ICICI Securities case: Is shareholder activism maturing in India?
On Monday, the National Company Law Tribunal deferred a class-action case filed by some shareholders of ICICI Securities (I-Sec) who are up in arms over the company’s move to delist itself and merge with parent ICICI Bank under a plan that won shareholder approval on 28 March. As investors, they were offered 67 shares of ICICI Bank for every 100 of I-Sec, a brokerage business owned nearly three-fourths by ICICI Bank and the rest by the public. As disgruntled minority owners saw it, that share-swap ratio implied their company had been valued at only about half its earnings multiple than at the time it was listed for trading six years ago.
Although ICICI argued that valuations were calculated properly and the merger would benefit all involved, dissenters insisted that they had been cut a raw deal in the process. Since over two-thirds of I-Sec’s equity pie has already voted in favour of the proposal, one may conclude that their objections got out-voted and that’s that. However, that isn’t the end of it.
What muddies the story is the way votes were allegedly won. These charges need a look-in. As alleged, ICICI Bank canvassed votes for the merger’s approval from retail holders of I-Sec shares by having bank representatives call them.
The lender claims these were mere awareness calls aimed at getting shareholders to participate. Yet, dissenters have raised questions that require clear answers. Why were these calls, assuming they were made, coming from ICICI Bank reps and not from I-Sec? And how did the parent company get hold of their contact details? What plaintiffs want probed here is whether the bank gained access to their personal data via a privacy breach.
Read more on livemint.com
