The Securities and Exchange Board of India (SEBI) proposed to amend the SEBI Act for imposing restrictions on ‘wilful defaulters’ from accessing the capital market.
The proposed amendment suggests that no issuer would be allowed to make a public issue of equity and debt securities and non-convertible redeemable preference shares if: The issuer, its promoter, group company or director of the issuer of such securities, is in the list of the wilful defaulters, published by the Reserve Bank of India (RBI).
Wilful defaulters would also not be allowed to make public issue of debt securities and non-convertible redeemable preference shares if they are in default of payment of interest or repayment of principal amount in respect of debt instruments issued by them to the public
SEBI said to prevent access to the capital markets by the wilful defaulters, a copy of the list of wilful defaulters -non-suit filed accounts and suit filed accounts are forwarded to SEBI by the RBI and the Credit Information Bureau (India) Ltd. (CIBIL).
However, it said that the existing listed companies/its promoter/group company/director of the issuer categorised as wilful defaulter may make a rights issue/private placement to qualified institutional buyers, with full disclosures in the offer document.
Further, it recommended that listed companies/its promoter/group company/director of the issuer categorised as wilful defaulter should not be allowed to take control over other listed entity in accordance with SEBI (SAST) Regulations, 2011.
Existing listed companies/its promoter/group company/director of the issuer categorised as ‘wilful defaulter’ should be allowed to make counter offer in case of a hostile bid