In a significant decision in the ongoing ICICI Securities delisting controversy, the Bombay High Court (HC) last week directed the Securities and Exchange Board of India (SEBI) to disclose the exemption letter granted to ICICI Securities. This letter, which exempted the company from the reverse book-building process for delisting, has been a central point of contention in the case.
The court instructed SEBI to provide the exemption letter to Aruna Vinod Modi, an ICICI Securities shareholder who challenged the regulator's decision. However, the Court imposed strict confidentiality measures, prohibiting Ms Modi from sharing, reproducing, or allowing a third-party inspection of the letter without the Court's permission.
This ruling came after Ms Modi argued that SEBI had overstepped its authority by granting the exemption which, she claimed, violated delisting regulations. The Court's decision underscores the importance of transparency in regulatory decisions, especially those affecting shareholder interests.
During the proceedings, the Court emphasised that a shareholder has the right to know about the company's affairs. This stance was maintained, despite attempts by ICICI's counsels to argue that Ms Modi's shareholding of 500 shares was insignificant. The Court rejected this argument, reinforcing the principle that even minority shareholders have the right to information.
The case has been scheduled for further hearing on 9 October 2024, with the Court setting deadlines for the exchange of affidavits and rejoinders. SEBI has been directed to file its affidavit-in-reply by 6th September, with any rejoinder to be filed by 25th September.
Parallel to this HC case, the national company law tribunal (NCLT) is hearing separate allegations against ICICI Bank for allegedly influencing shareholders improperly to support the delisting of ICICI Securities. Despite these challenges, about 83.8% of public institutional shareholders and 32% of non-institutional shareholders have voted in favour of the delisting.
This case has evolved significantly since its inception. It began with minority shareholders raising concerns at the NCLT about the fairness and transparency of ICICI Securities' delisting process. The initial hearings at the NCLT on 9th July and 15 July 2024, focused on issues such as the validity of SEBI's exemption, the interpretation of 'same line of business' for ICICI Bank and ICICI Securities, and the adequacy of disclosures to shareholders.
We have covered this delisting saga through various articles.
The case then expanded to the Bombay HC when Ms Modi filed a writ petition challenging SEBI's exemption. This move broadened the legal battleground and brought increased scrutiny to SEBI's decision-making process. The HC's recent order for SEBI to disclose the exemption letter marks a crucial development, potentially allowing for a more informed debate on the regulator's rationale.
Throughout its evolution, the case has consistently highlighted key issues in corporate governance, regulatory oversight, and minority shareholder rights. It has progressed from initial objections at the NCLT to a multi-forum legal challenge, involving both the NCLT and the HC. The case continues to draw attention from the financial and legal communities, as its outcome could set important precedents for future delisting processes and regulatory exemptions in India's capital markets.
How come they are in the same line of business if they are demerged in the first place only a couple of years back.