Quantum MF files appeal against NCLAT order approving delisting of ICICI Securities

The Mumbai bench of the National Company Law Tribunal (NCLT) had approved the delisting application of ICICI Securities from the stock exchanges and also rejected objections filed by minority shareholders.

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Quantum Mutual Fund has filed an appeal against an earlier order by the National Company Law Appellate Tribunal (NCLAT), which approved the delisting of ICICI Securities while dismissing objections raised by minority shareholders of the company.

“The Scheme of Arrangement proposed by ICICI Bank to acquire the (around) 25% of shares of its listed subsidiary, ICICI Securities via a share swap is a breakdown of every known norm of corporate governance,” said a statement issued by Ajit Dayal, Founder, Quantum Advisors, Sponsor of Quantum AMC.

“Quantum Mutual Fund has objected to this ‘scheme’ and has filed an appeal with the Honourable National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi against the order dated August 21st 2024 issued by the Honourable NCLT Mumbai, which dismissed the objections of Quantum Mutual Fund and approved the Scheme,” added the statement.

The Mumbai bench of the National Company Law Tribunal (NCLT) had approved the delisting application of ICICI Securities from the stock exchanges and also rejected objections filed by minority shareholders.

In its order, the NCLAT had approved the Scheme of Arrangement for delisting of shares of ICICI Securities under which shareholders of ICICI Securities will get 67 shares of ICICI Bank for every 100 shares.

Earlier this year, two separate objections were filed by minority shareholders and Quantum Mutual Fund.

Quantum Mutual Fund had voted against the proposed merger of ICICI Bank and ICICI Securities during a shareholder meeting in March 2024 on concerns that the move would be detrimental to the interests of the fund house’s unitholders.

Quantum Mutual Fund is a minority shareholder and owns shares in ICICI Bank and ICICI Securities through its Quantum Long Term Equity Value Fund and Quantum ELSS Tax Saver Fund.

At that time of the case, the fund house had estimated that the merger would result in a net loss of at least Rs 6.08 crore to its unit holders.

“Ironically, Quantum Mutual Fund is the only mutual fund house pursuing legal action to protect the rights of minority shareholders. SEBI, BSE, NSE – whose architecture rests on the foundation of protection of minority shareholders – have been silent observers and (as noted in the August 21st, 2024 judgement of the Honourable NCLT Mumbai) ‘The Regulators BSE, NSE, and SEBI have not raised any objection in relation to voting process before us’,” said the statement by Dayal.

“Our appeal to Honourable NCLAT Delhi is to ensure these institutions are in the courtroom to defend the very class of minority shareholders whose rights they are supposed to protect,” it added.

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

Another class action suit was filed by a group of minority shareholders led by Manu Rishi Guptha. The group has also filed an appeal against the order.

Speaking exclusively to Moneycontrol on September 18, Guptha noted that the tribunal failed to apply proper logic or request the critical document that formed the foundation of the delisting decision by ICICI.

“Despite our repeated requests to bring the exemption letter on record, ICICI used every strong-arm tactic to prevent it from being submitted,” he said adding that they were surprised by the NCLT Bombay's decision, which they say was rendered without thoroughly reviewing the necessary documentation.

“How can a shareholder be deprived of any documentation that forms the basis of this delisting and directly affects the shareholder’s value?” he asked adding that they are “vehemently appealing” the decision in NCLAT.

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