Exclusive: Due to worries over delisting, minority shareholders have filed a class action lawsuit against ICICI Securities

Exclusive: Due to worries over delisting, minority shareholders have filed a class action lawsuit against ICICI Securities

ICICI Securities said at a board meeting on March 28 that 83.8 percent of institutional investors cast votes in favor of the delisting, compared to just 32% of ordinary investors who supported the move.

Additionally, minority shareholders have claimed that ICICI Securities used "illegal" tactics to sway the vote in their favor.

Manu Rishi Guptha, an investor, and other minority shareholders have filed a class action lawsuit against ICICI Securities about the delisting proposal with the National Company Law Tribunal on Saturday, according to sources. The class action complaint includes more than one hundred stockholders.

According to section 245 of the Company Act of 2013, if one or more people band together and file a lawsuit on behalf of a larger group of people, they may do so if they believe that the management or conduct of the company's affairs is taking place in a way that is detrimental to the interests of the company, its members, or its depositors.

Previous reports from Moneycontrol indicated that the shareholders were considering taking legal action. The shareholders had expressed concerns about improper valuation, efforts to sway shareholder votes in favor of the delisting, and violations of due process.

The minority shareholders assert that a June 29, 2023 report serves as the foundation for the present value. They claim it ignores the bull market run that occurred at that time and ICICI Securities' strengthened position.

A minority stakeholder, Quantum Mutual Fund, had claimed in a note dated April 10 that ICICI Securities was valued by comparison to its rivals. The consensus earnings expectation for FY2024 has led to a valuation of I-Sec at a discount of 30-77 percent to its listed rivals. Quantum points out that the merger offer would have been at least 30% greater even if one had chosen to accept the lowest value among its peers—in this example, Angel One at 24x.

Unlawful techniques

In addition, the minority shareholders claim that ICICI Securities used "illegal" means to sway the vote in their favor. Allegedly, ICICI Bank called the shareholders on behalf of ICICI Securities to persuade them to support the merger plan.

Because ICICI Bank, not ICICI Securities, made the calls, which implies that the bank received their information, Guptha had previously informed Moneycontrol that the acts had also resulted in the compromising of minority shareholder data.

"After paying the necessary fees and following the proper procedures, I requested the shareholder registry around nine months ago. All I got was a list of names and email addresses. How are the phone numbers obtained by other users of the public domain? We think that someone is clearly not behaving appropriately," he said.

ICICI Securities said at a board meeting on March 28 that 83.8 percent of institutional investors cast votes in favor of the delisting, compared to just 32% of ordinary investors who supported the move.