NCLT dismisses petitions by minority shareholders opposing delisting of ICICI Securities

Mumbai – The Mumbai bench of the National Company Law Tribunal has dismissed applications filed by minority shareholders opposing the delisting of ICICI Securities, while allowing the company to go ahead with the plan. The detailed order in the matter is awaited.

A bench led by Justices Virendrasingh G. Bisht and Prabhat Kumar had reserved their order in the matter on 5 August.

ICICI Securities said in June 2023 that it plans to delist and merge with its parent company, ICICI Bank. The plan was approved by shareholders in March 2024, with 72% of the minority investors voting in favour of the plan. On June 29, 2023, the board of ICICI Bank approved the plan.

The delisting plan included ICICI Securities becoming a wholly owned subsidiary of ICICI Bank. Shareholders would get 67 shares of ICICI Bank for every 100 shares of ICICI Securities they held.

However, shareholders including Manu Rishi Gupta, an investor, and Quantum Mutual Fund opposed the proposed delisting of ICICI Securities in two different petitions, claiming that the share swap would negatively impact minority shareholders.

Gupta and Quantum owned 0.002% and 0.08%, respectively, of ICICI Securities' paid-up equity share capital. Following this, the two approached the NCLT seeking relief.

ICICI Securities contested the applications, stating that the applicants had no locus in the matter. While also clarifying that the proviso to Section 230 (4) of the Companies Act provides 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 the equity or 5% of the total outstanding debt.

Discussions on the stock's value were sparked by the fact that at the time of the announcement, the price of ICICI Securities' shares was slightly above the ₹520 initial public offering issue price.

As the proposal progressed, the shareholders highlighted concerns regarding the depressed valuation and the share-swap ratio of ICICI Securities. They also questioned the fairness of the deal, especially given the stock's low price relative to its potential.

In November, the Reserve Bank of India approved the delisting of ICICI Securities to make it ICICI Bank's wholly owned subsidiary, subject to certain conditions.

It received 'no objection' letters from the BSE and the National Stock Exchange of India for delisting the shares of the broking arm on 29 November 2023.