Delhi High Court grants BharatPe interim relief in Unity SFB shareholding dispute

The Delhi High Court has granted interim relief to fintech startup BharatPe, preventing Unity Small Finance Bank (SFB) from considering a proposal to increase its authorised share capital. The court's order, dated July 24, stops Unity SFB from tabling, considering, or approving the increase from ₹4,000 crore to ₹4,900 crore and amendments to its memorandum of association. This decision addresses a dispute over the bank's shareholding structure.

The core of the dispute lies in a 2021 shareholders' agreement between BharatPe's parent, Resilient Innovations, and Unity SFB promoter Centrum Financial Services. BharatPe, which holds a 49% stake in Unity SFB, argues that increasing authorised share capital is a "reserved matter" requiring its written consent. The startup contends the proposed move could dilute its stake to approximately 21%.

Unity SFB countered that the relevant warrants were already approved and issued in 2021, and the current proposal aims to convert them before their October 30 expiry. The bank argued that these convertible instruments do not carry voting rights immediately and would only convert to equity later, thus not affecting BharatPe's voting rights at present.

Without ruling on the merits, the High Court found a prima facie case for BharatPe and imposed the interim restraint. Unity SFB is required to file its response within four weeks, with BharatPe to file its rejoinder subsequently. The matter is scheduled for further hearing on October 28. Reports from last year indicated BharatPe was exploring options to monetise its stake in Unity SFB, potentially selling up to 25%.