Shareholders and depositors will now have a statutory right to claim compensation against not only erring managements but also auditors, consultants and advisors to such managements. The Companies Bill, passed by the Rajya Sabha on Thursday and now awaiting Presidential assent, will usher in the concept of class action suits in India.Class action is a right to members or deposit holders or their representatives to file an application before a tribunal for restraining a company from some specified acts. The shareholders or depositors can claim damages against a company, directors, auditors, experts and advisors for their wrongful conduct. “It is a huge step forward in investor protection,” said Virendra Jain, founder and president of Midas Touch Investors Association, which had taken up the cause of seeking compensation on behalf of its cheated retail investors in the Satyam Computers corporate scandal.
Source : The Hindu Business Line
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