TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026
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....CHAPTER I PRELIMINARY Name and effective date. 1. (1) These regulations may be called the Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026. (2) These regulations shall come into effect on the day succeeding the 30th day from the date of notification of these regulations in the Official Gazette. Definitions. 2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall have the meanings given to them below and their related words shall derive their meaning from the terms defined hereunder, - (a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) "alleged default" means any act or omission resulting in contravention of any provision of the securities laws attracting specified proceeding; (c) "Board" means the Securities and Exchange Board of India established under Section 3 of the Act; (d) "days" means English calendar days; (e) "High Powered Advisory Committee" means a committee, constituted by the Board under regulation 23; (f) "Internal Committee" means a committee, constituted by ....
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....or regulations or master circulars or circulars or any statutory modification or re-enactment thereof, as the case may be. CHAPTER II GENERAL Application for settlement. 3. (1) Subject to compliance with the requirements of these regulations, an entity may make an application proposing for settlement of specified proceeding at any stage of proceeding. (2) The application under sub-regulation (1) shall be filed with the Board in the Form along with the undertaking and waiver and the basis of computation of settlement amount, as specified in Part-A, Part-B and Part-C, respectively, of Schedule-I. (3) The application made under sub-regulation (1) shall be accompanied by a non- refundable application fee of rupees twenty five thousand for natural person and rupees thirty five thousand for others, payable through the payment gateway provided for this purpose. (4) The facts established against the applicant or admitted in any ongoing or concluded proceeding in India or outside India, with respect to the same cause of action, under any law, shall be deemed to be admitted by the applicant in respect of the specified proceeding proposed to be settled. (5) The applica....
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....lation (1) shall not apply in case where issuance of interim directions or prosecution is contemplated or for cases which are covered under regulation 27. (3) The Board shall have the right to modify the nature of the enforcement action to be initiated against the entity or the probable charges stated in the notice referred to in the sub-regulation (1) and such notice shall not confer any right to seek settlement on the basis of probable charge and enforcement action contained in such notice or avoid any enforcement action due to modification of probable charge or enforcement action. CHAPTER III SCOPE OF SETTLEMENT Scope of settlement proceeding. 6. (1) Save as otherwise provided in these regulations, the following specified proceedings shall not be settled, namely :- (i) where the settlement application for the same alleged default has been previously rejected under these regulations except where the application is covered under regulation 4(3) or regulation 7(4); (ii) where the examination, investigation, inspection, or audit, if any, in respect of any cause of action, is pending except in case of settlement application involving confidentiality; ....
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....application may be withdrawn at any time prior to the communication of the decision of the Panel of Whole Time Member, accepting or rejecting the settlement application. (4) Settlement application once rejected shall only be filed at subsequent 'stage of proceeding' as defined under regulation 2(1)(m), if the reason for earlier rejection no longer applies and such refiling shall be subject to payment of twenty percent additional settlement amount. (5) Settlement application once withdrawn under sub-regulation (3) or under regulation 3(7), may be filed at the same or a subsequent stage of the proceeding and such refiling shall be subject to payment of twenty percent additional settlement amount. (6) The rejection or withdrawal of the application shall not affect the continued validity of the undertakings and waivers given in respect of limitation or laches and the waivers given in Part-B of the Schedule-I and the Board or the applicant, shall be free to initiate or pursue such proceeding as may be appropriate in accordance with the law. Effect of pending application on specified proceeding. 8. (1) In a specified proceeding where settlement application has been....
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.... credited to the General Fund of Securities and Exchange Board of India as constituted under Section 14 of the Act or any statutory modification or re-enactment thereof. Explanation. - Legal costs shall include liquidated costs, as may be determined by the Board, in respect of costs for obtaining appropriate orders from the Tribunal or any forum and include other expenses incurred by the Board in any other proceeding before Tribunal or any forum in respect of such application. (7) The amount disgorged along with applicable interest as part of the settlement terms shall be credited to the Investor Protection and Education Fund as referred in Section 11(5) of the Act or any statutory modification or re-enactment thereof. Settlement Amount. 10. (1) The settlement amount shall be calculated as per the following formula: Settlement Amount (SA) = BA x (S + R +G +A -M) Where, 'BA' = Base Amount under regulation 11; 'S' = Stage of Proceeding under regulation 12; 'R' = Regulatory Action Factor under regulation 13; 'G' = Gravity Factor under regulation 14; 'A' = Aggravating Fact....
