NCLAT upholds NCLT's approval for delisting of ICICI Securities

The National Company Law Appellate Tribunal (NCLAT) on Monday upheld the approval granted by the National Company Law Tribunal (NCLT) for the delisting of ICICI Securities (ISec), dismissing all six appeals filed by Quantum Mutual Fund (MF) and Manu Rishi Gupta.

 

Shareholders of ISec will receive 67 shares of ICICI Bank for every 100 shares held. Shares of ISec last closed at ₹795, while that of ICICI Bank ended at ₹1,215.

 

Last year, ICICI Securities had secured shareholders’ approval to delist the stock. However, Quantum MF and a few other shareholders had opposed the delisting, citing irregularities.

 

ICICI Bank was the first company to use the newly-introduced regulatory provision that grants exemption from the strict reverse book building (RBB) process for the delisting of a subsidiary firm in a similar business.

 

 

The key contentions of the appellants was that not following the reverse book building method for delisting took away the right of public shareholders. Also, the valuation and swap ratio they claimed were unfair. The appellants also questioned the relaxation granted by Sebi and the outreach exercise undertaken by ICICI Bank.

 

NCLAT noted that Regulation 37 of the SEBI (Delisting of Equity Shares) Regulations 2021 provides an alternative delisting mechanism. The tribunal held that shareholders retain the right to exit and that the valuation process adheres to recognised methods. Further, the tribunal said that the valuation report was prepared by independent valuers and supported by fairness opinions. It held that courts should not interfere with valuation issues.

 

It also held that the relaxation granted by Sebi was within its regulatory powers.

 

The NCLAT also didn’t find any evidence of undue influence or coercion.

 

The tribunal dismissed all appeals, while noting that the appellant did not meet the 10 per cent threshold under Section 230(4) of the Companies Act, 2013, to object to the scheme.

 

If the delisting bid goes through, ICICI Securities will merge with its parent firm ICICI Bank—which is also its majority shareholder with a 74.77 per cent stake—and become its wholly-owned subsidiary once again after six years.