SEBI bars wilful defaulters from markets

Market regulator Securities and Exchange Board India (SEBI) on Saturday decided to bar wilful defaulters from raising public funds through stocks and bonds.

Going further any company or its promoter or its director categorised as a wilful defaulter may not be allowed to take control over other listed entities. However, if a listed company or its promoter or its director is categorised as a wilful defaulter, and there is a take-over offer in respect of the listed company, they may be allowed to make a competing offer for the said listed company.

SEBI has also decided to bar such defaulters from setting up market intermediaries such as mutual funds and brokerage firms.

The criteria for determining a ‘fit and proper person’ in SEBI regulations, will be amended for inclusion of the aspect that no registration shall be granted to any entity, if the entity or its promoters or its directors or key managerial personnel are included in the list of wilful defaulters, as defined under the regulations formulated by the International Centre for Dispute Resolutions (ICDR), the international arm of the American Arbitration Association, which is the largest provider of global ADR.

The move by SEBI would disqualify UB Group chairman Vijay Mallya from various posts who has exited the country after continuous efforts from banks to recover Rs 9000 crores of unpaid loans.

The move by SEBI will integrate more transparency into the market. There will be changes in the boards of different companies in market after this move by SEBI.