ICICI Bank under SEBI lens; watchdog examining complaints in ICICI Securities delisting case, says report

Shareholders of ICICI Securities complained about data privacy issues and efforts to sway decision-making by ICICI Bank employees.

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The Securities and Exchange Board of India (SEBI) is investigating allegations of ICICI Bank employees contacting ICICI Securities shareholders in an attempt to influence them before a vote on delisting proposal in March, Mint reported.

During the vote, the shareholders were to decide on the delisting of ICICI Securities and its merger with its parent company, ICICI Bank. Over 500 shareholders of ICICI Securities had collaborated through WhatsApp and social media to file numerous complaints with SEBI.

"The regulator is presently reviewing several complaints. Once substantiated evidence is gathered, SEBI will commence an investigation. The specific actions SEBI may take remain uncertain," the Mint report quoted an unidentified source.

Earlier, Manu Rishi Guptha, a Bengaluru-based fund manager and a minority shareholder in ICICI Securities, said in an exclusive interaction with Moneycontrol that prior to the board meeting, both ICICI Securities and ICICI Bank had been reaching out to retail shareholders of the former, persuading them to vote in favor of the merger scheme.

Gupta added that the actions have also led to minority shareholder data being compromised as the calls were made by ICICI Bank and not by ICICI Securities, which means that the details were shared with them.

In the Mint report, Guptha also stated that minority investors of ICICI Securities have filed 60-70 complaints with the SEBI and also complained on the SCORES platform. SCORES is SEBI's online platform for filing grievances.

Also Read | MC Exclusive: Minority shareholders file class action suit against ICICI Securities on delisting concerns

He further stated that the primary accusations in these grievances involve the breach of data privacy concerning ICICI Securities' shareholders and the valuation at which the company is slated for delisting.

Guptha is leading team of over 100 ICICI Securities shareholders who, last month, submitted a class action lawsuit to the National Company Law Tribunal (NCLT) challenging ICICI Bank Ltd's bid to delist ICICI Securities.

In a response to the stock exchanges, ICICI Bank clarified that the "outreach program aimed to encourage higher participation in voting" rather than influence decision-making. However, Quantum MF labeled this clarification as a "smokescreen" and an effort to conceal the "malicious" intentions of ICICI Securities.

"Upon initial examination of the clarification response, no valid justification is provided for the queries raised by the stock exchanges. The notice summoning the shareholder's meeting had already been dispatched in February 2024, thus rendering contacting shareholders individually unnecessary," the mutual fund emphasised.

On March 27, minority shareholders voted in favor of delisting ICICI Securities to wholly merge the entity with its parent, ICICI Bank. Currently, the bank holds a 74.73 percent stake in the brokerage firm, with public shareholders owning the remaining shares.

However, several retail shareholders, collectively owning approximately 6 percent of the company, voiced objections regarding the valuation at which the delisting was proposed. According to the plan, shareholders of ICICI Securities were to receive 67 shares of ICICI Bank for every 100 shares they held in the brokerage firm.

Both ICICI Bank and ICICI Securities have asserted that the valuation was determined by independent appraisers and scrutinised by independent professionals representing both entities.

ICICI Securities notably became the first company to make use of a new SEBI regulation that provides an exemption from the reverse book-building process for price discovery during the delisting of a listed subsidiary involved in a similar business as its parent company.

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