Supreme Court Upholds ICICI Securities Delisting

The Supreme Court on Wednesday dismissed a petition challenging the delisting of ICICI Securities Ltd., clearing the way for its status as a wholly-owned subsidiary of ICICI Bank. The court rejected an appeal filed by investor Manu Rishi Gupta, who had objected to the valuation and the process followed.

ICICI Securities was delisted in March and merged with its parent, ICICI Bank. Gupta's counsel had argued that the valuation was unfair and that a reverse book-building process might have resulted in a better price. The lawyer also said the delisting process was opaque and rushed.

ICICI Bank’s counsel countered that Gupta had continued trading in ICICI Securities shares even after the delisting plan was made public. The court questioned the petitioner’s conduct, saying, “Why would you buy more shares” if the scheme was known. The bench noted that over 90% of shareholders had approved the delisting and dismissed the petition.

In March, the National Company Law Appellate Tribunal upheld rulings by the Mumbai and Ahmedabad benches of the National Company Law Tribunal that had approved the delisting. Gupta and Quantum Mutual Fund had opposed the move, citing concerns about a depressed valuation and an unfavourable share-swap ratio for minority shareholders. Quantum Mutual Fund and Gupta held 0.08% and 0.002%, respectively, of ICICI Securities' paid-up equity capital.

ICICI Securities had argued the petitioners had no legal standing to challenge the scheme. Under the Companies Act, 2013, only those holding at least 10% equity or 5% of the total debt are eligible to object to a scheme of arrangement.

As part of the merger, ICICI Bank will issue 56.01 million of its shares to public shareholders of ICICI Securities. The share-swap ratio was set at 67 shares of ICICI Bank for every 100 shares of ICICI Securities.