What is the Class Action Suit for Shareholders

The amendment bill states the laws related to Indian companies. The Companies Act 2013 will regulate and also help in the formation and functioning of the corporation and the companies in India. The Act was amended multiple times from 1956 to 2019. After the Amendment, India has become the first country to make Corporate Social Responsibility (CSR) spending mandatory by the law.

The Main Highlights of the Companies Act 2013 

The major highlight which constitutes the 2013 Act is that the shareholders of any private company should be 200 maxima. Before, it was only 50 for a one-person company, company law tribunal, and company law appellate tribunal; most importantly, CSR is mandatory. 

The Salient Features of the Companies Act 2013 

The Act was introduced for dormant companies that have not been engaged in any business for more than two years consecutively. A quasi-judicial body that governs the issues concerning the companies called the National Company Law Tribunal, and the company law board replaced it. There is transparent self-regulation, and for the disclosures and the electronic form documents to be maintained, the process of the merger and amalgamation should be done faster; having a single director is made mandatory and should be residing in India only. The Act also provides entrenchment, which means extra-legal safeguards. The board meeting should be conducted at least seven days before the notice.

Class Action Suits for Shareholders

One or more persons can do the class-action suits for shareholders, but if it is against a company, it involves many directly or indirectly involved people. Hence dealing with the company is a tedious process. The class-action suit for shareholders came into force as numerous people, or aggrieved persons with the same common interest came together. This will help to sue the company or single unit, respectively. 

Minimum People Required for Application 

As per the class action suits for shareholders, at least five % of the members involved in the company are required to apply. The members holding at least five % of the company’s share capital should be part of the application. In the case of the depositors, at least 5% of the total depositors who are part of the company or at least 100 individual depositors of the company or less should be involved.

The Suit in the Tribunal Conditions for Acceptance 

The main aspect is that an open public notice should be issued to all the members or the depositors after the NCLT admits it. Any number of applications will be converted to one single application, and a lead applicant is made out of all the members or the depositors. There should not be any second calls for action or suits. The suit cost and the expenses shall be borne by the company itself or by the person responsible for the offense or the actions.

Corporate Social Responsibility

Corporate Social Responsibility means it is a process of automating the business, which will help the company be more socially accountable to the company itself and the public. The companies must be conscious of all aspects of society and the economic condition, social status, and the environment.

The Main Aspects of Corporate Social Responsibility

This is a business model in which the companies make the utmost concerted efforts in the operations to enhance the degraded society or the environment. It also helps the brand image, and the morale in the workplace can be increased with CSR programs. This program may be done voluntarily or with business which will help in boosting the brand.

National Company Law Tribunal

This quasi-judicial authority deals with all the corporate disputes that are civil and are part of the Companies Act. The main objectives of the National Company Law Tribunal are to look after all the arguments related to the mismanagement of the company and the claims which are in oppression. There is no civil court involvement in such kinds of issues. The tribunal has the power to all the procedures of the company acts, which include arbitrations, agreements, and reconstruction.

Conclusion:

The Indian Companies Act was amended multiple times from 1956 to 2019. After the Amendment, India has become the first country to make the Corporate Social Responsibility (CSR) speeding which has become mandatory by the law. The main motto of making all the Companies Acts is to make them functional and monitor all the mismanagement and disputes related to the companies. The other aspect of the class action suits for shareholders is to give harmony to all the members, stakeholders, and individuals who don’t fall into companies that are in losses.