a continuing contravention, a further penalty of INR 5,000 (Indian obtain the RBI’s

3
Sr. Caption Observation and Implication Recommendation
No.
Rupees five thousand) may be levied for every day of contravention after the acknowledgement and
first contravention. confirmation for this
identified Form FC-GPR,
The Government of India has a right to confiscate/ attach the shares. However, as a condition precedent to
such contravention under FEMA may be compounded by the RBI on payment of the Proposed
compounding amount as a penalty.

When determining the compounding amount, RBI considers facts and imposes a
greater or a lower compounding penalty amount, as RBI may in its discretion
deem fit, under FEMA Regulations.

2. Proof of stamp We have not been provided with any certificate of stamp duty payment, in i. The Target should provide
duty payment on relation to the following share certificates issued by the Target: the certificate of stamp duty
certain share payment on these share
certificates not (a) share certificate numbers [•] to [•] (for [•] equity shares bearing distinctive certificates to the Acquirer
provided numbers [•] to [•]); for review, as a condition
precedent to the
Under the Indian Stamp Act, 1899, any document which is inadequately consummation of the
stamped or unstamped is not admissible in a court/ tribunal as evidence. Proposed Transaction.

Further, if such inadequately stamped or unstamped document is produced ii. Appropriate

before any person having (by law or consent of parties) authority to receive representations and
evidence (like a judge of a court/tribunal or an arbitrator), such person has the warranties should be
right to impound the document. obtained from the
Promoters in relation to:
However, in our experience, the courts/ tribunals do not ordinarily impound such
a document but instead give the relevant party(ies) a chance to regularise the (a) all issuance of shares by the
document by paying the appropriate stamp duty and the applicable penalty Target being in accordance with
(which may extend up to 10 times of the proper duty or deficient portion) upon applicable law; and
adjudication by the concerned stamp duty authorities.
(b) adequate stamp duty having
Further under Section 56 of the Companies Act, a company is required to deliver been paid to the correct
share certificates in respect of all securities issued by it, with a prescribed governmental authorities in
period. While not expressly mentioned in the Companies Act, it is possible that a relation to the issuance of
failure of a company to pay adequate stamp duty on share certificates issued by shares and that there exist no

4
Sr. Caption Observation and Implication Recommendation
No.
it, could be construed as an improper issuance of share certificates and thus a circumstances wherein any such
non-compliance of the obligation to issue share certificates under Section 56 of payment (including its
the Companies Act. adequacy) may be called into
question by a governmental
Where any default is made by a company in complying with the provisions of authority.
Section 56 of the Companies Act, such company and every officer who is in
default is liable to a penalty of INR 50,000. iii. Further, specific
indemnities from the
Section 56 of the Companies Act states that a company shall not register a Promoters may be obtained
transfer of securities unless a proper instrument of transfer along with the share as regards any losses
certificates has been delivered to the company. suffered as a result of any
action initiated and penalty
It is likely that the board of directors of the Target, while registering share levied by any person or
transfers, may look into whether the relevant share certificates are duly stamped, authority in relation to this
and if not, then refuse to register transfer of these shares, which are required for risk.
consummation of the Proposed Transaction

3. Corporate As per Section 203(1) of CA 2013 read with Rule 8 of the Companies i. The Target should, as a first
compliance - (Appointment and Remuneration of Managerial Personnel) Rules, 2014, certain step, appoint whole time
appointment of specified companies (being public companies with a paid up share capital of company secretary and
whole time above Rs. 100,000,000) are required to appoint a whole time company secretary chief financial officer.
company and a chief financial officer. The Target falls in the aforesaid category, has not
secretary and ii. Thereafter, the Target
appointed a whole time company secretary and a chief financial officer. should seek to make an
chief financial
officer application with the
A violation of the provisions of Section 203 of Companies Act, attracts a penalty relevant RoC to seek
of Rs. 100,000 which may extend to Rs. 500,000. In addition, every director and compounding of the
key managerial personnel of the Target Company who are in default may also be violation.
punished with a fine which may extend to Rs. 50,000 and where the iii. The board meetings noting
contravention is a continuing one, a further fine of Rs. 1,000 per day during the appointment of the
which the contravention continues may be imposed. whole time company
It may however be noted that these offences are compoundable (i.e., an secretary and chief
application can be made for compounding the fine/ penalty, in lieu of the financial officer, the
statutory liability) in nature. compounding order and the
payment challan evidencing

