BIHL was found guilty of breaching Rule 10.2 of the BSE Listings Requirements in terms of which listed companies contemplating related party transactions are required to consult the bourse prior to entering into such transactions. Despite this charge, BIHL was only slapped with a penalty fee of P25, 000 and warned about its actions in a strongly worded-letter. The BSE Committee said last week that after due and careful deliberation and consideration, it acted in accordance with the provisions of Rule 1.14 of the BSE Listings Requirements to impose penalties on BIHL. "BHIL was reprimanded in writing for its failure to consult the BSE prior to entering into the transaction as required in terms of Rule 10.2 of the BSE Listings Requirements and a penalty fee of P25, 000 was imposed in BIHL," the BSE Committee said in a statement. BIHL, as a BSE-listed company, and Bifm being a wholly-owned subsidiary of the group is by virtue thereof, also bound by the BSE Listings Requirements. BIHL board of directors last had to reverse the controversial sale of Bifm shares to executive managers and directors.
The then board chairman of BIHL Mclean Letshwiti, said at that time that "in response to shareholder concerns, the board will take measures to redress the adverse effects on the company, including the reversal of the transaction in its entirety without prejudice to minorities." Letshwiti was quoted in a local paper saying that "with the benefit of hindsight, I must respectfully state that this transaction could have served the desired purpose if public perceptions and expectations had been handled differently through communication of the transaction to stakeholders at a more appropriate time instead of relying only on the announcement in the annual report". Bifm executive managers and directors had sold themselves a 10 percent stake in the company worth P300 million without the knowledge of the BSE or the Non-Banking Financial Institutions Regulatory Authority.
