ICICI Securities Delisting: Bombay High Court Allows Amendment to Petition; Complexity Grows
Moneylife Digital Team 05 September 2024
In a significant ruling on 3 September 2024, the Bombay High Court allowed petitioner Aruna Vinod Modi to amend her writ petition seeking details of the exemption granted by the market regulator to ICICI Bank from making an open offer in the merger and consequent delisting of ICICI Securities. This development marks another crucial turn in the complex legal battle surrounding the proposed delisting of ICICI Securities.
 
A two-member bench of justices KR Shriram and Jitendra Jain permitted the petitioner after the Securities and Exchange Board of India (SEBI) made available an exemption letter which was initially subject to strict non-disclosure conditions. This letter is now likely to become available in the public domain. It is still unclear how the regulator would insist on the letter being kept confidential.
 
However, the revised petition could potentially shed more light on SEBI's rationale for granting the exemption, a key point of contention in the case. It could help address the question of whether large companies can obtain regulatory waivers to swallow up their listed subsidiaries or if the minority investor participation in the price discovery process is essential for the delisting to work effectively.
 
A significant regulatory change occurred on 28 June 2024 when SEBI approved a fixed-price model for delistings. This new model allows founders to offer to buy back shares from the public at a minimum 15% premium to the fair price as an alternative to the reverse book-building process. SEBI chairperson Madhabi Puri Buch explained that this change was introduced to address issues with the previous system, which often pushed stock prices to 'stratospheric levels' during delisting attempts.

Under these new rules, a founder can make a counteroffer to shareholders after receiving bids based on the delisting floor price, provided they secure a 75% stake in the company and more than half of the public investors tender their shares. This regulatory shift aims to streamline the delisting process and prevent situations like the failed Vedanta Ltd delisting attempt in 2020. (Read: Vedanta delisting fails)
 
ICICI Bank has moved more than 30% post-announcement of the delisting of ICICI Securities.  
 
 
The ICICI Securities' delisting saga has evolved into a multi-faceted legal battle spanning various forums and raising critical questions about corporate governance, shareholder rights and regulatory oversight.
 
Initially, the case began with objections from minority shareholders at the national company law tribunal (NCLT). On 21 August 2024, the Mumbai bench of NCLT approved ICICI Securities' delisting application, dismissing objections raised by Quantum Mutual Fund and minority shareholder Manu Rishi Gupta. The NCLT approval came, despite allegations of undue influence on the voting process.
 
Concurrently, ICICI Securities disclosed a settlement with SEBI, paying Rs69.82 lakh to resolve issues related to its merchant banking activities' due diligence process.
 
The case then expanded to the Bombay High Court (HC) when Aruna Vinod Modi challenged SEBI's exemption decision. The HC’s order for SEBI to disclose the exemption letter marked a crucial development, potentially allowing for a more informed debate on the regulator’s rationale.
 
Now, with the HC allowing the amendment of Ms Modi's petition, the case enters a new phase. The inclusion of new information and the potential public disclosure of the SEBI exemption letter could bring fresh perspectives to the ongoing debate.
 
Throughout its evolution, the case has consistently highlighted key issues in corporate governance, regulatory oversight and minority shareholder rights. It continues to draw attention from the financial and legal communities, as its outcome could set important precedents for future delisting processes and regulatory exemptions in India's capital markets.
 
We have covered this delisting saga through various articles. Here are the links to these articles…
 
 
 
 
 
 
Comments
parimalshah1
5 months ago
The house of many not in order. Be it ICICI bank, HDFC bank, SEBI, and God knows, which others. Lot of cleaning required.
mgprabhu
5 months ago
Looks these days no one does a fact check at Moneylife.

How is Vedanta's delisting similar to ISec ? Vedanta gave it's minority shareholders option to submit share at the price which they are wished. The floor price is of no relevance at all in final delisting. What matters is the discovered price and the quantity needed. Vedanta failed to get the quantity.

In Adani power, it never came to exchange with offer, after getting shareholder nod for delisting.

ISec has not given any chance to its minority shareholders and facilitate price discovery, which Vedanta did.
parimalshah1
5 months ago
How SEBI has different yardstick for ICICI demerger case?!!
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