In short: SEBI has notified new settlement regulations in a notification dated 6 October 2026. They introduce a new formula to calculate settlement amounts and a fast-track route, including for cases where the settlement amount is up to Rs 10 lakh. Wrongful gains are now disgorged separately, ending the double counting seen earlier.
What has happened?
The Securities and Exchange Board of India (SEBI) has notified the Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026. The Gazette notification is dated 6 October 2026. The regulations are made under powers in the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956 and the Depositories Act, 1996. They follow SEBI board approval of the new rules at its meeting last month.
"Settlement" lets a person facing SEBI proceedings resolve the matter by agreeing to certain terms, usually without a full adjudication of the case.
What are the key changes?
- Three parts to settlement terms: the settlement amount, disgorgement of wrongful gains (where applicable), and remedial and regulatory terms (RRT). RRT is the new name for what were earlier called non-monetary terms.
- A new formula: the settlement amount starts from a base amount linked to the minimum penalty prescribed for the violation under securities laws. This is then adjusted for the stage of proceedings, regulatory action, gravity of the violation, aggravating factors and mitigating factors, along with legal costs.
- No double counting: wrongful gains, loss avoided or loss caused to investors are not part of the base amount. Where they can be quantified, they are disgorged separately.
- Cases of serious misconduct: settlement is also available for misrepresentation of financial statements or diversion of funds, subject to suitable remedial and regulatory measures. These include disclosures and bringing back diverted funds.
How does the fast-track route work?
There are two types of fast-track settlement: one based on the violation and one based on a monetary threshold.
| Type | How it works |
|---|---|
| Monetary threshold-based | Where the settlement amount does not exceed Rs 10 lakh, the case moves directly from the internal committee to a panel of whole-time members. |
| Violation-based | SEBI issues a notice offering the entity a chance to settle by paying the amount stated in it. The panel passes the settlement order after the amount is paid. |
The violation-based route covers certain violations, including some disclosure-related ones.
Why does it matter?
SEBI expects the framework to be simpler, less discretionary, easier to understand and more predictable. It also aims to fast-track less serious matters while keeping settlement an effective way to resolve cases, with a real deterrent against violators of securities laws.
Who is affected?
Listed companies, intermediaries, promoters and individuals who face SEBI proceedings and are considering settlement are the main audience. Investors may also be affected because losses caused to them are now dealt with separately through disgorgement.
What should readers do?
- If you are facing a SEBI proceeding, read the full regulations and take advice from a securities lawyer before applying.
- Check the Gazette text for exact procedures and eligibility, as this article is only a summary.
- Other readers need not act, but may wish to follow how SEBI applies the new formula.
Frequently asked questions
What is the fast-track threshold?
Under the monetary route, cases where the settlement amount does not exceed Rs 10 lakh go directly from the internal committee to a panel of whole-time members.
What does the base amount depend on?
It is linked to the minimum penalty prescribed for the violation under securities laws. It is then adjusted for factors such as the stage of proceedings, gravity, and aggravating and mitigating factors.
Can cases of diverted funds be settled?
Yes, the regulations provide for settling cases of financial statement misrepresentation or fund diversion, but only with remedial and regulatory measures, such as disclosures and bringing back diverted funds.
Sources
- SEBI: Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026
- ET Legal: Sebi notifies new settlement rule; introduces new formula, fast-track route