5
Sr. Caption Observation and Implication Recommendation
No.
the payment of the
stipulated penalty should be
provided to Acquirer as a
condition precedent to the
Proposed Transaction.
iv. Appropriate
representations
warranties should be
obtained from the
Promoters in relation to
compliance by the Target
with applicable laws in this
regard.
4. Constitution of Based on our review of the documents, the Target upon conversion to a public i. As a condition
committees limited company, is required to constitute: precedent to the
(i) an audit committee; and Proposed
Transaction, the
(ii) a nomination and remuneration committee under Companies Act Target should:
The Target Company has not constituted these committees. (a) constitute the
In terms of Section 178(8) of the Companies Act, if the company fails to relevant committees as
constitute audit committee and nomination and remuneration committee, the required under
company shall be punishable with fine which shall not be less than Rs. 100,000 Companies Act; and (b)
but which may extend to Rs. 500,000 and every officer of the company who is in provide documentary
default shall be punishable with imprisonment for a term which may extend to proof evidencing the
one year or with fine which shall be not less than Rs. 25,000 but which may same to Acquirer.
extend to Rs. 100,000, or with both. ii. Appropriate
representations
and warranties
should be obtained
from the Promoters
in relation to
compliance by the
Target with

6
Sr. Caption Observation and Implication Recommendation
No.
applicable laws in
this regard..
5. Maintenance of Based on our review of the documents, we note that the Target has: i. As a condition precedent
statutory to the Proposed
registers i. not maintained all the requisite statutory registers under
Companies Act; and Transaction, the Target
should:
ii. not maintained the statutory registers in accordance with the
format stipulated under the Companies Act. (a) maintain the statutory registers,
and update the same, as
If a company does not maintain its registers as per the provisions of the required under Companies Act;
Companies Act, the company and every officer of the company who is in default and
shall be punishable with fine which shall not be less than Rs.50,000 but may
extend to Rs.300,000 and where the failure is a continuing one with a further (b) provide documentary proof
fine which may extend to Rs. 1000 for every day after the first during which the evidencing the same to the
default continues. Acquirer.

To this end, please note that in terms of Companies Act, these offences are ii. Appropriate
compoundable in nature (i.e., an application can be made for compounding the representations and
non-compliance, in lieu of the liability). warranties should be
obtained from the
Promoters in relation to
compliance by the Target
with applicable laws in this
regard...
6. Prior written As per the Debenture Trust Deed dated [●]between the Target and [●] i. Approval of the Debenture
approval of ("Debenture Trustee"), prior written permission of the Debenture Trustee and Trustee and majority
debenture trustee consent of the majority debenture holders' would be required for any: debenture holders' must be
i. corporate restructuring or reorganisation of Target; or obtained as a condition
precedent to closing of the
ii. change in capital structure. Proposed Transaction; and
ii. Appropriate
representations and
warranties should be
obtained in the Transaction

7
 Sr. Caption Observation and Implication Recommendation
No.
Documents, that against
any or all liabilities which
may arise on account of not
obtaining the approval from
the Debenture Trustee and
majority denture holders.
7. Reserved Based on our review of the AoA, we note that Necessary waivers and consents
matters, pre- i. for the Target to undertake certain matters such as any amendments to should be obtained from all
emptive rights, the AoA, the prior approval of [•] and [•] will need to be obtained, shareholders of the Target including
transfer ii. there are a number of transfer restrictions applicable to secondary [•] and [•] for consummating the
restrictions and transfers of shares by certain shareholders of the Target, Proposed Transaction, as a
liquidation iii. certain shareholders of the Target have pre-emptive rights in relation to condition precedent to the
preference rights any primary issuance of securities by the Target, and consummation of the Proposed
under the AoA iv. certain shareholders of the Target have liquidation preference rights in Transaction.
the manner set out in the AoA.
Consummation of the Proposed Transaction is likely to trigger each of the above
categories of provisions under the AoA.

