The Securities
Appellate Tribunal (SAT) has set aside the Sebi order passed by its
adjudicating officer imposing a penalty of Rs 1 crore on Satyanarayana Agarwal
and other ten promoters of Bhoruka Financial Services Limited (BFSL), a company
listed on the Bangalore Stock Exchange (BgSE) for violating regulatory
norms.The adjudicating officer of the Sebi in its order dated February 20, 2007
has imposed a penality of Rs 1 crore on them collectively for violating
regulatory norms.BFSL has challenged the Sebi order before the SAT. The appellants as
promoters of BFSL, a non-banking finance company, held 98.73% of the equity
shares of the company; the remaining shares were held by only 26 public
shareholders. Since the acquisition of the shares of the promoters by DLF would
trigger the Sebi (substantial acquisition of shares and takeovers) regulations,
1997 and a public offer for acquisition of shares would be necessary, DLF
applied to Sebi in October 2004 seeking exemption from making the public offer
and observing other connected procedures and formalities.Since there were only
26 public shareholders and DLF was willing to make an offer to all of them by
issuing individual registered acknowledgement due letters, on June 29, 2005
Sebi agreed to grant the exemption applied for by DLF.BFSL argued that they
were not engaged in organising or assisting in organizing any unrecognized
stocks exchange nor were they members of any similar stock exchange and
therefore they did not come under the purviews of section 19 of SCRA.
"Appellants pointed out that they had not, at any stage, made any secret
of their intention to purchase all the shares of BFSL through a recognised
stock exchange", SAT order said.After hearing both BFSL and Sebi, SAT said
that "the appellants can not be held to have violated section 19 of SCRA,
which is the charge against them. Accordingly, we allow the appeal and set
aside the impugned order of the board." – www. yahoonews.com