Investors can sue cos for fraud: Govt

“The government is committed to protect the interests of investors especially small time investors. The government has taken several steps to safeguard the legitimate interests of investors. The Companies Bill, 2009 will have clauses in this regard,” Minister of State for Corporate Affairs Salman Khurshid said in the Lok Sabha.

The Companies Bill, 2009, now before the Parliamentary Standing Committee, proposes Class Action Suit for the first time, he said adding under this investors could seek compensation from companies in the event of negligence or fraud.

To a query as to steps being taken by the government to prevent reoccurrence of the fraud detected in the Satyam Computers, he said the new Companies Bill 2009 proposed several measures to prevent the Satyam like situation. Khurshid said the government has set up a Market Research and Analysis Unit (MRAU) in the Serious Fraud Investigation Office.

The new unit would collect information from various sources including investigating agencies, employees, investors, deposit holders, financial institutions and would analyse whether regulatory system in corporate sector is fine.