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THE long running dispute stemming from Burren Energy’s acquisition of Hindustan Oil Exploration (HOCL) has reached the Supreme Court (SC). Sebi has appealed to the SC against a decision of the Securities Appellate Tribunal (SAT), setting aside a fine of Rs 25 lakh on Burren Energy and Unocal Bharat.

On February 14, 2005, Burren Energy India (a company with its registered office in London) entered into an agreement with Unocal International Corporation (UIC) to acquire the entire equity share of Unocal Bharat, which owned 26.1% of the share capital of target company, Hindustan Oil Exploration. In September 1996, California-based UIC had acquired the entire share capital of UBL which was incorporated in Mauritius in July 1996.

Burren on February 14, 2005, had appointed two of its directors on board of UBL, and on the same date.

UBL in concert with the acquirer had appointed the same persons on the board of directors of the target company. On February 15, 2005, Burren made a public announcement in accordance with the regulation. The market regulator has said that such appointment during the offer period was a violation of Regulation 22(7) of the Sebi Act, 1992.

Alleging flouting of rules, Sebi had imposed a penalty of Rs 25 lakh each on the two companies, which they challenged before SAT and which allowed their appeal. Sebi has argued that an offer period should begin from the date the share purchase agreement was signed, after which the directors were appointed on the HOCL board. The tribunal had said that where no memorandum of understanding is arrived at and the parties straightaway enter into an agreement for the purchase of shares, then the offer period shall commence from the date on which the acquirer makes a public announcement.

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