SAT sets aside order on Hitachi

The Securities Appellate Tribunal (SAT) on Wednesday set aside the order of the Securities and Exchange Board of India (SEBI) asking the Hitachi Group to make an open offer to acquire shares of Amtrex Hitachi Appliances Limited (AHPL). The Tribunal has also found that the regulator's decision was influenced by extraneous factors, which led to retract its own earlier view. "SEBI must be insulated and be independent in its decision making process and should not be influenced by any extraneous materials", Justice Kumar Rajaratnam noted in the order. The disturbing fact is that although SEBI had decided rightly that there was no violation of the Takeover Regulations, it was tempted to take action on the basis of certain complaints sent by some people with vested interests. "The complaints are welcome in the interest of the securities market but complaints by itself cannot influence SEBI from retracting from its own considered view in any matter". The case was related to the Hitachi Group's acquisition of Lalbhai Group's 19.37% shares in AHPL at a price of Rs. 41.63 per share, which was completed on January 18, 2003. Even though SEBI gave a clearance to acquire these shares before the acquisition was completed, the whole time member of SEBI on April 17, 2004 directed the Hitachi Group under Section 11B to make a public announcement as required under Chapter 3 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulation, 1997. The public holding of the company was 26.23%.