Ann: Disclosure under Takeovers Panel GN 20, page-35

A cash-settled equity swap is a financial derivative that allows two parties to exchange returns on an equity investment without transferring actual shares. Instead of delivering the underlying stock, the agreement settles in cash based on changes in the stock price.

Here’s how it works:

• One party agrees to pay the returns on a reference stock (dividends + capital appreciation).

• The other party pays a fixed or floating interest rate.

• At maturity or during periodic resets, any gains/losses are exchanged in cash rather than transferring stock ownership.

These swaps are often used by investors to gain exposure to equities without holding actual shares, or by institutions managing risk while maintaining flexibility.