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....idered; (iii) where different alleged defaults attract different base amounts [calculated as per clause (i)], then base amount shall be the sum of all the base amounts applicable for each of such defaults; (iv) if any of the person is lead conspirator who is alleged as mastermind or key-operator in the report or in the Show Cause Notice or determined in the order, then the base amount of such person, determined as above, shall be doubled; (v) the base amount for independent director shall be taken at par with executive director, if as per the report or the Show Cause Notice, the independent director is alleged to be beneficiary of the fraud or has actively participated in the alleged fraud or determined as such in the order. (3) The base amount shall not be less than the penalty already imposed for the default for which settlement is being sought. (4) The base amount shall be calculated based on the alleged default in the report or the Show Cause Notice or the order. (5) Where the order is under challenge before the Tribunal or the Supreme Court, the base amount shall be calculated on the basis of allegations upheld in the order impugned before t....
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....1) The value assigned on the basis of the stage of the enforcement proceeding, as on the date of filing of settlement application, shall be the stage of proceeding factor. (2) Stage of proceeding factor shall be determined as per the following table, namely :- STAGE OF THE PROCEEDING(S) WHEN THE SETTLEMENT APPLICATION IS FILED VALUE OF 'S' a. Voluntary Suo Motu 0.20 Before issue of Show Cause Notice 0.40 b. Post issue of Show Cause Notice 0.60 c. Pending before Designated Member in case of Enquiry proceeding under Section 12(3) of the Act; Pending before the Board under Section 15I(3) of the Act, or Section 23I(3) of Securities Contracts (Regulation) Act, 1956 or Section 19H(3) of Depositories Act, 1996 0.80 d. Pending before the Tribunal 1.00 e. Pending before the Supreme Court 1.50 (3) Where multiple enforcement proceedings arising out of the same cause of action are sought to be settled, the value of the enforcement proceeding which is at the most advanced stage, shall be taken as the stage of proceeding factor. Regulatory Action Factor (R). 13. (1) The sum of all the values assigned to the admini....
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.... (v) Applicant failing to heed prior regulatory guidance and prior warnings; (vi) Evidence of planning, pre-meditation or sophisticated means. Explanation: Conducting default across different jurisdictions, hiding assets or transactions, or both, through the use of fictitious entities, corporate shells or offshore financial accounts ordinarily indicates sophisticated means; (vii) A listed intermediary or Securities Market Infrastructure Institution was substantially jeopardized. Explanation. - A listed intermediary or Securities Market Infrastructure Institution shall be deemed to have been substantially jeopardized if as a result of the alleged default: a. it has become insolvent or an application under the Insolvency and Bankruptcy Code, 2016 was admitted; b. it was unable on demand to refund fully any public deposit, payment or investment; or c. it is so depleted of assets that it is forced to merge with another institution in order to continue active operations. (viii) Omission or act of Market Infrastructure Institution was such that the functioning of such Market Infrastructure Institution or other Market Inf....
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....e action is not in accordance with the applicable internal procedures; (xiv) The applicant taking decisions relating to the violation beyond his field of competence; (xv) The applicant benefiting financially from the violation, either directly or indirectly; (xvi) The alleged default being repetitive under a single count; (xvii) The body corporate or the responsible person, being aware of a risk that their actions or inaction may amount to reckless actions or inaction or could result in a violation of securities laws and failing adequately to mitigate that risk. Explanation. - The following shall be deemed to be reckless, - a. failure to appoint competent officials for discharge of their duties, including a compliance officer; b. failure to put in place adequate systemic safeguards; or c. failure to put in place a code of conduct; (xviii) Search and seizure being conducted by the Board in the matter; (xix) Any other factor deemed fit in the facts and circumstances of the case. Mitigating Factors (M). 16. The Panel of Whole Time Member shall take into account the following mitigating fact....
