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सेमिनार: अंग्रेज़ी सीखने का अवसर (23 सितंबर: दोपहर 3 बजे)
New SEBI Norms for Wilful Defaulters
Mar 28, 2016

Cracking its whip on 'wilful loan defaulters', markets regulator SEBI has decided to bar them from raising public funds through stocks and bonds as also from taking board positions at listed companies.

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

  • These defaulters would also be not allowed to take control of any other listed company.

  • All the persons would stand disqualified from all positions at listed companies.

  • These restrictions would apply to every individual and company declared as wilful defaulter as per the Reserve Bank norms.

  • Any company or its promoter or its director categorized as wilful defaulter may not be allowed to take control over other listed entity. 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 may be allowed to make competing offer.

  • In another move that would help investors take a better informed decision, the SEBI has said that companies will have to disclose the impact of all remarks—qualifications in accounting parlance—in a separate statement along with the annual financial statements.

The move assumes significance in the wake of a raging controversy over UB Group Chairman Vijay Mallya, who has exited the country amid continuing efforts by the banks to recover dues totalling over Rs 9,000 crore of unpaid loans and interest.

Under the existing framework, a wilful defaulter was allowed to come out with an initial public offering (IPO) merely by making adequate disclosures in the offer document.

Offer documents, normally contain all information including promoters’ financial record and pending litigations. However, investors don’t tend to read the fine print.

With the latest move, defaulters would not be able to approach investors.

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