The Delhi High Court has stopped Unity Small Finance Bank from raising its authorised share capital to ₹4,900 crore from ₹4,000 crore, siding with BharatPe in a shareholder dispute over governance rights.

Justice Tushar Rao Gedela ruled on July 24 that the capital increase falls under Reserved Matters in the shareholders’ agreement, meaning it needs BharatPe’s prior written consent. Unity SFB wanted the raise to convert warrants into compulsorily convertible preference shares before they expire in October 2026. BharatPe was issued those warrants when it invested ₹746 crore for a 49% stake in October 2021.

BharatPe has refused consent three times over the past year, according to Business Standard. Its counsel told the court the conversion would cut its stake to roughly 21%, changing its shareholder position without the sign-off its agreement requires.

The Dispute Centrum Won’t Concede

Centrum Financial Services, which holds the remaining 51%, argues the CCPS conversion does not immediately affect voting rights. The court did not settle that question. It goes to arbitration instead.

The relief is interim. The High Court has ordered Unity SFB to file its response within four weeks, with the next hearing set for October 28 — days before the warrant deadline. BharatPe and Centrum jointly acquired Unity SFB in 2021 after the RBI-backed reconstruction of Punjab and Maharashtra Cooperative Bank. Whether the conversion counts as a Reserved Matter requiring BharatPe’s consent, or can proceed under Centrum’s majority, is now for the arbitrator to decide.

Sources

  • Entrackr: share capital proposal, warrant-to-CCPS conversion mechanics, shareholder agreement claims
  • Inc42: court order date (July 24), BharatPe stake dilution claim (49% to 21%), Unity SFB voting rights counterargument, next hearing date (October 28)
  • Business Standard: warrant expiry date (October 2026), BharatPe consent refusals (three occasions over past year), Centrum Group statement
  • LiveLaw: Justice name (Tushar Rao Gedela), Reserved Matters designation, BharatPe investment amount (₹746 crore), stake percentages (49% BharatPe, 51% Centrum)

Reporting compiled and contextualised by TechScoop India. Figures reconciled across the sources above.

Originally reported by entrackr.