NCLT approves delisting of ICICI Securities; firm's shares see major drop

Dismissing objections raised by minority shareholders, the National Company Law Tribunal (NCLT)-Mumbai on Wednesday approved the delisting of ICICI Securities Ltd from the stock exchanges.

ICICI Securities shareholders will receive 67 ICICI Bank Ltd shares for every 100 shares they hold as per the approved scheme.

Justice Virendra Singh G Bisht and technical member Prabhat Kumar dismissed the applications of Quantum Mutual Fund and investor Manu Rishi Guptha objecting to the proposed delisting of ICICI Securities.

The NCLT had reserved its order on August 5 after listening to the arguments by the parties.

Shares of ICICI Securities reportedly fell 5% to the day’s low of Rs 808.55 on the BSE after the delisting.

ICICI Securities had told the tribunal that those opposing the delisting have no locus standi, as the proviso to Section 230(4) of the Companies Act says that any objection to a scheme of arrangement under Section 230 of the Act shall be made only by persons either holding at least 10% of equity or 5% of the total outstanding debt as per the latest audited financial statement.

Quantum MF and Guptha hold 0.08% and 0.002% of the paid-up equity share capital of ICICI Securities, respectively.

The ICICI Bank’s affiliate firm had argued that the two applications should be dismissed as they were against the principle of shareholder democracy. It said that the delisting proposal has been approved by 93.82% in value of equity shareholders of ICICI Securities.

A similar case is going on in NCLT-Delhi.

Minority shareholders had told the tribunal in Delhi that ICICI Securities had breached shareholder privacy and administration rules by sharing the details of shareholders with ICICI Bank. They said that employees of ICICI Bank called and misled shareholders to vote in a particular way in the name of "spreading awareness".

The lawsuit, filed by minority shareholders led by Bengaluru-based investment manager Guptha, said ICICI Bank influenced shareholders to support its proposal to delist the private lender’s broking subsidiary from Indian stock exchanges. It said that ICICI Bank employees, not the employees of ICICI Securities, contacted public shareholders, persuading them to vote in favour of delisting. The lawsuit further said that bank employees created a PowerPoint presentation to influence shareholders and exploit their lack of technological expertise.

Meanwhile, Guptha told Business Standard, "We will appeal and wouldn't allow the justice to fester."

The Bombay High Court is also hearing a similar case. The court had on August 7 directed the Securities and Exchange Board of India (Sebi) to disclose a letter that granted ICICI Securities an exemption from the reverse book building process required for delisting.

This exemption was contested by Aruna Vinod Modi, another shareholder of ICICI Securities, saying that it violated the delisting regulations and that the market regulator had overstepped its authority.

The court told Sebi to provide a copy of the exemption letter to Modi, but with strict conditions prohibiting her from sharing, reproducing, or allowing third-party access to the letter.