Sebi rule makes Vijay Mallya's board position at Bayer, Sanofi shaky

New rule on restraining wilful defaulters from board positions at listed companies will debar them from raising public funds, mutual funds, brokerage firms etc

With Sebi barring wilful defaulters from board positions at listed companies, the beleaguered Vijay Mallya may be left with no choice but to exit boards of Bayer Cropsciences and Sanofi India in addition to other entities of his UB Group.

Mallya recently resigned as chairman and director of United Spirits. He, however, remains on board of various other companies, including those from his UB Group as also a few others, including Indian subsidiaries of some multinational companies.

Mallya is currently on the board of Bayer Cropsciences, Sanofi India, Mangalore Chemicals and Fertilizers, United Breweries, United Breweries Holdings and Kingfisher Airlines.

He would have to resign from these boards after the new rules come into effect.

The new rules on restraining wilful defaulters is likely to come into effect in a few weeks and will apply to all listed firms as also their promoters and directors.

Sebi Chairman U K Sinha on March 12 had said the new rules on restraining wilful defaulters will come into effect after they get notified.

"After the notification, all the persons would stand disqualified from all positions at listed companies," Sinha had said, but refused to comment on any individual.

Meanwhile, Mallya has left the country amid continuing efforts by banks to recover dues totalling over Rs 9,000 crore of unpaid loans and interest.

Sebi also launched a multi-pronged clampdown on 'wilful loan defaulters', by barring them from raising public funds and taking control of listed firms and holding board positions.

Besides, such defaulters -- including individuals and the companies as well as their promoters and directors -- will be debarred from setting up or being associated with market entities like mutual funds and brokerage firms.

Sebi is also contemplating making it mandatory for listed companies to disclose their bad loans if they breach certain thresholds set by banking regulator RBI.