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....ely: - (i) Implementation of enhanced procedures and policies to prevent future securities laws violations as well as agreeing to appoint or engage an independent consultant to review internal policies, processes and procedures; (ii) Providing enhanced training and education to employees of intermediaries and securities market infrastructure institutions; (iii) Agreeing to submit to enhanced internal audit and reporting requirements; (iv) Suspension or cessation of business activities for a specified period subject to clause (xi); (v) Exit from Management; (vi) Clawback of the benefits received by the applicant, for services rendered in violation of securities laws; (vii) Refund of money received in contravention of provisions of securities laws; (viii) Refraining from acting as a partner or officer or director of an intermediary or as an officer or director of a company that has a class of securities regulated by the Board, for specified periods; (ix) Cancelling securities where the securities are issued fraudulently, including bonus shares received on such securities, if any, and recovery of any divi....
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....of diversion or siphoning off of funds, any unfair trading or illegal gains or losses averted by the applicant, by trading in the securities market during the time of mis-statement of financial or siphoning off of money, as brought out in the report or the Show Cause Notice or the order, may be considered while deciding the settlement term; vii. Where there are allegations of diversion or siphoning off of funds, and the applicant is willing to bring back all the diverted or siphoned off money along with interest as part of settlement term, the said diversion or siphoning off of the money shall not be an impediment to settle the matter for the reasons that the said diversion or siphoning off, caused loss to the investors. (3) In cases where sub-regulation 2(i) and 2(ii) apply, the applicant shall have the option of stating in its disclosure and the explanatory notes that it is making the disclosure without admission or denial of the findings of fact and conclusions of law, as part of the settlement term. Factors to be considered to arrive at Remedial and Regulatory Term. 18. (1) While arriving at Remedial and Regulatory Term under regulation 17, factors enumerated ....
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....subsequent in the priority status may be granted reduction upto or equal to twenty-five percent of the settlement amount. Interest. 20. (1) In a specified proceeding where the applicant is liable to pay any amount including disgorgement of wrongful gains made or loss averted or loss caused to investors, the same shall be paid along with interest, as under, namely :- (i) if no final order is passed by the Board, at the rate of nine percent per annum from the date of transaction till the date of filing of settlement application; or (ii) if final order is passed by the Board, at the rate of nine percent per annum from the date of transaction till the date of passing of final order and thereafter, at the rate of twelve percent per annum till the date of filing of settlement application. (2) Interest on the said amount shall be charged from the date of individual violation or transaction till the date of filing of settlement application. (3) Interest shall only be charged on the principal amount liable to be paid by an applicant and no interest shall be charged on unpaid interest amount. CHAPTER V CONSTITUTION, PROCEDURES AND POWERS OF COMMITTEES AND ....
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....appropriate by the Internal Committee; (e) permit the applicant to submit revised settlement term in accordance with the discussion held in the meeting with Internal Committee, within a period not exceeding twenty-one days from the date of the Internal Committee meeting; (f) require that the settlement amount shall be paid by Asset Management Company or the investment manager, as the case may be, in case settlement application is made by a Pooled Investment Vehicle settling alleged defaults against it. (6) Save as otherwise provided under these regulations, the term proposed by the applicant after Internal Committee meeting along with the recommendation of the Internal Committee thereon, shall be placed before the High Powered Advisory Committee. High Powered Advisory Committee. 23. (1) The Board shall constitute a High Powered Advisory Committee for consideration and recommendation on the term of settlement proposed by the applicant and the recommendation made thereon by the Internal Committee. (2) The High Powered Advisory Committee while recommending settlement term may take into consideration various powers or discretion given to the Panel of Whole....
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....e or modification or rejection of settlement term. (4) The recommendations of the High Powered Advisory Committee shall be placed before the Panel of Whole Time Member. Proceeding before the Panel of Whole Time Member. 25. (1) The Panel of Whole Time Member shall consider the recommendations of the High Powered Advisory Committee or the Internal Committee in cases covered under regulation 28 and may accept or reject the same. (2) Where the recommendations of the High Powered Advisory Committee or the Internal Committee to settle the specified proceeding are not accepted by the Panel of Whole Time Member, then- (a) the Panel of Whole Time Member may return the application for re- examination of the settlement term and thereafter the procedure as applicable in the case of an original application shall be followed by the Internal Committee and the High Powered Advisory Committee; or (b) the Panel of Whole Time Member may not accept the recommendation by recording the reasons for such non-acceptance and such decision of the Panel of Whole Time Member alongwith the reasons for such non- acceptance, shall be communicated to the applicant. (3) Where the Pa....
