ICICI Securities Delisting Faces Class Action Suit from Minority Shareholders
A group of minority shareholders, led by investor Manu Rishi Guptha, have filed a class action suit against ICICI Securities' delisting plan with the National Company Law Tribunal. 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 claim is supported by Section 245 of the Companies Act 2013, which allows such suits when the management of a company acts in a manner prejudicial to the interests of its shareholders.
This follows objections raised by Quantum Mutual Fund, another minority shareholder, who termed the merger scheme "flawed" and detrimental to minority interests. They also allege "illegal" tactics by ICICI Securities to influence voting in favor of the delisting.
Despite these concerns, the delisting proposal was approved by shareholders on March 28th. While institutional investors overwhelmingly supported the scheme, a majority of non-institutional investors voted against it. Ultimately, 72% of public shareholders approved the delisting.
The scheme involves exchanging 67 shares of ICICI Bank for every 100 shares held in ICICI Securities. The boards of both entities approved the merger last year, despite reported concerns from some investors about the valuation.
This class action suit adds another layer of complexity to the delisting process and could potentially delay or even derail the entire plan.