The National Company Law Appellate Tribunal (NCLAT) on Monday dismissed petitions challenging ICICI Securities’ delisting process from stock exchanges, saying appellants failed to demonstrate any illegality in the procedure. Rejecting the petitions, a two-member NCLAT bench said the petitioners did not have requisite shareholding and were trying to stop a process approved by 93.82 per cent of equity shareholders and 71.89 per cent of public shareholders.
Petitioners Manu Rishi Guptha and Quantum Mutual Fund, respectively have 0.002 per cent and 0.08 per cent stake of ICICI Securities.
It is only at the instance of the appellant, who holds “minuscule” shares, that the implementation of the scheme is being delayed and the majority shareholders are being “deprived of the benefits” of the plan, the NCLAT said in its 12-page order.
This “militates against the basic principle of shareholder’s democracy, which permeates through all corporate actions”, said the NCLAT bench, comprising Justice Yogesh Khanna and Technical Member Ajay Das Mehrotra, while dismissing petitions.
The appellate tribunal also said appellants have failed to demonstrate any illegality in either the process followed for sanctioning the scheme or in the terms of the plan itself.
It upheld the previous order passed by the NCLT and said the “impugned order is a detailed, well-reasoned order, which has effectively dealt with all the contentions raised by the appellant whilst noting that the appellant is not entitled to object to the Scheme”.
Quantum Mutual Fund and Guptha had challenged an earlier order passed by the Ahmedabad bench of the National Company Law Tribunal (NCLT), which earlier approved the delisting, dismissing the two petitions, in August last year.
The order was subsequently challenged by both the petitioners, alleging undervaluation of shares and manipulation before the appellate tribunal.
They had alleged a prejudice is caused to the public shareholders as the scheme takes away the right to reverse book building and about unfair valuation and swap ratio. Moreover, the relaxation granted by Sebi in this delisting process is not valid.
Petitioners have also raised the outreach exercise by ICICI Bank and Sebi administrative warning shows undue influence caused by the company over its shareholders and the participation of employees and mutual funds of ICICI group in the voting as public shareholders was bad.
The NCLAT also observed that one of the appellants, the petitioners, does not meet the 10 per cent threshold under Section 230(4) of the Companies Act, 2013 (Act) to object to the scheme.
It is a settled law that what cannot be done directly cannot be done indirectly — since the appellants have no right to object, they cannot maintain the appeal as “aggrieved persons”.
As per the scheme of arrangement, shareholders of ICICI Securities (ISEC) will get 67 shares of ICICI Bank for every 100 shares they hold.
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 per cent of minority shareholders voting in favour of it. The plan was authorised by the ICICI Bank board on June 29, 2023.>