Section II - Personnel

8. Risks under the We have not been provided with copies of electronic challans-cum-returns filed In the event the contractor of the
EPF Act under the EPF Act by one contractor of the Target [•], with respect to the Target has not made the requisite
contract labour engaged by the Target for the months of [•]. contributions or filed the electronic
challans-cum-returns with respect
In case of a failure of payment of contribution by the abovementioned to the contract labour engaged by
contractor, the Target could be held liable to pay the amount of contribution due. the Target, under the EPF Act, the
Target should require the contractor
Additionally, such non-compliance under the EPF Act may also attract a fine to rectify such non-compliance, and
ranging from INR 5,000 to INR 10,000 or imprisonment of a minimum of 6 the Acquirer may commercially
months up to 3 years, or both, depending on the nature of non-compliance. In consider having this action as a
addition, the relevant labour authority, by way of penalty, may levy interest and condition precedent to the
damages. Damages may also be imposed at the following rates: consummation of the Proposed
a. less than 2 months – 5% per annum; Transaction.
b. 2 months but less than 4 months – 10% per annum;

8
 Sr. Caption Observation and Implication Recommendation
No.
c. 4 months but less than 6 months - 15% per annum; Appropriate representations and
d. 6 months and above – 25% per annum.1 warranties should be obtained
from the Promoters in relation to
We understand that the Acquirer’s advisors conducting the financial due compliance with the EPF Act by the
diligence and the statutory auditors of the Target have not made any adverse Target and any liabilities which
finding in this regard.] may arise under the EPF Act.

9. Non-compliance As per the Disabilities Act, every establishment is required to formulate and Appropriate warranties and
with the register an equal opportunity policy. Further, establishments engaging 20 or corresponding indemnities should
provisions of the more employees are required to appoint a ‘Liaison Officer’ under the be obtained from the Promoters, in
Disabilities Act Disabilities Act. relation to any breaches or
threatened breaches of the
We have been informed by the Target that it has not formulated an equal Disabilities Act by the Target.
opportunity policy, in accordance with the requirements under the Disabilities
Act. Therefore, the Target is not in compliance with the Disabilities Act. The Acquirer may commercially
consider having the Target:
Any non-compliance under the Disabilities Act could attract a penalty involving
a fine which may extend to INR 10,000 for the first offence, and from INR i. formulate an equal
50,000 to INR 5, 00,000 for any subsequent offence. opportunity policy and
register the same with the
relevant authorities; and
ii. appoint a ‘liaison officer’ to
oversee the recruitment of
disabled persons and make
the necessary provisions
and facilities for such
employees in the
establishment, post the
consummation of the
Proposed Transaction.

1
Note: Wherever “imprisonment” has been set out as a consequence for contravention of applicable labour laws under the Personnel section of this Observation List, please note that imprisonment
is rare. Courts in India consider the following factors while determining the severity of sanction and imprisonment: (a) if the employer is a habitual defaulter; (b) number of days of delay; (c)
amount of loss suffered by the employees; (d) reason of default; and (e) hardship caused to the beneficiaries. Therefore, even though the nature of penalty will depend on such factors and may be
adjudicated by the authorities on a case to case basis, the likelihood of imprisonment may only arise if the employer deliberately fails to rectify its past non-compliances or continues to be in non-
compliance, or fails to pay the monetary penalty.

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 Sr. Caption Observation and Implication Recommendation
No.

Section III - Permits, Licenses and Regulatory Filings

10. Trade licenses The Target has not obtained trade licenses from the local municipal corporations The Acquirer may consider having
not obtained for its exclusive business outlets located in [•]. the Target file necessary
forms and documents with the
Under the respective local municipal laws and regulations which are in force in appropriate municipal authorities to
the areas where the above facilities are located, we note that it is mandatory for obtain trade licenses for the said
businesses to obtain trade license before commencing manufacturing, storage or properties, post consummation of
trading of any activity/ commodity. the Proposed Transaction.
Non-compliance with the trade licensing requirements under the various
applicable local municipal acts and rules typically attract nominal monetary
penalties and fines.

