Sebi’s new settlement regulations to come into force from Nov 7; rolls out online application, calculator

The Securities and Exchange Board of India’s (Sebi) new framework for settling administrative and civil proceedings will come into force on November 7, 2026, allowing eligible entities to seek settlement of specified proceedings at different stages, subject to the conditions prescribed under the regulations.

The market regulator notified the Sebi (Settlement of Administrative and Civil Proceedings) Regulations, 2026, on October 8, replacing the existing framework with revised provisions governing the filing, consideration and settlement of proceedings under securities laws.

In a release dated November 6, Sebi said it had made available a set of frequently asked questions (FAQs), an online settlement amount calculator and an online application facility to help applicants understand and file settlement applications. The regulator has also established a help desk for applicants.

Under the new regulations, an entity can apply for settlement of specified proceedings at any stage of the proceedings. Such applications must be accompanied by the prescribed undertaking, waivers and the basis for computation of the settlement amount.

The application fee has been fixed at Rs 25,000 for individuals and Rs 35,000 for other applicants. The fee is non-refundable and must be paid through the designated payment gateway.

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The regulations also prescribe a 90-day window for filing settlement applications in proceedings pending before Sebi. An application will not be considered if filed after 90 days from the date of service of the show-cause notice or supplementary show-cause notice, whichever is later. This restriction does not apply to proceedings pending before the Securities Appellate Tribunal or the Supreme Court.

For proceedings pending as of the commencement of the new regulations, applicants will have 90 days from November 7 to file settlement applications, provided an application was not previously filed or was rejected, returned or withdrawn under the Sebi (Settlement Proceedings) Regulations, 2018. In such cases, the settlement amount will be 20% higher than the amount otherwise calculated under the new framework.

The regulations also introduce a settlement notice mechanism. Sebi may issue a notice outlining the substance of probable charges and enforcement actions before issuing a show-cause notice, giving the concerned entity 60 days from receipt of the notice to apply for settlement.

However, this provision will not apply where interim directions or prosecution are contemplated, or in cases covered under the specified exclusions in the regulations. Sebi has also retained the right to modify the probable charges or enforcement action mentioned in the settlement notice.

The new framework specifies categories of proceedings that cannot ordinarily be settled. These include cases where a settlement application for the same alleged default has previously been rejected, cases where an examination, investigation, inspection or audit is pending, and applications involving entities categorised as wilful defaulters, fraudulent borrowers or fugitive economic offenders.

Proceedings involving alleged defaults with market-wide impact, losses to a large number of investors or an impact on market integrity may also not be settled, subject to the provisions of the regulations.

The regulations provide for settlement terms comprising the settlement amount, disgorgement of wrongful gains or losses averted or caused to investors, and remedial and regulatory requirements, wherever applicable. Disclosures may also form part of the settlement terms.

The settlement amount will be credited to the Consolidated Fund of India, while the application fee and legal costs, if any, forming part of the settlement amount will be credited to Sebi's General Fund.

Sebi may reject applications in cases where applicants fail to respond to communications, delay or fail to provide required information, do not appear before the Internal Committee when required, breach undertakings or waivers, or fail to pay the settlement amount within the prescribed period.

Applicants can withdraw their applications before the decision of the Panel of Whole Time Members is communicated. However, rejected or withdrawn applications can be refiled subject to the conditions prescribed under the regulations, including payment of an additional 20% of the settlement amount.

The filing of a settlement application will not prevent Sebi from issuing interim civil or administrative directions to protect investor interests and maintain the integrity of the securities market.

The regulator has made the FAQs, settlement amount calculator and online application form available on its website. An explainer video on using the settlement calculator has also been provided.

Eligible persons can apply for settlement in accordance with the Sebi (Settlement of Administrative and Civil Proceedings) Regulations, 2026.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here

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