Minority Shareholders File Class Action Suit Against ICICI Securities Delisting Plan
A group of minority shareholders, led by investor Manu Rishi Guptha, have filed a class action suit with the National Company Law Tribunal against ICICI Securities' delisting plan. The suit, filed on April 27th, involves over 100 shareholders and challenges the valuation used for the delisting process.
The shareholders argue that the current valuation, based on a report from June 29, 2023, does not account for the subsequent bull market rally and improved financial position of ICICI Securities. They believe this undervalues their shares and unfairly benefits the majority shareholder, ICICI Bank.
Their lawsuit cites Section 245 of the Companies Act 2013, which allows such action when individuals believe the company's management is acting in a manner prejudicial to the interests of the company or its members.
This follows earlier objections raised by Quantum Mutual Fund, another minority shareholder, who deemed the merger scheme "flawed and riddled with irregularities." They also expressed concerns about the potential negative impact on minority shareholders.
The shareholders further allege that ICICI Securities employed "illegal" methods to secure votes in favor of the delisting. They claim to have received calls from ICICI Bank, on behalf of ICICI Securities, urging them to vote for the merger.
During the March 28th shareholder vote, 83.8% of institutional investors approved the delisting, while 67.8% of non-institutional investors opposed it. Overall, 72% of public shareholders voted in favor.
The proposed scheme offers shareholders 67 shares of ICICI Bank for every 100 shares of ICICI Securities they hold. The boards of both entities approved the delisting and merger plan last year, despite reported concerns from some investors regarding the valuation.