11. Violation of Air No consent to establish and/or consent to operate has been obtained by Target in
Act and Water respect of [•]. Building Nos [•],[•] and [•]. i. The Acquirer may consider
Act having the Target file
As per Section 21 of the Air Act and Section 25 of the Water Act, consent to necessary applications for
establish is required to be obtained prior to commencing construction activities consents to operate in
on site and consent to operate is required to be obtained prior to commencing respect of [•]. Building Nos
operations on site. Contravention of the aforesaid provisions can lead to the [•], [•] and [•] respectively
following penalties: as a condition precedent
to the Proposed
Air Act Water Act Transaction.
Whoever fails to comply with the Whoever contravenes the provision of
provisions of inter alia Section 21 of the inter alia ii. Appropriate covenant and
Air Act, shall, in respect of each such Section 25 of the Water Act shall be undertaking from the
failure, be punishable with punishable with imprisonment for a Promoters for pursuing the
imprisonment for a terms which shall term which shall not be less than 2 years applications with the
not be less than I year and 6 months but but which may extend to 6 years and relevant authorities,
which may extend to 6 years and with with fine. payment of penalty/ies and
fine, and in case the failure continues, procuring the consents to
with an additional fine which may If any person who has been convicted of operate within [•] days from
extend to Rs. 5,000 for every day during any offence under inter alia Section 25 the closing as a conditions

10
Sr. Caption Observation and Implication Recommendation
No.
which such failure continues after the is again found guilty of an offence subsequent in the
conviction for the first such failure. involving a contravention of the same Transaction Documents.
provision, he shall, on the second and
If the failure referred to above continues on every subsequent conviction, beiii. Further, specific
beyond a period of I year after the date punishable with imprisonment for a indemnities from the
of conviction, the offender shall be term which shall not be less than 1.5 Promoters may be obtained
punishable with imprisonment for a years but which may extend to 7 years as regards any losses
term which shall not be less than 2 years and with fine. However, no cognizance suffered as a result of any
but which may extend to 7years and shall be taken of any conviction made action initiated and penalty
with fine. more than 2 years before the levied by authorities in
commission of the offence which is relation to non-procurement
being punished. of consent to establish.

Further, If any person convicted of an

offence under the Water Act commits a
like offence afterwards it shall be lawful
for the court before which the second or
subsequent conviction takes place to
cause the offender's name and place of
residence, the offence and the penalty
imposed to be published at the
offender's expense in such newspapers
or in such other manner as the court
may direct and the expenses of such
publication shall be deemed to be part
of the cost attending the conviction and
shall be recoverable in the same manner
as a fine.
Where an offence has been committed by a company, every person who, at the time
the offence was committed, was directly in charge of, and was responsible to, the
company for the conduct of the business of the company, as well as the company,
is deemed to be guilty of the offence and is liable to be proceeded against and
punished accordingly.]

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 Sr. Caption Observation and Implication Recommendation
No.
12. Non-compliance The following non-compliances are observed : i. As a condition precedent
of environmental : to the Proposed
laws Transaction, Target should
(i) not monitoring the ambient air for parameters stipulated in National rectify the aforesaid non-
Ambient Air Quality Standards (2009); compliances and continue
to comply with the
(ii) not filing water cess as required under the provisions of Water Cess Act, aforesaid requirements.
1977;
ii. In the event that the parties
(iii) not submitting Environmental Statement as required under the provisions of agree that it would not be
the Environmental Protection Rules, 2002; and necessary for the Target to
rectify the non-compliances
(iv) not monitoring the ambient noise to demonstrate compliance with the as a conditions precedent to
commercial noise level standards stipulated in Noise Pollution (Regulation the Proposed Transaction,
and Control) Rules, 2000, specific indemnities may
be obtained as regards to
and that the non-compliances could lead to the authorities issuing show cause any losses incurred or
notices. damages or penalty which
may arise on account of the
non-compliances under the
provisions of applicable
environment laws.

Section IV – Financing

13. Change in The Target has availed financial facilities from [•] in terms of facility documents The Target should obtain the prior
control executed between the Target and [•] written consent of [•] for the
Proposed Transaction for change in
In view of the Proposed Transaction, the Target Companies (in its capacity as control, as a condition precedent
borrower of loan facilities) require prior approval of [•]. to the consummation of the
Proposed Transaction.

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 Sr. Caption Observation and Implication Recommendation
No.

Section V – Material Contracts/ Arrangements

14. Intimation In terms of the [•] agreement dated [•] between the Target and [•], the Target is Appropriate covenant and
requirement in required to inform [•] in writing of all changes in its constitution or directors undertaking from the Promoters to
case of change of within [•] days of the occurrence of such change, on the Target’s letterhead make the intimations required under
management executed by its authorised signatory, listing out the names and details of the the respective agreements within [•]
personnel in charge of the management and affairs of the Target. days from the closing as a
conditions subsequent may be
incorporated in the Transaction
Documents.

