The board positions in companies which have been listed with Sebi will now not be under the reach of wilful defaulters. They also won't be allowed to tap the securities market to raise funds.
Securities and Exchange board of India has also restrained wilful defaulters from setting up market intermediaries like mutual funds and brokerage firms , putting a rigid framework to choke their funding sources. Taking control of any other listed company has also been restricted for these defaulters.
These rules shall be effective from Wednesday and shall apply to every individual or company declared as a wilful defaulter according to the Reserve Bank of India's norms. If the company or its promoters or directors figure on the list of wilful defaulters, the issuer won't be allowed to make a public issue of shares, debt securities or non-convertible redeemable preference shares.
The decision was followed by discussions between various regulators and government departments to tighten the regulatory noose on wilful defaulters, especially in the wake of many such cases coming in recent months.