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Protection of small investors

Posted on 13 July 2009,    
 5181    Share  Report

Protection of small investors

The Ministry of Corporate Affairs received a total of 986 complaints from investors during the period 1.4.2008 to 31.3.2009. The investors’ complaints pertain to defaults by the companies from complying with various provisions of the Companies Act, 1956, such as non-receipt of dividend/duplicate shares, non-refund of application money, non-payment of matured deposits and interest thereon, non-redemption of debentures and interest thereon, etc. The Ministry redresses the grievances through the jurisdictional Registrars of Companies. It also coordinates with the Reserve Bank of India, Department of Economic Affairs and Securities and Exchange Board of India for redressal of investors’ grievances received in the Ministry but pertaining to these agencies.


Government has taken a number of steps to protect the interests of small investors. Appropriate provisions have been made in the Companies Act, 1956, for this purpose under various Sections, such as Sections 252 (i), 58AA, 58A(1) and 399 (4). The Companies (Appointment of Small Shareholders’ Director) Rules, 2001 provide for election of a director representing small shareholders as prescribed under the Rules. The defaults in repayment of deposits are to be intimated to the Company Law Board (CLB) by the companies on a monthly basis. Further, in cases of default, CLB can direct the companies to repay within prescribed time and in the manner specified in its order. Other steps taken by the Ministry for protection of small investors include implementation of MCA21, an e-governance programme for easy access to corporate information in public domain; launch of three websites,, to provide information about economic defaulters; putting in place suitable mechanisms for redressal of investor grievances and imparting financial literacy to general public etc. All these facilities have been provided free of cost. Besides, Ministry has also organized media campaigns, workshops, etc. to educate investors.


This information was recently given by Shri Salman Khurshid, Minister for Corporate Affairs, in the Lok Sabha in a written reply.