Section VI - Property

15. Lease The lease agreements for the following premises have not been duly stamped Appropriate warranties with
agreements not and registered: corresponding indemnities should
duly stamped be obtained from the Promoters in
and registered (a) [•]; relation to all agreements executed
(b) [•]; by the Target for leasing/ licensing
(c) [•] any properties used by it being
valid, stamped and duly registered
An instrument which is inadequately stamped is inadmissible as evidence and (if applicable) in accordance with
not enforceable in the event of a dispute in a court of law, unless the deficient applicable law.
portion along with penalty, if any, is paid on such instrument.
The Acquirer may commercially
The penalty in such cases can be up to 10 times the deficient portion of the consider if any of these lease
stamp duty. agreements should be re-executed
on same terms and conditions for
Moreover, a document which is chargeable to stamp duty but is not remainder term, stamped and
appropriately stamped may be impounded by any authority having the power to registered by the Target, post the
do so. consummation of the Proposed
Transaction.]
Under the Indian Registration Act, 1908, a transfer (which has the effect of a
lease or a licence) of an immovable property for a term exceeding 1 year or sale

13
Sr. Caption Observation and Implication Recommendation
No.
of an immovable property needs to be mandatorily registered (subject to state
specific amendments/exemptions) and will not be enforceable unless it is
registered (after the relevant stamp duty under local stamp laws has been affixed
on the document).

An unregistered agreement can neither give effect to transfer of immovable

property by way of lease comprised therein nor can it be received as evidence of
any transaction affecting such property.

If a compulsorily registerable document has not been adequately stamped then

such defect can be remedied by paying deficient stamp duty along with interest
and/ or penalty. However, non-registration of a mandatorily registerable
document is not ordinarily curable by registering that document after the expiry
of the prescribed period for registration.
16. Re-conveyance We understand that the facility amounts of Rs. [●] and Rs. [●] availed of by As a condition precedent to the
of mortgages Target from [●] and secured by a unilateral indenture of mortgage dated [●] andProposed Transaction, Target
indenture of mortgage dated [●], respectively, over [●] and [●] have been repaid
should obtain release of the
in full. aforesaid mortgages through duly
stamped and registered
Target has made the appropriate form filings with the RoC, [●], who has issued reconveyance deeds.
memorandums of satisfaction of charge in this regard. However, the mortgaged
properties has not been re-conveyed to Target.
17. Updating Revenue records have not been updated to reflect the name of Target as the As a condition precedent to the
revenue records owner of undivided right, title and interest in the [●]. Proposed Transaction, the revenue
records should be updated to reflect
the names of Target.
18. Property tax A demand for payment of property tax in relation to Unit No. [●] been made on i. The Target should provide
dispute Target to the tune of Rest. [●] for the financial years [●] to [●]. an acknowledgement/proof
of property tax payment to
Arrears of property tax can be recovered by sale of immoveable property of the the Acquirer for review, as
defaulter. a condition precedent to
the consummation of the
Proposed Transaction.

ii. Appropriate

14
 Sr. Caption Observation and Implication Recommendation
No.
representations and
warranties should be
obtained from the
Promoters that all property
taxes have been paid upto
date in relation to Unit No.
[●] and other properties
owned/taken on lease/leave
and license basis

Section VII – Intellectual Property and Data Protection

19. Discrepancies in [•] The Acquirer may commercially

trademark filings consider obligating the Target to
make appropriate filings before the
Trademarks Registry, as a
condition precedent to
consummation of the Proposed
Transaction, in order to have the [•]
discrepancy rectified from
application no. [•], so as to have the
correct user date reflected.

Section VIII - Litigation

20. Litigations Snapshot of the litigations based on documents and information provided by Appropriate covenants and
Target are set out in Annexure C hereto. undertakings may be obtained
from the Promoters that they will
continue to co-operate and provide
full support to the Target in relation
to the on-going litigations and
provide specific indemnities as
regards to any losses damages,
penalty, interest incurred by Target

15
 Sr. Caption Observation and Implication Recommendation
No.
in the aforesaid litigations.

Section IX – Insurance

21. Expired Based on our review of the various insurance policies obtained by the Target, we The Acquirer may commercially
insurance policy note that [•] procured from [•], has expired on [•]. consider whether the Target should
renew these expired insurance
policies, as a condition precedent
to the consummation of the
Proposed Transaction or post
consummation of the Proposed
Transaction.

