Irate Shareholders Threaten To File Class Action Suit Against Anil Ambani Led Management At Annual General Meeting

Angry shareholders have threatened to file the country’s first ever class action suit against the Anil Ambani Group led management, if he does not address issues like poor performance and frequent credit rating downgrades in three months.

A shareholder stated at the AGM that 10% of shareholders would get together to launch India’s first ever class action suit, in which a group of complainants sues a defendant or a number of defendants on behalf of a group, or a class, of absent parties.

The irate shareholder, who claimed to be a corporate lawyer, stated that he lost over 90% of the value of more than Rs 3 crore investment in three of the seven Reliance Group companies. He was frequently supported by fellow shareholders in his 15-minute speech at the heated AGM.

Incidentally, the Companies Act 2013 has a section which enables interested parties to file such class action suits, which are common in the West, though no case has been filed under this provision in India so far.

The shareholder was particularly irritated at group chairman Anil Ambani pledging more than 80% of his holdings in the company and blamed him for bad “signaling”. On the promoter pledging, he wondered if any of the money so raised by the Ambani family had actually been ploughed into any of the group companies.

He was dismayed at the company’s credit rating downgrades, claiming that he lost Rs 37 lakh of his portfolio in a single episode of a downgrade by Care Ratings recently.

Shareholders also questioned the rationale for paying 13.9% interest on borrowings through bond raisings even as the company claimed to have reserves of more than Rs 15,300 crore.