ICICI Securities Delisting: SEBI Exemption Letter, NCLT Approvals Seem To Be Paving The Way

The exception letter issued by market regulator SEBI to ICICI Securities relates to an application made by ICICI Bank on May 18, 2023, from the reverse book-building process mandated for delisting.

The letter, reviewed by NDTV Profit, is signed by T. Venkateshwarlu, acting on behalf of SEBI, with approval from the competent authority within SEBI.

ICICI Bank sought certain exemptions from the regulatory requirements mentioned in Regulation 37 of the Delisting Regulations. This regulation deals with the delisting process when a subsidiary company is getting delisted through a scheme of arrangement, provided that both the listed holding company and the listed subsidiary are in the same line of business.

ICICI Bank requested an exemption from the criteria set forth in a SEBI circular issued on July 06, 2021, which define the conditions that must be fulfilled for both the holding and subsidiary companies to be considered in the "same line of business."

ICICI Bank argued that due to regulatory restrictions, it is not possible for it to carry out both banking and stock broking activities within the same entity. Essentially, this means that regulatory rules prevent ICICI Bank from running these two different types of businesses under one company structure, which is why it sought an exemption from the "same line of business" requirement.

In response, SEBI agreed to grant the requested exemption, allowing ICICI Bank some flexibility in complying with Regulation 37.

However, this exemption comes with specific conditions. ICICI Bank was asked to still meet other important requirements, such as ensuring that the valuation of the listed subsidiary’s shares is not lower than the volume-weighted average price of the shares over the last 60 days.

Additionally, the company was asked to comply with any relevant regulations set by the Reserve Bank of India (RBI), which is the domain regulator overseeing banking activities. Moreover, SEBI emphasised that the exemption applies strictly to this delisting process and does not absolve ICICI Bank, its promoters, or directors from following other applicable laws.

Any violations of SEBI regulations or other laws would still need to be addressed.

SEBI made it clear that this letter should not be taken as permission to overlook other legal obligations. It is simply a specific exemption from certain provisions of the Delisting Regulations to allow ICICI Bank to proceed with its delisting process. The entire application, including all related communications, was formally addressed and closed by SEBI.

ICICI Bank did not respond to a NDTV Profit's request for comment on the matter and the queries sent to the market regulator also remained unanswered.

Meanwhile, NDTV Profit was told that the minority shareholders are also planning on appealing against the approval granted by the NCLT in Ahmedabad before the concerned appellate authority.

Interestingly, in a similar case, the Bombay High Court had directed SEBI to disclose the letter to the petitioner challenging its validity. However, the high court had directed to keep the letter confidential.

Under the NCLT Mumbai approved scheme, ICICI Securities shareholders will receive 67 ICICI Bank Ltd. shares for every 100 shares they hold. The scheme had earlier secured approval from 93.8% of ICICI Securities' equity shareholders.

Quantum Mutual Fund and Manu Rishi Gupta, who held 0.08% and 0.002% of ICICI Securities shares respectively, had opposed the scheme. They had alleged undue influence by ICICI Bank employees on the voting process.