ICICI Securities delisting cleared by NCLT; minority shareholders' objections rejected

The National Company Law Tribunal (NCLT) in Mumbai has approved the delisting of ICICI Securities, dismissing the objections raised by minority shareholders, including Quantum Mutual Fund and investor Manu Rishi Gupta. The decision, made by Justices Virendrasingh G Bisht and Prabhat Kumar on August 21, came after the tribunal reserved its judgment on August 5.

ICICI Securities had announced its intention to delist and merge with its parent company, ICICI Bank, in June 2023. This plan, which includes a share-swap ratio of 67 ICICI Bank shares for every 100 shares of ICICI Securities, was approved by 72 per cent of minority shareholders in March 2024. ICICI Bank's board had also given its nod to the delisting on June 29, 2023.

The delisting faced opposition from Quantum Mutual Fund and Manu Rishi Gupta, who argued that the share-swap ratio was unfavourable and would harm minority shareholders. Despite holding a combined stake of just 0.082 per cent in ICICI Securities, they brought their objections before the NCLT. However, the tribunal ruled that their stake was insufficient to challenge the delisting under the Companies Act, which requires objectors to hold at least 10 per cent of the equity or 5 per cent of the total debt to have standing in such cases.

In addition to the delisting, ICICI Securities has been involved in regulatory proceedings with the Securities and Exchange Board of India (SEBI). The company recently paid a settlement of Rs 69.82 lakh to SEBI under the SEBI (Settlement Proceedings) Regulations, 2018, following observations related to the due diligence process in its merchant banking activities.

The ICICI Securities delisting has sparked a broader debate over corporate governance and the protection of minority shareholder rights. The matter is also being examined by the NCLT's Delhi bench, where allegations that ICICI Bank pressured shareholders to support the delisting are under review. Additionally, the Bombay High Court is hearing a case brought by shareholder Aruna Vinod Modi, challenging SEBI's decision to exempt ICICI Securities from the reverse book-building process typically required for delistings.

This case underscores the complexities of corporate delistings and the ongoing need for vigilant regulatory oversight to ensure fair treatment of all shareholders.