The National Company Law Tribunal (NCLT) has deferred the ICICI Securities case in which non-institutional minority shareholders challenged its delisting and merger with ICICI Bank. The NCLT is now expected to take the case up in July.
Last month more than 100 shareholders of ICICI Securities, led by Manu Rishi Guptha, filed a class-action lawsuit at the NCLT against ICICI Securities’ delisting and merger plan.
The shareholders are unhappy with the valuation at which the company is being taken private just six years after it was listed. They argue that ICICI Securities was listed at a price-to-earnings multiple of around 32x but is being delisted at a PE multiple of around 15x.
ICICI Securities questions maintainability
During the hearing on Monday, ICICI Securities questioned the maintainability of the class-action suit, filed under Section 245 of the Companies Act, 2013, in terms of the threshold for such a case and its subject matter. Section 245 of the Companies Act allows a group of individuals to collectively file a lawsuit against a company.
ICICI Securities also claimed there was a jurisdictional issue, suggesting the matter should be addressed to the Securities and Exchange Board of India (Sebi) rather than the tribunal.
Senior counsel Arun Kathpalia, representing ICICI Securities, argued that the shareholders who filed the lawsuit represented just 0.0065% of ICICI Securities’ share capital. He also noted that most minority shareholders had approved the delisting proposal.
Kathpalia argued that 37 of the 110 investors who filed the suit had bought shares of the company after 25 June 2023, when the swap ratio was disclosed. Shareholders of ICICI Securities are set to receive 67 shares of ICICI Bank for every 100 shares they hold. Kathpalia said, “We are dealing with investors who are speculative and now they are speculating on a lawsuit.”
Petitioners say vote was compromised
The petitioners, however, said the shareholder vote was compromised by interference from employees of ICICI Bank. Mint reported earlier that Sebi was investigating allegations that employees of ICICI Bank had reached out to shareholders of ICICI Securities to influence them ahead of the shareholder vote in March.
Advocate Kaushik Chhatterjee, counsel for the petitioners, also claimed that ICICI group mutual funds had bought as many as 1.3 million shares of ICICI Securities in March, which were classified as publicly held shares by the company. Similarly, shares held by employees of ICICI Securities, to whom employee stock options were granted, were also listed as public shares, the petitioners said.
The case revolves around ICICI Securities’ announcement last year that it would delist and merge with ICICI Bank, and offer investors 67 shares of ICICI Bank for every 100 shares of ICICI Securities they held. The plan was approved on 28 March, with 72% of shareholders voting in favour of it. However, about 68% of public non-institutional investors opposed the scheme.
