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Class Action Lawsuit
May 11 , 2019
2369 days
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- The National Company Law Tribunal (Second Amendment) Rules, 2019 have been notified by the Ministry of Corporate Affairs.
- It has specified the ‘thresholds’ required for filing Class Action Lawsuits (CAL).
- Minimum 5% of the members of a company or 100 members, whichever is less
- The same criteria will also be applicable for the depositors of deposit-taking companies.
- CAL is filed when the allegations involve a large number of people (usually 40 or more) who have been injured by the same defendant in the same way.
- Investors can thus file CAL if they feel that the management or conduct of the affairs of a company are prejudicial to their interests.
- Example: In 2006, corruption by the executives of American energy firm Enron led to its bankruptcy and erosion of shareholder’s wealth.
- So, investors filed a class action suit against the company and received a compensation of $ 7.2 Billion.
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