Securities and Exchange Board of India (SEBI) seeks to put a stringent framework to choke the sources of funds for willful defaulters. The markets regulator on Thursday notified its amended norms wherein willful defaulters will no longer be able to tap the securities markets to raise funds and hold board positions at companies listed with the markets regulator.

In addition, no fresh registration will be granted to any entity in case the entity itself or its promoters or directors or key managerial personnel are included in the list of wilful defaulters.

SEBI has also barred such entities from setting up market intermediaries like mutual funds and brokerage firms and also restrained them from taking control of any other listed company.

However, if a listed company or any of its promoters or directors is categorised as a wilful defaulter, and there is a takeover offer in respect of that listed company, they may be allowed to make competing offer.

The new rules, became effective from Wednesday. It would apply to every individual and company declared as willful defaulter as per the Reserve Bank of India norms.

The move becomes significant in the wake of a raging controversy over United Breweries group chairman Vijay Mallya, who left the country amid continuing efforts by the banks to recover dues totaling over Rs 9,000 crore of unpaid loans and interest.







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