Sebi bars raising of funds from public by wilful loan defaulters

Also bars wilful defaulter from taking control of another listed company

Stock market regulator Securities and Exchange Board of India (Sebi) has decided to bar wilful loan defaulters from raising funds from public through any mode such as issue of equity shares, debt securities and non-convertible redeemable preference shares. Sebi's decision comes at a time when several banks have declared UB Group Chairman Vijay Mallya and his now defunct Kingfisher Airlines as wilful defaulters.

Sebi has also decided to bar a company or its promoter or its director categorized as wilful defaulter from taking control of another listed company. However, if a listed company or its promoter or its director is categorized as wilful defaulter and there is a take-over offer in respect of the listed company, they will be allowed to make a competing offer.

The stock market regulator has also decided to initiate a public consultation process for amending the definition of the term 'control' of a company. Control can be defined as the right or entitlement to exercise at least 25% of voting rights of a company irrespective of whether such holding gives de facto control. Alternately, control can be defined as the right to appoint majority of the non-independent directors of a company.

The plan of action for FY 2017 set by the Sebi board after the conclusion of a meeting in New Delhi on Saturday, 12 March 2016, includes energizing the Institutional Trading Platform (ITP), REITs, Invits and Municipal Bond Markets, encouraging dividend distribution policy by listed companies, encouraging delisting of suspended companies, raising standards for Credit Rating Agencies (CRAs), and encouraging use of technology to streamline KYC procedure and augment the reach and depth of the market -- especially for mutual funds.

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