22. Pending We await further documents and information which have been requisitioned,
Information upon receipt of which we will update our observations set out herein
________________________
.

16
 ANNEXURE A

KEY CORPORATE DETAILS OF THE TARGET

Based on the information available in the public domain and the documents provided to us by the Target, the key corporate details of the Target are set out
below:

Name :
Registered office :
Date of incorporation :
Corporate Identity :
Number
Corporate status : Active
Authorised capital : INR [•] consisting of:
(a) [•] equity shares of INR [•] each;
(b) [•] preference shares of INR [•] each
Paid-up capital : INR [•] consisting of:
(a) [•] equity shares of INR [•] each;
(b) [•] preference shares of INR [•] each

Directors : Name of Director Date of Appointment DIN

Chief Executive Officer :

Chief Financial Officer :
Chief Operating Officer :
Chief Growth Officer :

17
 ANNEXURE B

CURRENT SHAREHOLDING PATTERN OF THE TARGET

Based on the information provided to us by the Target, the current shareholding patterns (on a fully diluted basis) of the Target is set out below:

Sr Name of the Shareholder Number of Equity Shares (on Shareholding Percentage (on a fully diluted
. a fully diluted basis) basis)
No
.
1.

2.

3.

4.

5.

TOTAL [•] 100.0%

18
 ANNEXUREC

SUMMARY OF LITIGATION

Sr. Matter Background and description of dispute Forum Status

No.
1. Writ Petition No. [•] Matter
[•]of [•] High Court adjourned sine
die in view of
(i) Target the reference
before the
(ii) [•] (Director of Larger bench
Target) of the Apex
… Court.
Petitioners
No next date of
hearing
versus

(i) Union Of India

(ii) [•]

2. Anticipatory Bail [•] sought anticipatory bail, which was granted by an Sessions Court, [•] Disposed
Application No. [•]of order dated [•] against a sum of Rs. [•] as cash bail
[•] deposit.

[•]& others
... Applicants

Versus

State of [•]
....Respondents

19
3. C.C. No. [•]/[•]/[•] Pursuant to investigations, the Economic Offences Additional Chief Matter is
Wing of [•] Police filed a charge sheet in court Metropolitan pending, next
framing charges against the [•]. Magistrate, [•], date of hearing
State of [•]
not mentioned.
... Complainant
In the charge sheet, it was recorded that: [•]
committed criminal breach of trust, fraud whereby
Versus [•] released its rights over [•]; (ii) cheated [•] of Rs.
[•]; and (iii) planned criminal conspiracy.
[•]
... Accused

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 SCHEDULE I

DEFINITIONS

Definition Particulars Definition Particulars

AoA Articles of association of the Target ESOP An employee stock option granted by the
AD Bank An authorized dealer bank under FEMA Target
Regulations FEMA 1999 or FEMA Foreign Exchange Management Act,
CLRA Contract Labour (Regulation and Regulations 1999 and all rules, regulations,
Abolition) Act, 1970 notifications and circulars issued
Companies Act Companies Act, 2013 pursuant to it from time to time
Disabilities Act Rights of Persons with Disabilities Act, MoA Memorandum of association of the
2016 Target
EPF Act Employees’ Provident Fund and Promoters [●]
Miscellaneous Provisions Act, 1952 RBI Reserve Bank of India
ESI Act Employees State Insurance Act, 1948 ROC Registrar of Companies

_______________________

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 SCHEDULE II

ASSUMPTIONS AND QUALIFICATIONS

1. AGREED SCOPE OF WORK

Under this Observation List, we have reported on all material legal issues that we have become aware of through our due diligence process which could
have a material impact on the Proposed Transaction.

2. INFORMATION REVIEWED

2.1. The scope of our review has been limited to:

(a) reviewing the due diligence documents that have been uploaded until the Cut-Off Date in the Target’s virtual data room hosted on [•](“ Virtual
Data Room”);

(b) considering responses to certain written and oral enquiries of the Target’s employees and advisers (by way of request lists or pursuant to oral
discussions); and

(c) any information received (either oral or written) in relation to any of the above;

in each case and at all times, limited to the Scope of Work (together the “Information”).

