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SEBI Introduces Formula-Based Settlement Rules With Wider Access
SEBI has created new rules for settling cases involving securities-law violations.
The rules replace the system introduced in 2018.
They use a formula to calculate the main settlement amount.
The formula considers the seriousness of the violation and other details of the case.
Money gained improperly or losses caused to investors will be recovered separately.
Companies and individuals will have more time to ask for a settlement.
Some smaller cases can use a faster process if the amount is no more than ₹10 lakh.
People whose earlier applications were rejected or not filed may get one special chance to apply.
The new rules will begin after the regulations are officially notified and 30 more days have passed.
SEBI approved new settlement regulations replacing the 2018 framework, effective 30 days after notification.
Settlement amounts will use a formula based on the minimum prescribed penalty and factors such as case stage, gravity and mitigating circumstances.
Wrongful gains, avoided losses and investor losses will be disgorged separately rather than included in the base amount.
Entities will get 60 days to apply after a settlement notice and 90 days after receiving a show-cause notice.
The rules add a fast-track route, a one-time 90-day reopening window and settlement options for certain financial misstatement and fund-diversion cases.
- Who
- The Securities and Exchange Board of India (SEBI), along with entities involved in securities-law proceedings.
- What
- SEBI approved revised settlement regulations featuring a formula-based settlement amount, separate disgorgement and wider application access.
- Where
- India’s securities-regulation framework; specific proceedings remain before SEBI’s Board.
- When
- Approved on Thursday and published on September 24, 2026; the regulations will take effect the day after 30 days from notification.
- Why
- To replace the 2018 framework, standardize settlement calculations, avoid double counting of wrongful gains and expand settlement access.
Key facts
- Regulator
- Securities and Exchange Board of India (SEBI)
- Previous framework
- 2018 settlement regulations
- Settlement formula
- Base Amount × (S + R + G + A - M) + Legal Costs
- Pre-show-cause application window
- 60 days after a settlement notice
- Post-show-cause application window
- 90 days, increased from 60 days
- Fast-track threshold
- Settlement amount of no more than ₹10 lakh, subject to specified cases
- Reopening facility
- One-time 90-day window with an additional 20% settlement amount
- Disgorgement interest
- Generally 9% annually in specified periods, rising to 12% after the final order in applicable matters until the application is filed
Sources
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