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2025 (3) TMI 579 - AT - IBCRejection of objections filed by the appellants to the Scheme of Arrangement proposed between ICICI Bank Ltd and ICICI Securities Ltd. - threshold limit for minimum number of shares for filing objection was not met with - Section 230 of the Companies Act 2013 - HELD THAT - There is no conflict between Section 230 of the Act and Regulation 37. There is no provision in Section 230 of the Act specifically requiring a separate meeting of public shareholders of a company. Section 230(1) refers to a scheme between a company and its members or class of members. Correspondingly Section 230(3) refers to power of the Ld. NCLT to convene a meeting of members or a class thereof as the case may be. At any rate there is no specific provision in the Act specifically requiring a meeting of public shareholders in listed companies. Indeed Section 230 only requires a meeting to be held between the members and the company or such classes of members and the company where the scheme of arrangement is between the company and a specific class of members. In the present case the scheme is a uniform scheme for all equity shareholders namely a uniform scheme of delisting; the delisting in the present case being feasible only through the vehicle of a wholly owned subsidiary and not through an amalgamation in view of the extant regulatory regime applicable to ICICI Bank. The Companies Act prescribes only two classes of shareholders i.e. preference and equity shareholders. Ordinarily the courts does not favor a further sub-classification in the case of shareholders per Alstom(Supra). Thus the contention viz. the SEBI Regulation 37 itself recognizes the public shareholders constitute a separate class is wholly misconceived. As stated above for the purposes of Section 230 class is a uniform class being one of equity shareholders. SEBI in exercise of its exclusive jurisdiction over matters of listing and delisting imposes an additional safeguard in such schemes - the Scheme is a delisting scheme as contemplated under the provisions of Regulation 37 of the Delisting Regulations. The provisions of Regulation 37 thus ought to be given full effect along with the provisions of the Act especially when there is nothing inconsistent between the two statutes. The Ld. NCLT had correctly appreciated the provisions of Section 230 and Regulation 37 of the Delisting Regulations and has applied the said provisions harmoniously to the facts and circumstances at hand. The Ld. NCLT s finding viz no separate meeting of public shareholders is required in the circumstances is in consonance with the object and purpose of Regulation 37 and in no way conflicting to the provisions of Section 230 of the Act. If the Appellants submission regarding a separate meeting is accepted then every scheme under Regulation 37 will need to be approved by meeting of separate class of shareholders (promoters and public) thereby rendering the provisions of Regulation 37(2)(d) completely otiose as has also been observed by the Ld. NCLT in its impugned order. The Appellants are not entitled to object to the Scheme and not entitled to maintain an appeal as an aggrieved person . Consequently in view of proviso to Section 230(4) too the present appeal is also not maintainable at the instance of the appellants. Notably the Scheme has been approved by 93.82% of equity shareholders and 71.89% of public shareholders. The Appellants who hold merely 0.08% shareholding are depriving the majority shareholders of the benefits of the Scheme by filing frivolous objections and derailing its implementation. This militates the very principle of shareholder democracy. Conclusion - i) The Scheme of Arrangement complies with Regulation 37 of SEBI (Delisting of Equity Shares) Regulations 2021 and any procedural relaxation granted by SEBI is within its regulatory authority. ii) The voting process was conducted legally and SEBI found no evidence of coercion or undue influence. iii) The appellants do not meet the requisite shareholding threshold to object to the Scheme under Section 230(4) of the Companies Act 2013. Appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The Tribunal considered several core legal questions in this judgment:
ISSUE-WISE DETAILED ANALYSIS Compliance with Regulation 37 of SEBI (Delisting of Equity Shares) Regulations, 2021 The Tribunal examined whether the Scheme adhered to Regulation 37, which requires the listed subsidiary and its holding company to be in the same line of business. The expression "same line of business" is not defined in the Delisting Regulations. However, SEBI granted a relaxation from the strict enforcement of this requirement, considering the regulatory restrictions applicable to ICICI Bank. The Tribunal found that SEBI's decision to grant such relaxation was within its regulatory domain and not justiciable in these proceedings. Voting Process and Alleged Coercion The Tribunal addressed allegations of coercion during the voting process, noting SEBI's letters which warned ICICI Bank and ICICI Securities about inappropriate outreach programs. However, SEBI found no evidence of influence or misleading of voters. The Tribunal concluded that the outreach program did not vitiate the voting process and that the voting was conducted legally. Valuation Methodology The Tribunal reviewed the valuation methodology used by independent registered valuers and supported by fairness opinions from SEBI registered merchant bankers. The valuation was consistent with the minimum requirements prescribed under Regulation 37(2)(j) of the Delisting Regulations. The Tribunal upheld the valuation, emphasizing that courts should not interfere with technical and complex considerations of valuation, which are best left to experts. Requisite Shareholding to Object The Tribunal examined whether the appellants met the minimum threshold of 10% shareholding required to object to a scheme under Section 230(4) of the Companies Act, 2013. The appellants held only 0.08% shareholding, which did not meet the threshold. The Tribunal noted that the threshold was introduced to prevent frivolous objections by shareholders with minuscule holdings. Consequently, the appellants were not entitled to object to the Scheme or maintain an appeal as an 'aggrieved person.' Separate Meetings for Promoter and Non-Promoter Shareholders The Tribunal considered whether separate meetings for promoter and non-promoter shareholders were required under Section 230(6) of the Companies Act, 2013. The Tribunal found no conflict between Section 230 and Regulation 37, as the latter imposes additional safeguards without contradicting the Act. The Tribunal concluded that the Scheme did not require separate meetings, as the public shareholders did not constitute a separate class, and the Scheme was a uniform scheme for all equity shareholders. SIGNIFICANT HOLDINGS The Tribunal made several significant holdings:
The Tribunal dismissed both appeals, affirming the order of the National Company Law Tribunal and closing all pending applications without costs.
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