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SEBI rewrites settlement rules, with a fast track for cases up to ₹10 lakh
New regulations replace the 2018 framework. Wrongful gains will be recovered separately from the settlement amount, and firms get 90 days instead of 60 to apply after a show-cause notice.
Key points
- SEBI has notified the Settlement of Administrative and Civil Proceedings Regulations, 2026, approved by its board on 24 September.
- Cases where the settlement amount is ₹10 lakh or less will go straight from SEBI's internal committee to a panel of whole-time members.
- Wrongful gains and investor losses will be disgorged separately, ending what SEBI called double counting in the old formula.
- The window to apply after a show-cause notice rises from 60 to 90 days.
The Securities and Exchange Board of India (SEBI) has notified new rules for settling enforcement cases, changing how much violators pay and how fast smaller cases are closed. The Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026 were posted on SEBI’s website on 8 October.
They replace the settlement regulations of 2018. SEBI’s board approved the change at its meeting on 24 September. The new rules take effect the day after 30 days have passed from their publication in the official gazette.
Settlement lets a person or company facing SEBI proceedings close the case by paying an amount and accepting conditions. The new formula and fast track are meant to make the framework simpler and more predictable.
A new way to work out the amount
Settlement terms will now have three parts: the settlement amount, disgorgement of wrongful gains where they apply, and remedial and regulatory terms. The last of these were earlier called non-monetary terms.
The settlement amount starts from a base amount linked to the minimum penalty the law sets for the violation, with different multipliers for different types of applicant. It is then adjusted for the stage of proceedings, the regulatory action involved, the gravity of the violation, aggravating and mitigating factors, and legal costs.
Wrongful gains, losses avoided and losses caused to investors are kept out of this base. They will be quantified and disgorged separately, with interest of 9% a year, and 12% in some cases after a final order. SEBI said this ends the existing double counting of such sums in settlement terms.
The new settlement rules in numbers
- ₹10 lakh fast-track ceilingCases at or below this settlement amount skip a step and go straight to a panel of whole-time members.
- 90 days to apply after a show-cause noticeUp from 60 days under the 2018 rules.
- 60 days after a new settlement noticeSEBI can now invite settlement before a show-cause notice is issued.
- 20% extra for a second chancePaid by those using a one-time 90-day window for pending cases.
Two fast-track routes
Cases where the settlement amount is ₹10 lakh or less will go directly from SEBI’s internal committee to a panel of whole-time members.
The second route is based on the type of violation, including certain disclosure lapses. SEBI will send a notice naming the amount payable; once the entity pays, the panel passes the settlement order.
More time, and a second chance
The rules add a settlement notice that SEBI can send before a show-cause notice, giving the entity 60 days to apply. No such notice will be sent where prosecution or an interim order is being considered. After a show-cause notice, the time to apply goes up from 60 days to 90 days.
There is also a one-time 90-day window for some pending proceedings. It covers those who did not apply earlier, and those whose applications under the 2018 rules were rejected, withdrawn or returned. Applicants using this window pay an extra 20% of the settlement amount.
Serious cases can be settled, with conditions
Cases involving misstated financial statements or diversion of funds can also be settled. SEBI will attach remedial terms in these cases, such as public disclosures and bringing the diverted money back.