The Securities Appellate Tribunal has waived the penalty imposed by the Securities and Exchange Board of India on Burren Energy India and Unocal Bharat. This is yet another instance of the tribunal overruling the market regulator's order.

In its judgement, SAT also came out with a new interpretation for defining the open offer period under the takeover code.

The SAT order says in case the acquirer and the target company has not signed a memorandum of understanding, the date of public announcement post acquisition can be the starting date for the open offer period.

In cases where an MoU has been signed, the date of signing the MoU for the share purchase agreement will be the date for starting the open offer.

This means an open offer period starts from the date of public announcement of acquisition of the shares and not only the date at which the actual acquisition of the shares took place, said a corporate lawyer.

Sebi had fined Burren energy and Unocal Bharat a penalty of Rs 25 lakh (Rs 2.5 million) each following complaints by minority shareholders that the company had appointed directors on the board of the target company - Hindustan Oil Exploration - during the period of the open offer.

Burren Energy India is a subsidiary of Burren Energy, UK, which was formed to acquire the entire share capital of Unocal Bharat. Unocal had acquired 26.01 per cent in Hindustan Oil exploration.

Since Burren had taken over Unocal, it indirectly acquired 26 .01 per cent in Hindustan Oil Exploration as well.

The share purchase agreement was executed on February 14, 2005, which is the day when both UBL and Burren nominated two of their directors on the board of HOE.

The open offer post takeover was announced on February 15, 2005. Following this, the minority shareholders complained to Sebi that the company had violated regulation 22(7) of the Sebi Act by appointing directors on the board of target company during the open offer period. Sebi imposed a penalty post enquiry.

SAT in its judgement has clarified that the prohibition for appointing director on the board applies only during the open offer period. In the case of Burren, no MoU has been signed for purchase of the shares.

The shares of Hindustan Oil has been acquired by Unocal and Burren on February 14, 2005, but the public announcement was made the next day.