National Company Law Tribunal (NCLT), on Wednesday, 21 August 2024, dismissed the petition filed against ICICI Securities Delisting plans. Last year in June, ICICI Bank announced the delisting plan of ICICI Securities, in which ICICI Bank holds 75% stakes. Minority shareholders of ICICI Securities filed a petition against the same in NCLT. The Tribunal gave its verdict yesterday and dismissing the petition, nodded for the delisting plans.
Before we jump into the details of the ICICI Securities delisting plan, let us understand how delisting works and the role of NCLT.
What is the delisting of a security?
As per SEBI, delisting securities means removing a security or listed company’s share from the stock exchange. This means the stock won’t be available anymore on the stock exchange for trading and investment purposes.
Now delisting can be voluntary or compulsory. So, for instance, this ICICI Securities delisting is voluntary as the company has decided on its own to delist itself from the stock exchanges. However, if SEBI or stock exchanges ask any company to delist then it must be related to non-compliance or other legalities which the company couldn’t follow.
However, in both cases, once a company is delisted, it cannot be listed again and thus delisting is also referred to as permanent removal of the company from the stock exchange.
ICICI Securities Delisting Plan
In June 2023, ICICI Bank announced that it would delist its broking business, ICICI Securities from the stock exchanges via a share-swap deal. The icici bank delisting icici securities deal was valued at $622 million or above ₹ 50 billion.
In ICICI Securities, the stakes held by ICICI Bank is around 75% which the bank wants to take up to the entire 100% and make ICICI Securities, a wholly-owned subsidiary of the lending bank.
ICICI Bank will be buying the remaining 25% stakes of ICICI Securities and then delist it from the exchanges.
What does it mean for the investors?
As per the delisting agreement drawn last year, ICICI Bank decided to give 67 shares of the bank for every 100 shares of ICICI Securities for the delisting purpose. Suppose, you have 1000 ICICI Securities in your investment portfolio, you will receive 670 shares of ICICI Bank but the 1000 shares of ICICI Securities will get dissolved.
Post delisting of the stock, no traders and investors can buy or sell the stock and all investors holding the ICICI Securities get the ICICI Bank shares in the abovementioned ratio in their Demat account.
Share swap Method for Delisting
As mentioned above, the shareholders of ICICI Securities will get shares of ICICI Bank, this process of delisting shares from any stock exchange is known as a share swap. In this method, stakeholders get shares of the parent company that is buying the company that is getting delisted.
The share swap is carried based on a share swap ratio which determines the number of shares a shareholder will get against the shares he holds in the company getting delisted. Last year, the share swap ratio was decided at a 2.3% premium.
Why did minority shareholders file the petition?
Some of the shareholders which included Quantum Mutual Fund, Manu Rishi Guptha, and others filed a petition opposing the delisting plan of ICICI Securities with NCLT. They claimed that this delisting would affect the interest of the minority shareholders as the valuation of ICICI Securities was lower than its fair value.
NCLT’s Take on ICICI Securities Delisting
NCLT dismissed the petition as the required shareholding for filing petitions or opposing board’s decision is way higher than the shareholding of Quantum MF or Manu Rishi Guptha. They hold around 0.08% and 0.02% stakes in the ICICI securities respectively while the required stakeholding is 10% of equity or 5% of outstanding debt.
Share Price Movement
The ICICI Securities share price has gone up in the past year by more than 27% and currently, it is trading around ₹ 790 per share. After yesterday’s nod for the delisting, the share had picked up too, gaining around 0.69% today.
Source: SEBI, IndiaToday
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.