The Ontario Municipal Employees’ Retirement System has until the end of October to decide if it will serve as the lead plaintiff in a class action suit brought against an Indian solar energy sector business.
The lawsuit, which charges Azure Power Global Ltd. and several of its current and former executives with violations of the Securities Exchange Act, is seeking an investor that acquired shares in the company between June 15, 2021 and Aug. 26, 2022, to serve as a lead plaintiff. Earlier this summer, the OMERS signed an agreement to acquire a 19.4 per cent stake in Azure Power for $275 million, with the transaction closing in early August.
As the largest investor during the period, the OMERS would likely be selected as the lead plaintiff in the lawsuit, should it choose to join, and would be given the power to select a law firm of its choice to pursue the lawsuit on behalf of the class action.
The lawsuit, which stems from allegations of procedural irregularities and misconduct at a plant operated by Azure Power was filed by Robbins Geller Rudman & Dowd LLP. It alleges procedural irregularities, including deviations from safety and quality standards, occurred at one of Azure Power’s plants. It also contends data was manipulated, rendering the company’s internal controls and procedures ineffective. The claims are based on the testimony of what the law firm describes as a “credible whistleblower report.”
The allegations, which emerged last week, prompted the resignation of Harsh Shah, the company’s recently appointed chief executive officer. In the week following his resignation, the company’s share price fell by 81 per cent.
“Azure is certainly placed very well to seize the big growth opportunity that India presents and I was looking forward to working with the team to deliver Azure’s potential,” said Shah in a statement. “However, owing to unforeseen circumstances and matters beyond my control, I have decided to step down from my role of the chief executive officer.”
In March 2020, the Caisse de dépôt et placement du Québec secured a majority stake in Azure Global. While the Caisse is a larger investor than the OMERS, it doesn’t qualify to serve as the lead plaintiff since its stake in the company predates the qualification period for the suit.