Supreme Court Upholds ICICI Securities Delisting, Dismisses Investor Plea Over Valuation
The Supreme Court of India has officially upheld the delisting of ICICI Securities, dismissing an investor petition challenging the fairness of the valuation offered to public shareholders. The judgment affirms the legality and procedural integrity of the share swap method used by ICICI Bank, reinforcing the company’s stance and the approvals secured during shareholder voting.
Background of the Delisting
ICICI Securities, a subsidiary of ICICI Bank, proposed delisting in 2023 through a share swap arrangement. The deal offered 67 shares of ICICI Bank for every 100 shares of ICICI Securities held by public investors. The proposal received strong backing from stakeholders — over 93% of equity shareholders and nearly 72% of public shareholders voted in favor, surpassing the required thresholds.
Investor Challenge and Legal Proceedings
Despite majority approval, some minority shareholders opposed the deal, arguing that the valuation failed to reflect true market value. The primary point of contention was the lack of a reverse book-building (RBB) process, which investors claimed would have delivered a higher exit price.
Investor Manu Rishi Gupta filed a petition against the scheme, alleging inadequate price discovery and unfair treatment of minority shareholders. However, both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) rejected the petition, citing lack of sufficient shareholding to contest under Section 230(4) of the Companies Act.
The matter escalated to the Supreme Court, which on May 28, 2025, reaffirmed the decisions of the lower tribunals, concluding that the process followed by ICICI Bank and ICICI Securities was in line with regulatory requirements and did not warrant judicial interference.
Implications for Minority Shareholders and the Market
This judgment sets a significant precedent in India's corporate and securities law landscape. It highlights the importance of due process and shareholder participation in such transactions, while also emphasizing the need for investors to meet statutory thresholds to contest corporate decisions.
For companies, the ruling provides greater clarity and confidence when pursuing delisting through structured arrangements approved by regulators and shareholders.
FAQs: ICICI Securities Delisting Case
1. Why was ICICI Securities delisted?
ICICI Bank decided to consolidate its stake by delisting ICICI Securities to streamline operations and enhance shareholder value through a share swap arrangement.
2. What did the investor plea challenge?
The investor challenged the valuation method used during the delisting process, arguing that it did not represent fair value and lacked a reverse book-building mechanism.
3. Why did the Supreme Court dismiss the plea?
The Court upheld prior rulings that the delisting process complied with legal norms and noted that the investor did not meet the minimum shareholding threshold to challenge the scheme legally.
4. What does this mean for future delistings in India?
The ruling reinforces legal procedures in mergers and delistings, offering reassurance to companies about the validity of share swap methods when approved by a majority.
5. How does this affect minority shareholders?
It underscores the limitations faced by minority investors in contesting corporate actions without adequate shareholding or procedural grounds.
Published on : May 28, 2025
Uploaded by : PAVAN