SEBI Warning to ICICI Bank on I-Sec Investor Outreach

The capital market regulator, the Securities and Exchange Board of India (SEBI), has criticised ICICI Bank’s ‘outreach programme’ related to the delisting of ICICI Securities (I-Sec). SEBI found that ICICI Bank’s employees attempted to influence shareholders to vote in favour of the delisting. Despite the bank’s claim that the outreach aimed to explain the scheme and boost participation, SEBI’s investigation revealed that officials made repeated calls and requested screenshots of votes. One call recording showed a bank official suggesting that shareholders would benefit from the scheme, which SEBI deemed inappropriate.

Over 100 minority shareholders have filed a class action suit with the National Company Law Tribunal (NCLT), alleging that ICICI Bank undervalued I-Sec’s business. The next hearing is set for July. Sebi disputed ICICI Bank’s justification, pointing out that the bank, holding a 74% stake in I-Sec, is an interested party. SEBI also found the outreach on the last voting day inappropriate and dismissed claims that shareholders were unaware of the e-voting process.

SEBI warned ICICI Bank to improve compliance standards. ICICI Securities’ Board approved the delisting on June 29, 2023, with a proposed share swap ratio of 0.67 ICICI Bank shares per I-Sec share. Despite SEBI’s letter, ICICI Bank stated it would not impact its financial operations.