ICICI Securities Delisting Ongoing, NCLT Defers to July: Full Update

by | May 16, 2024 | 0 comments

Even though the NCLT has pushed the case to a later date in July, this will foster moment when it would be subjected to further examination and intense arguments.

The drama over the delisting of ICICI Securities is still unfolding and has experienced yet another setback after the National Company Law Tribunal (NCLT) postponed its decision until July considering concerns raised by minority shareholders about possible privacy breaches and voting manipulation.

Recently, a class action lawsuit has been filed against ICICI Bank’s delisting plans and merger proposal with ICICI Securities by more than 100 shareholders under the leadership of Manu Rishi Gupta. In effect, it accuses ICICI Securities of sharing confidential shareholder data improperly with ICICI Bank, an act that invades investor privacy.

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In June 2023, the board of ICICI Bank approved the delisting of ICICI Securities. It involved giving shares in ICICI Bank to holders of shares in ICICI Securities who would receive 67 shares in ICICI Bank for every 100 they hold in their former investment bank. This aimed to make all the equity interest, exclusively owned by parent company ICICI bank limited. However there have been questions on how fair this move is as some people feel that these shares are undervalued especially when compared to their price during their initial public offering (IPO) in 2018 considering that its stock traded at Rs 510 apiece on Wednesday while its IPO price was Rs 520 per share.

Initially, the delisting plan passed through regulatory hurdles such as permission from Reserve Bank of India (RBI) coupled with ‘no objection’ from stock exchanges BSE and NSE towards late 2023. However, investors were unhappy which came out prominently during a post-earnings analyst call held in January 2024. Despite receiving approval from shareholders to proceed with delisting in March, there were still apprehensions among them due to trustworthiness of voting process and confidentiality pertaining to ownership information.

Moreover, several mutual funds such as Kotak, LIC and Quantum revealed their dissatisfaction by voting no for delisting, which underscored continuing concerns about the valuation and terms of the deal.

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SEBI has taken up multiple complaints regarding potential vote rigging as well as undue influence by ICICI Bank officers before the delisting vote to look at it as the case now waits for further hearing in July. This on-going saga remains under intense scrutiny in line with ICICI securities’ poor stock performance over the last three months.

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