Major Help For Minority Investors: Government Considering To Reimburse Legal Expenses For Class Action Suits

To protect the interest of investors and improve India's rank in Ease of Doing Business (EODB) index, the government is considering a proposal to provide financial assistance to minority investors who file class action lawsuits, reports Press Trust of India (PTI).

In recent years, the Corporate Affairs Ministry has encouraged investors to file class-action suits against erring companies. Under Section 245 of the Companies Act, investors who believe that the management or conduct of a company can harm their interests can band together to file a class action suit.

"We are looking at class action suits. We will be soon coming out with a scheme for providing financial assistance to minority investors to file class action by using the IEPF (Investor Education and Protection Fund)," said Corporate Affairs Secretary Injeti Srinivas in an interview.

"The IEPF will introduce a scheme for reimbursing legal expenses incurred on class action," added Srinivas.“We will define the threshold such as the minimum number of members, minimum shareholding or deposits. That will be notified very soon.”

IEPF which is managed by the corporate affairs ministry has accumulated funds to the tune of around Rs 4,138 crore. These are to be used by the government to improve investor awareness.