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Seminar NIRC of ICSI

Seminar NIRC of ICSI. 28 th September, 2013 on Consolidation of Corporate Jurisdiction CS Saurabh Kalia Partner, Śāstra Legal Class Action – Issues & Concern. Class Action Suits (CAS). Class Action ?

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Seminar NIRC of ICSI

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  1. Seminar NIRC of ICSI 28th September, 2013 on Consolidation of Corporate Jurisdiction CS Saurabh Kalia Partner, Śāstra Legal Class Action – Issues & Concern

  2. Class Action Suits (CAS) • Class Action ? Class Suit or a Representative Action is a form of lawsuit in which large group of people collectively bring a claim to tribunal / court against a group people • New Concept under Indian Law ?

  3. CAS: Why in India ?

  4. CAS - Sec. 245 contd….. • Who can file ? • Members or • depositors in a company • Does not allow any other class • Qualification • 100 members or depositors • 1/10th or • 10% • whichever is less

  5. CAS Relief ? • Restrain the company from : • Committing an Act ultra vires the MOA & AOA • Committing breach of MOA & AOA • Declare such resolution as void, which is based on misleading statement • Restrain co. & directors from acting on such resolution or contrary to resolution passed

  6. CAS Relief ? • Seek any damages or compensation or demand any other suitable action from or against • Company or its Directors: • for any fraudulent, unlawful or wrongful act, omission or commission or conduct on its of there part • Auditor including audit firm, with liability of each partner who acted: • Any expert or advisor or consultant or any other person associated with company • Improper, misleading statement of particulars, any fraudulent, unlawful or wrongful act or conduct

  7. CAS Issues ? • Whether its in Good Faith • Involvement of other person (KMP ? ) • Member / depositor to pursue in own right • Public Notice within 7 Days • Information on website of NCLT, MCA, ROC & SE (for listed co.) • Application cannot be withdrawn without leave of tribunal • All applications to be clubbed (lead applicant) • No two class actions • Cost for frivolous applications

  8. IMPACT STAKEHOLDERS • Positive and encouraging move for stakeholders. • New remedy & additional rights and grounds . • Deposit Holders no option but a civil suit , now shall be more secure about their investment. • Includes auditors and consultants

  9. IMPACT STAKEHOLDERS • Additional empowerment to stakeholders • Ensures experts, advisors and auditors act carefully. • NGOs can also take up causes for affected people • Faster action and speedy disposal. • Deterrent. 

  10. Industry • Will ensure companies become more careful. • auditors, • experts, • advisors or • consultants Will exercise more independence, diligence and efficiency in their work. • Professionals

  11. O&M vis-à-vis CAS in CA, 13 O&M CAS • Provision u/s 241 deals with filing of petition before the NCLT for O&M • Filed against the company and its statutory appointees only. • Can be filed for past mismanagement and to prevent recurrence. • Depositors can file class action suits • An expert, advisor ,consultant or any other person for any incorrect or misleading statement to the company and also against an auditor for any improper or misleading financial statements. • Ask the management or directors of company to desist from 1 or more particular action that have not been taken yet.

  12. CAS Concerns • Potential Misuse ? • Can be filed by members and deposit holders only • Stakeholders like Creditors, bankers , debenture holders etc. are deprived such rights. • Regulatory authority not empowered to file CAS against companies

  13. Thank you CS Saurabh Kalia Con. No. +91 98109 79440 ; +91 9711444434 Sastra Legal, E-96, MalchaMarg, Chankyapuri, New Delhi 110 021 Email : saurabh@sastralegal.com ; saurabhkalia@hotmail.com Skype ID : kaliasaurabh15

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