Satyam fiasco: Options for small investors?
Holding onto stock that may be near worthless, Satyam's shareholders are living through their own hell even as Ramalinga Raju spends his days behind the bars. They are the hapless victims of Raju's unimaginable deceit.
With the stock down 82 per cent, the company’s shareholders are looking for ways to recover some of their losses. So what are their possible redressal options?
Investors can file a criminal lawsuit for cheating and breach of trust. They can also approach the civil courts to claim damages or demand a seat on Satyam's board from CLB under section 408. CLB can be approached only if applicants collectively hold 10 per cent stake.
“Investors, at least one-tenth of the investors, can file application under the company law board seeking an order to put a nominee on the board of Satyam whereby they can have a greater role in decision making in Satyam,” said Abhixit Singh, Partner, Titus & Co.
But for small investors to form a group that commands 10 per cent of the voting rights is a tall order, given their miniscule individual stakes. Even fighting a long drawn civil suit isn't a palatable option with small pockets.
"A civil suit for the recovery of damages for fraud is a remedy available to the shareholders as well. However, in the Indian scheme of things, civil lawsuits will take their own time. There are delays in the system and it’s not easy to get trials. Also Indian courts are not known to award very high damages," said Akhil Hirani, Managing Partner, Majmudar &
History is replete with examples of scamsters like Harshad Mehta and Ketan Parekh who have roamed free as the courts take years to give their verdict. One wonders how long it will take to entangle the Satyam mystery and start the process of recovery of assets.
The government needs to find an alternate scheme to protect investor interests like an investor protection from scam fund.
Source: NDTV Profit
With the stock down 82 per cent, the company’s shareholders are looking for ways to recover some of their losses. So what are their possible redressal options?
Investors can file a criminal lawsuit for cheating and breach of trust. They can also approach the civil courts to claim damages or demand a seat on Satyam's board from CLB under section 408. CLB can be approached only if applicants collectively hold 10 per cent stake.
“Investors, at least one-tenth of the investors, can file application under the company law board seeking an order to put a nominee on the board of Satyam whereby they can have a greater role in decision making in Satyam,” said Abhixit Singh, Partner, Titus & Co.
But for small investors to form a group that commands 10 per cent of the voting rights is a tall order, given their miniscule individual stakes. Even fighting a long drawn civil suit isn't a palatable option with small pockets.
"A civil suit for the recovery of damages for fraud is a remedy available to the shareholders as well. However, in the Indian scheme of things, civil lawsuits will take their own time. There are delays in the system and it’s not easy to get trials. Also Indian courts are not known to award very high damages," said Akhil Hirani, Managing Partner, Majmudar &
History is replete with examples of scamsters like Harshad Mehta and Ketan Parekh who have roamed free as the courts take years to give their verdict. One wonders how long it will take to entangle the Satyam mystery and start the process of recovery of assets.
The government needs to find an alternate scheme to protect investor interests like an investor protection from scam fund.
Source: NDTV Profit
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