NCLAT Junks Petitions Against ICICI Securities' Delisting Process
NCLAT Junks Petitions Against ICICI Securities' Delisting Process
States that the appellants failed to demonstrate any illegality in the procedure
A two-member bench of the National Company Law Appellate Tribunal (NCLAT) has dismissed petitions challenging ICICI Securities' delisting process from stock exchanges.
The Coram of Justice Yogesh Khanna (Chairperson) and Ajay Das Mehrotra (Technical Member) said the petitioners did not have requisite shareholding. They were trying to stop a process approved by 93.82 percent of equity shareholders and 71.89 percent of public shareholders.
The petitioners, Manu Rishi Guptha and Quantum Mutual Fund, had 0.002 percent and 0.08 percent stake, respectively of ICICI Securities.
The 12-page order of the tribunal stated that at the instance of the appellant, holding ‘minuscule’ shares, the scheme’s implementation was delayed. The majority shareholders were being ‘deprived of the benefits’ of the plan.
It "militates against the basic principle of shareholder's democracy, which permeates through all corporate actions.”
The NCLAT added that the appellants failed to demonstrate any illegality in the process followed for sanctioning the scheme or in the terms of the plan.
While upholding the previous order passed by the National Company Law Tribunal (NCLT), it said, “The impugned order is a detailed, well-reasoned order, which has effectively dealt with all contentions raised by the appellant whilst noting that the appellant is not entitled to object to the scheme.”
Quantum and Guptha had challenged an earlier order passed by the Ahmedabad bench of the NCLT, which approved the delisting and dismissed the two petitions, in August last.
However, the order was challenged by the petitioners before the NCLAT, alleging the undervaluation of shares and manipulation.
They alleged a prejudice was caused to the public shareholders, as the scheme took away the right to reverse book building and the unfair valuation and swap ratio. They added that the relaxation granted by the Securities and Exchange Board of India (SEBI) was not valid.
Quantum and Guptha also raised the outreach exercise by ICICI Bank and SEBI’s administrative warning. It showed undue influence caused by the company over its shareholders and the participation of employees and mutual funds of the ICICI Group in the voting as public shareholders was bad.
The appellate tribunal observed that one of the petitioners did not meet the 10 percent threshold under Section 230(4) of the Companies Act, 2013.
The NCLAT reminded that it was a settled law – ‘what cannot be done directly cannot be done indirectly’. It added that since the petitioners had no right to object, they could not maintain the appeal as ‘aggrieved persons.’
Thus, as per the scheme of arrangement, shareholders of ICICI Securities would get 67 shares of ICICI Bank for every 100 shares.
ICICI Securities declared that it would delist and continue as a wholly-owned subsidiary of ICICI Bank in June 2023.
In March 2024, the plan was accepted by shareholders, with 72 percent of minority shareholders voting in its favor. On 29 June 2023, the plan was authorized by the board of ICICI Bank.
