Vijay Mallya, besides being a chairman of the UB Group, also acts as the director and chairman of various other UB Group companies, such as UB Holdings and UB Engineering among others. Mallya’s place as a chairman of the United Breweries Holdings Limited is in question because of the recent SEBI order prohibiting him from accessing securities markets or holding any directorial position in one if his companies.
On January 25, SEBI or the Securities and Exchange Board of India introduced a ban on Vijay Mallya and six other senior officials of United Spirits (USL) against any direct or indirect activities in capital markets. SEBI also demanded that Vijay Mallya and Ashok Capoor, the former managing director of United Spirits hold off from any directorial or managerial positions in any company listed on the Indian marketplace.
Such a turn of events is legally backed as Securities and Exchange Board of India (SEBI) has prohibited individuals in the past from holding any key managerial positions in the case of fraud, insider trading, or for example minimum public shareholding cases (Section 11(1) and 11B of Sebi Act). The SEBI order came as a result of allegations against Mallya. He is accused by six other officials of United Spirits for alleged fund diversion from the company. SEBI demanded an information and statement on the wrongly diverted Rs 1,880.8 crore from the United Spirits budget.
SEBI also investigated the diversion of funds from Kingfisher Airline, the now-defunct company. Vijay Mallya has spoken out strongly on social media, in several posts calling the allegations a “Joke” and “Baseless” and that he is “Getting used to these witch hunts coming from all directions with no legal basis whatsoever.”
Mallya is determined to fight the SEBI order, and he vowed that he would not step down from the board of United Spirits or the chairman position of United Breweries until he is proven guilty in an Indian court. Vijay Mallya now hopes to secure a stay from the High Court in Bombay. An UB official stated that “It is not a company notification, it is a personal notification and they are barring some people from participating in the securities market. Only the company affairs ministry can pass such an order as it comes under the Company Law Board and not SEBI“.