An investor in ICICI Securities has moved the Bombay High Court, contesting the Securities and Exchange Board of India’s decision to grant parent ICICI Bank relaxation from rules on delisting the broking firm.
Aruna Modi, a shareholder of ICICI Securities, said in a writ petition filed before the court that the capital markets regulator “acted beyond its jurisdiction” in granting the exemption. She contends that Regulation 42 of the delisting regulations does not empower Sebi to grant any relaxation or exemption regarding any substantive requirement under the delisting regulations.
The petition said such exemptions in the delisting regulations apply only if the listed subsidiary and the listed holding company are in the same line of business. ICICI Securities is a ‘stockbroker’ while ICICI Bank is a ‘commercial bank’, it said.
According to the petition, Sebi did not provide a copy of the order of relaxation or exemption granted to ICICI Securities on June 20, 2023. Sebi did not respond to ET’s queries.
In March, public shareholders of both ICICI Bank and ICICI Securities approved the scheme of arrangement in which the bank proposed delisting the broking firm through a share swap deal. As per the terms, for every 100 shares held, public shareholders in ICICI Securities would receive 67 shares of ICICI Bank. A section of the minority shareholders of ICICI Securities is opposed to the delisting bid because they felt the share swap ratio offered by ICICI Bank was unfavourable to them.
According to the petition filed at the court, Sebi’s step to relax delisting rules in this case could encourage more companies to misuse the delisting regulations. The petition pleaded with the court to declare the scheme of arrangement as illegal and void and to stay the Sebi’s exemption order dated June 20, 2023, until the court gives its verdict. It also requested the court to direct Sebi to produce a copy of the exemption order.
In two separate applications, Quantum Mutual Fund and Bengaluru-based money manager Manu Rishi Guptha, who are shareholders of ICICI Securities, objected to the proposed delisting and moved the National Company Law Tribunal’s Mumbai and Delhi bench, respectively.
Earlier this month, the Mumbai bench NCLT said it does not have jurisdiction to adjudicate the legality of the Sebi exemption for delisting without the reverse book-building process and indicated that the matter must be moved to the appropriate forum.