It is expressly clarified that we have not reviewed any information or documents relating to the Information received after the Cut – Off Date, and all
such information or documents are expressly excluded from the scope of work.

2.2. We have not reviewed documents in relation to or reported on taxation, or with respect to the monetary adequacy/ actuarial valuation of the statutory
contributions and benefits made to or reserved for the benefit of employees and any anti-trust matters.

2.3. Unless otherwise indicated, we have not carried out any further investigations into the affairs, property, assets, liabilities or business of the Target or
made enquiries at any regulatory authorities, governmental authorities, public registers or courts.

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3. JURISDICTIONAL ISSUES

The Information includes materials which are governed by the laws of jurisdictions other than India. Members of the legal team that reviewed the
Information are admitted to practice only in India but not in any of the jurisdictions outside of India and we do not purport to be experts on, or
generally familiar with, any laws other than Indian law. We cannot be taken to have reviewed the Information in the light of, or prepared this
Observation List on the basis of any other such laws and, accordingly, our comments in relation to any such Information is of a general nature only.

4. BASIS, QUALIFICATIONS AND LIMITATIONS

This Observation List is delivered on and subject to the following basis, qualifications and limitations:

i. The accuracy of this Observation List is dependent on the Information being true, complete, accurate and not misleading. We have not sought
to independently verify the Information;

ii. This Observation List is not (i) a comprehensive or formal legal opinion concerning any matter referred to in it; or (ii) a comprehensive
summary of all the Information. It has been prepared solely to highlight those legal issues based on the Information which we consider may be
of material importance in relation to the Proposed Transaction. It is the Acquirer’s responsibility to evaluate whether the due diligence review
(of which this Observation List forms only a part) identifies matters of this nature and to carry out its own commercial assessment of the
Proposed Transaction and the commercial and financial implications of the Information;

iii. This Observation List is based on our review of Information which deals with issues in respect of the following areas: Corporate (Section I),
Personnel (Section II), Permits, Licenses and Regulatory Filings (Section III), Financing (Section IV), Material Contracts (Section V),
Property (Section VI), Intellectual Property (Section VII), Litigation (Section VIII) and Insurance (Section IX);

iv. We have limited this Observation List to matters of a legal nature. We have not conducted any technical, financial, business, commercial,
environmental, insurance, taxation or accounting due diligence nor have we commented on technical, financial, business, commercial,
environmental, insurance, taxation, information technology systems, pension or accounting issues or the validity of the numbers contained in
the information furnished to us in relation to this due diligence review

v. This Observation List highlights only those legal issues which we have identified so far to be material in the context of the Proposed
Transaction and does not contain a detailed description or a summary of all the documents;

vi. We do not accept responsibility for, duty in respect of or liability for the accuracy or completeness of, any Information made available to us
basis which we have prepared this Observation List. The accuracy of this Observation List necessarily depends on the Information being true,
complete, accurate and not misleading;

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 vii. This Observation List does not make any assessment of any pricing or valuation issues with respect to either the Target or the Proposed
Transaction;

viii. The terms of this Observation List may not be varied without our prior written consent;

ix. Our legal liability to you in relation to this Observation List is limited to the extent of the total amount of fees that are paid by you for the
agreed scope of work in relation to this legal due diligence. We shall not be liable for consequential, special, indirect, incidental or punitive
losses.

5. ASSUMPTIONS

This Observation List has been prepared on the basis of the following assumptions, unless expressly stated otherwise in the Observation List:

i. the genuineness of all signatures, the authenticity and completeness of the documents submitted to us and the conformity with the originals of
all documents supplied as copies;

ii. each of the documents:

a. is in full force and effect, incorporates all amendments which have been made to it and has not been terminated;

b. has been validly executed and is valid and binding on each of the parties to it and that each of the parties has complied and continues to
comply, with the relevant provisions of the document;

c. has been properly stamped or filed with the appropriate authority, to the extent required under applicable law;

d. has been provided to us without breach of any confidentiality undertakings given in relation to them; and

e. all and any oral or written information provided to us by the Target, or by any of its employees, advisors or agents during any meetings
or in response to the requisitions is true and complete and is not misleading;

f. no material information and documentation relating to Proposed Transaction and/ or which may have a bearing on, or be material or
significant in relation to any of the information disclosed to us, has been omitted from the Virtual Data Room or withheld.

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