Minority Shareholders File Suit Against ICICI Securities On Delisting Issues

Minority Shareholders File Suit Against ICICI Securities On Delisting Issues

More than 100 shareholders of ICICI Securities filed a class action suit with National Company Law Tribunal against the delisting plan of ICICI Securities on Saturday, according to investor Manu Rishi Guptha who is representing the aggrieved shareholders.

This comes after shareholders raised concerns on the way delisting process is going through, inappropriate valuation, swap ratio, and ICICI Bank’s attempts to influence shareholders to vote in favour of the delisting.

The terms of the arrangement stated that shareholders of ICICI Securities will get 67 shares of ICICI Bank against every 100 shares held, after the delisting process.

In a note by Quantum Mutual Fund, on April 10, who is a minority shareholder, the entity alleged that the valuation for ICICI Securities was at a discount of 30-77% in comparison to other listed peers. Even if the lowest valuation of ICICI Securities’ peers was considered, the merger offer would have been at least 30% higher.

The shareholders’ vote conducted in the last week of March for delisting of ICICI Securities saw a lot of opposition from retail shareholders. Some shareholders said that ICICI bank employees called them incessantly, goading them to vote in favour of the proposal.

Despite the opposition, votes in favour of delisting by institutional shareholders managed to swing the vote results on March 28.

About 72% of the shareholder votes were cast in favour of the proposal to merge ICICI Securities with ICICI Bank Ltd. after a delisting process.

Among the public institutional shareholders, 83.8% voted in favour of the proposal, while among the public non-institutional shareholders, only 32% votes were in favour. However, the large institutional holdings in ICICI Securities led to the proposal being cleared.

Foreign and domestic institutional investors own 16.68% in the broking firm. Non-institutional public shareholders held 8.55% in the company as of Dec. 31, 2023, according to stock exchange data.

The Securities and Exchanges Board of India requires that in cases of delisting and merger of a subsidiary with its holding company, votes in favour by shareholders of a delisted firm must be at least two times higher than those voting against it. More shareholders in the listed holding company must have voted in favour than the votes against the proposal.

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