Bombay HC orders Sebi to disclose ICICI Securities exemption letter

ICICI Securities shareholder Aruna Vinod Modi challenged the exemption, and a related case at the NCLT accuses ICICI Bank of improperly influencing shareholders to support the delisting.

The Bombay High Court on August 10 has ordered the Securities and Exchange Board of India (SEBI) to disclose the exemption letter granted to ICICI Securities, which exempted the firm from the reverse book-building process for delisting.

The court ruled that the market regulator must provide this letter to Aruna Vinod Modi, an ICICI Securities shareholder who challenged the exemption. However, Aruna Modi is prohibited from sharing, reproducing, or allowing third-party inspection of the letter.

Modi argued that SEBI overstepped its authority by granting the exemption, which she claimed violated delisting regulations.

Additionally, a case is ongoing before the National Company Law Tribunal (NCLT) alleging that ICICI Bank improperly influenced shareholders to support the delisting of ICICI Securities from Indian stock exchanges.

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As many as 83.8 percent of the public institutional shareholders and 32 percent non-institutional shareholders of ICICI Bank had voted in favour of ICICI Securities' delisting.

Shareholders assert that ICICI Bank employees, rather than ICICI Securities staff, contacted public shareholders to persuade them to vote in favor of the delisting, using a presentation to exploit their lack of expertise. A similar case was previously filed with the NCLT in Mumbai.

Acting on several such complaints by ICICI Securities shareholders, SEBI issued an administrative warning on the outreach earlier this year. The regulator's observation said, "The heightened outreach programme on the last day of voting citing holidays/weekend appears inappropriate".

Investor complaints revealed that some officials had 'gone beyond the outreach programme' and made repeated calls, and even sought screenshots of voting.

Sebi's letter to ICICI Bank said, "... bank being a promoter/ interested party, providing its perspective on the proposed transaction to shareholders of I-Sec cannot be said to be providing a balanced factual position. There was a clear conflict of interest.."

The regulator warned ICICI Bank to be careful and expected it to improve the compliance standards to avoid such instances, failing which Sebi said action may be initiated.