NCLT Postpones ICICI Securities Delisting Case to July Hearing

The NCLT has decided to postpone the ICICI Securities case, where non-institutional minority shareholders contested its delisting and merger with ICICI Bank. The next hearing is scheduled for July.

Manu Rishi Guptha and over 100 shareholders of ICICI Securities lodged a class-action lawsuit at the NCLT last month, opposing the company’s delisting and merger proposal.

Shareholders are dissatisfied with the valuation of ICICI Securities, which is being taken private just six years after its initial listing.

They highlight that when ICICI Securities was listed, it had a price-to-earnings (PE) multiple of around 32x.

However, the company is now being delisted at a PE multiple of around 15x, which the shareholders argue is undervalued and unfair.

During Monday’s hearing, ICICI Securities questioned the validity of the class-action suit filed under Section 245 of the Companies Act, 2013, citing concerns about the threshold for such cases and their subject matter. They also raised a jurisdictional issue, suggesting the matter should be addressed to the Securities and Exchange Board of India (Sebi) instead of the tribunal.

Senior counsel Arun Kathpalia, representing ICICI Securities, argued that the shareholders who filed the lawsuit represented only 0.0065% of ICICI Securities’ share capital. He pointed out that most minority shareholders had approved the delisting proposal.

Kathpalia further stated that 37 out of the 110 investors involved in the suit had purchased shares of the company after 25 June 2023, when the swap ratio was disclosed. He remarked, “We are dealing with investors who are speculative and now they are speculating on a lawsuit”.

The petitioners claimed that the shareholder vote was tainted by interference from ICICI Bank employees. Sebi is reportedly investigating these allegations. Additionally, Advocate Kaushik Chhatterjee, representing the petitioners, pointed out that ICICI group mutual funds acquired 1.3 million ICICI Securities shares in March, counted as publicly held. Similarly, shares owned by ICICI Securities employees who received stock options were also classified as public shares.

On March 28, in a board meeting, ICICI Securities had revealed that of the institutional investors 83.8 per cent voted positively, while in terms of retail investors only 32 percent of retail shareholders were in favour of the delisting.