Securities and Exchange Board of India (Sebi) is examining allegations made by some minority shareholders of ICICI Securities that they were coerced by the relationship managers (RMs) of its parent ICICI Bank to vote in favour of a proposal to delist the stock broking arm. These small investors have also moved the company law tribunal against the bank with similar allegations.
The Delhi bench of the tribunal will hear the matter on Monday.
“The RMs would have been asked by some senior management personnel of the bank to woo the subsidiary’s shareholders to vote in favour of the delisting proposal,” said a person familiar with the regulator’s thinking. “Sebi is looking into the allegations. Call data records of people involved in this matter will also be examined.” Emails sent to ICICI Bank and Sebi remained unanswered.
About 72% of ICICI Securities’ public shareholders voted in favour of the scheme of arrangements and subsequent delisting.
Unlike an ordinary resolution where promoters can participate, a delisting proposal comes under a special resolution where promoters can’t vote. For the special resolution to go through, the number of votes cast by public shareholders in favour of it should be twice that of those against it.
While a section of ICICI Securities’ shareholders opposed the delisting citing unfavourable valuations in the deal, ICICI Bank came under fire for allegedly coaxing the broking arm’s shareholders to support the private lender’s proposal to delist the broking and investment banking arm.
In their complaint to Sebi, the retail shareholders of ICICI Securities alleged that the “agents” of ICICI Bank approached many of them and “tried to mislead and unduly influence them to vote in favour of the purported scheme or click the assent button in the confirmation page”. They have also submitted snapshots of calls made by these agents.
Their complaint to Sebi further said that the agents told small shareholders since they are not habituated to voting through the NSDL portal, they should click on the assent button alone to ensure that the vote is cast. Sebi has also received a complaint on the valuation of ICICI Securities from Quantum Mutual Fund, which holds a 0.21% stake in the brokerage and had voted against the delisting.
The capital markets regulator may not intervene in the complaint over the valuations in the delisting as it doesn’t get involved in such metrics, said the person quoted above. Quantum believes that the deal has been undervalued.
As part of the scheme of arrangement, ICICI Securities’ shareholders will receive 67 shares of ICICI Bank for every 100 shares held. Investors are contending that the ratio is against their interests on the grounds that ICICI Securities’ profits are growing.
In their plea before the company law tribunal, the small shareholders of ICICI Securities said the “entire voting process is vitiated by fraud and it should be nullified”.
