NCLAT dismisses appeals against ICICI Securities delisting

The National Company Law Appellate Tribunal (NCLAT) on Monday dismissed a batch of appeals challenging the order of National Company Law Tribunal (NCLT) allowing ICICI Securities to proceed with its proposal to delist from Indian bourses..A coram of Judicial Member Justice (retired) Yogesh Khanna and Technical Member Ajay Das Mehrotra passed the order, a detailed copy of which is awaited..In August last year, the NCLT Mumbai Bench sanctioned the scheme of arrangement between ICICI Bank Limited and ICICI Securities Limited, paving the way for the delisting of the latter and its transformation into a wholly-owned subsidiary of the former.The scheme involves the delisting of ICICI Securities from the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), with public shareholders of ICICI Securities receiving shares of ICICI Bank in exchange for their holdings.ICICI Securities was listed in March 2018. However, due to the cyclical nature of the securities business and regulatory restrictions preventing ICICI Bank from directly engaging in securities broking, the companies proposed this scheme to enhance operational synergies and provide greater stability to public shareholders..The scheme faced objections from two entities: Quantum Mutual Fund and Manu Rishi Guptha, a public shareholder. Their primary concerns included:Undervaluation of shares: The objectors argued that the swap ratio undervalued ICICI Securities’ shares and that a reverse book-building process would have yielded a better price.Lack of disclosure: They contended that the exemption granted by the Securities and Exchange Board of India (SEBI) and the valuation details were not adequately disclosed to shareholders.Alleged manipulation: The objectors alleged that ICICI Bank and ICICI Securities engaged in an outreach program to influence shareholders to vote in favour of the scheme..The NCLT dismissed the objections, stating that the scheme was approved by a significant majority of shareholders and complied with all legal and regulatory requirements. The Tribunal noted that the objectors did not meet the threshold of holding at least 10% of the shareholding required to challenge the scheme under Section 230(4) of the Companies Act, 2013..This prompted them to file an appeal before the NCLAT..The objectors were represented by Advocates Kaushik Chatterjee and Samrath Chowdhary.The respondents were represented by Advocates Shankh Sengupta, Siddharth Ranade, Prakshal Jain, Ribhu Garg and Vijay Parikh.