India’s ICICI Bank is facing pushback against delisting its unit ICICI Securities, with some shareholders trying to block the move and the market regulator hauling the bank up over its processes to win shareholder approval.
In March, around 72% of ICICI Securities’s minority shareholders voted in favour of selling their shares to ICICI Bank, which holds a roughly 75% stake in the brokerage.
Ahead of the vote, media reports said ICICI Bank employees called ICICI Securities’ shareholders, soliciting their votes in favour of the move.
India’s markets regulator had received several complaints about these calls and had issued ICICI Bank a warning letter in this regard, saying the outreach was against regulations, the bank disclosed.
The bank argued that the so-called outreach was to present shareholders a factual position of the transaction.
However, the Securities and Exchange Board of India (SEBI) said that since ICICI Bank was an interested party, there was a conflict of interest and thus, the outreach was inappropriate.
“This has been viewed seriously,” the SEBI said.
Moreover, Quantum Mutual Fund, an investor in ICICI Securities, moved an India company tribunal against the proposed delisting, saying the buyout price was low and that the delisting process violated rules.
A local tribunal in Ahmedabad in the western state of Gujarat heard Quantum’s plea on Wednesday and the next hearing is scheduled for July.
This is a second suit aimed at stopping the delisting.
Last month, a clutch of retail shareholders had filed a plea against the plan, according to local media reports.
Reuters