SEBI Investigates ICICI Securities Vote Meddling Allegations Amid Delisting

The Securities and Exchange Board of India (SEBI) has initiated an investigation into allegations of vote meddling during a crucial shareholder meeting of ICICI Securities Ltd, a subsidiary of ICICI Bank Ltd, held in March. The meeting's agenda included the decision to delist ICICI Securities and merge it with its parent company.

More than 500 shareholders of ICICI Securities collaborated on platforms like WhatsApp and social media to raise approximately 70 complaints with SEBI, citing attempts by ICICI Bank employees to influence shareholder votes. Despite these allegations, 71.9% of the brokerage's minority shareholders voted in favour of the delisting, surpassing the required two-thirds majority.

However, concerns were raised regarding the disparity in voting patterns among different shareholder categories. While public institutional investors, holding a total of 16.68% in the company, displayed overwhelming support for the delisting with an 83.8% approval rate, only 32% of non-institutional public shareholders, who hold 8.55%, were in favor.

Norges Bank Investment Management, the largest public shareholder with a 3.2% stake, previously announced its support for the deal.

ICICI Bank, owning approximately 75% of ICICI Securities, did not participate in the vote, as its stake was already predetermined. Last June, ICICI Bank announced plans to acquire the remaining 25% stake in a share-swap agreement, which boosted its stock price by 16%, implying a substantial offer price of around Rs 726 per share, totaling approximately Rs 5,900 crore.

"It should be noted that four independent proxy advisory firms urged that shareholders of ICICI Bank and ICICI Securities vote for the motion to accept the proposed scheme.Those opposed to the planned scheme, on the other hand, launched a comprehensive campaign against the proposal, which included considerable outreach to retail shareholders via social media," said ICICI Securities.

Despite the approval, dissatisfaction lingers among some minority investors, primarily due to the offer price, which is approximately 2% lower than ICICI Securities' last closing price of Rs 741.70. Quantum Asset Management, holding a 0.21% stake, opposed the deal, suggesting that the offer price should be around Rs 940 per share, even considering the lowest multiple among the company's listed peers.

"Public shareholders voted 72% in favour of delisting, while retail investors voted 67% against it. The concept gained traction thanks to strong institutional support. ICICI Securities shareholders will receive 67 ICICI Bank shares for every 100 shares held, according to the delisting rules. Prior to the resolution passing, ICICI Bank drew criticism from minority shareholders, who accused the bank's leadership of undue influence on ICICI Securities stakeholders' voting decisions," IIFL said.

The delisting marks the end of ICICI Securities' six-year tenure as a public company, during which its stock price rose by approximately 43%. Initially, the stock witnessed a modest 8% growth over five years but experienced a surge following the announcement of the delisting plan.

The investigation by SEBI underscores the importance of fair corporate governance practices and transparency in shareholder dealings. The outcome of the investigation and any subsequent actions taken by regulatory authorities will be closely monitored by investors and industry observers alike, as they seek to ensure the integrity of the capital markets and protect the interests of all stakeholders involved in such transactions.