The Securities and Exchange Board of India (SEBI) has notified new rules for settling cases with companies, brokers, fund houses and individuals accused of breaking securities law. The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 were notified on 6 October 2026 and reported by DD India and other outlets on 10 October. They replace the SEBI (Settlement Proceedings) Regulations, 2018.
SEBI's board had approved the change at its meeting in September 2026. The board's press release said the new regulations come into force on the day after the 30th day from their notification, so the 2018 rules continue to apply until then.
What a settlement is
A settlement lets a person or company facing SEBI proceedings close the matter by paying an amount and accepting conditions, instead of contesting it to the end. It is not available as a right. SEBI decides whether to accept an application.
How the amount will now be worked out
Under the new regulations every settlement has three parts:
- The settlement amount.
- Disgorgement - handing back wrongful gains, where there are any.
- Remedial and regulatory terms - conditions that were earlier called non-monetary terms.
The settlement amount starts from a base figure linked to the minimum penalty that securities law lays down for that violation. The base is then adjusted for the stage the case has reached, regulatory action, how serious the violation is, and aggravating and mitigating circumstances. Legal costs are added.
Wrongful gains, losses avoided and losses caused to investors are kept out of the base amount. Where they can be measured, SEBI recovers them separately through disgorgement. The regulator's stated reason is to avoid counting the same money twice.
Two fast-track routes
- By amount: if the settlement amount is Rs 10 lakh or less, the case goes straight from SEBI's internal committee to a panel of whole-time members.
- By type of violation: for specified violations, including certain disclosure lapses, SEBI can send a notice stating the amount. If the party pays, the panel passes the settlement order.
Serious cases
Cases that involve misstated financial statements or diversion of funds can also be settled, but only with remedial conditions. Reports of the regulations give examples such as fresh disclosures and steps to bring back the diverted money.
Applying, according to reports
Goodreturns, which describes the application rules in detail, reports the following. These points are from that one report and should be checked against the regulations before anyone acts on them.
- An application carries a non-refundable fee of Rs 25,000.
- It must be in the prescribed format with an undertaking and a waiver.
- SEBI may issue a "settlement notice" before a show-cause notice, after which the party has 60 days to apply.
- If SEBI returns an application as incomplete, the applicant gets 15 days to file a corrected one.
What it means for investors
- The change affects parties facing SEBI action, not ordinary demat or mutual fund account holders.
- For investors in a company that settles, the main change is that money gained wrongly is to be dealt with separately from the settlement amount.
- A settlement closes SEBI's proceedings on the terms of the order. This article does not cover what it means for any other case or claim.
Among other regulatory changes this month, the RBI has tightened rupee derivative rules for banks.
What happens next
The 2018 regulations are repealed once the new ones take effect. The full text is on SEBI's website under Legal - Regulations.
