Opening bell for class-action suits

The Companies Act does not prescribe a maximum cap on the damages that may be awarded

A steep sudden fall in share price can now trigger much more than uncomfortable investor calls for the management of a listed company. Recent moves by the government have resulted in game-changing developments for the securities regime in India, making listed companies vulnerable to class-action lawsuits by investors on the back of big losses in share value. 

The scope of issues that can attract a class action under Section 245 of the Companies Act, 2013, is fairly wide, and includes any matters pertaining to the conduct of management that is prejudicial to the interests of the company or its shareholders.