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....f any of the requirements of law or directions issued by the Board; v. Such other defaults as may be determined by the Board. (2) The Board may not issue a fast track settlement notice under sub-regulation (1), if in the opinion of the Board, the entity has failed to make a full and true disclosure of facts or failed to co-operate in the required manner. (3) Nothing contained in the notice of fast track settlement shall restrict the power of the Board to modify the enforcement action to be brought against the entity and the notice of settlement shall not confer any right upon the entity to seek settlement or avoid any enforcement action. (4) The entity to whom a notice under sub-regulation (1) has been issued may, within thirty days from the date of receipt of the notice of fast track settlement, - (a) file an application to the Board in the Form proposing for settlement of specified proceeding along with the undertaking and waiver and the basis of computation of settlement amount, as specified in Part-A, Part-B and Part- C, respectively, of Schedule-I. (b) remit the settlement amount as specified in the notice of fast track settlement; ....
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....uch an entity shall only be permitted to file a settlement application at the subsequent stage of proceedings. CHAPTER VII SETTLEMENT WITH CONFIDENTIALITY Settlement with confidentiality. 30. (1) The Board may grant, to a person who agrees to provide substantial assistance in the examination, investigation, inspection, or audit, initiated or to be initiated, against any person in respect of a violation of securities laws, benefit of confidentiality in return for admitting default for the limited purpose of settlement of specified proceedings to be initiated. (2) An applicant seeking the benefit provided under sub-regulation (1), shall fulfil the conditions of this Chapter, including - (a) cease to participate in the violation of securities laws from the time of the disclosure of information, unless otherwise directed by the Board; (b) provide and continue to provide complete and true disclosure of information, documents and evidence, which is in possession of the applicant or which the applicant is able to obtain, to the satisfaction of the Board in respect of the alleged contravention of the provisions of securities laws; (c) co-operate fu....
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....ssurance of not being proceeded with, the Board may not initiate regulatory measures when the Board has a reasonable belief that the information provided to it relates to a possible securities law violation that has occurred, is ongoing or about to occur. Confidentiality. 33. (1) Irrespective of anything contained in Chapter VIII, the following shall be treated as confidential, - (i) the identity of the applicant seeking confidentiality; and (ii) the information, documents and evidence furnished by the applicant under this Chapter. (2) Irrespective of anything to the contrary contained in sub-regulation (1), the identity of the applicant or such information or documents or evidence may not be treated as confidential if, - (i) the disclosure is required by law; (ii) the applicant has agreed to such disclosure in writing; or (iii) there has been a public disclosure by the applicant. CHAPTER VIII SETTLEMENT ORDERS Settlement Order. 34. (1) On the basis of settlement term approved by the Panel of Whole Time Member, the specified proceeding shall be disposed of by an order passed by the respective authority before whom th....
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....any other person in any civil or administrative proceeding, while disposing proceeding against such other person, the respective authority before whom the specified proceeding is pending, may make necessary observations in respect of the applicant in so far as is necessary to prove the act of another. (3) Unless the settlement order is revoked, such observations shall qua the applicant be subject to the settlement order obtained by the applicant. (4) Where any person has obtained a settlement order, which contains observations in respect of any other person for the commission of an alleged default, such an order shall not in itself be admissible as evidence against such other person. (5) Passing of settlement order under regulation 34 in respect of a particular applicant shall not be relied upon by other persons, who are co-noticees with the applicant in the specified proceeding, for seeking exoneration or claiming that the said proceeding have become infructuous qua them. Revocation of the settlement order. 39. (1) If the applicant fails to comply with any term of settlement order or at any time after the settlement order is passed, it comes to the notice of the Boa....
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....one percent where extension of time sought is with respect to payment of settlement amount beyond the time provided in the notice of demand and such extension shall not be exceeding thirty days. Irregularity in procedure. 43. (1) No settlement order or rejection of a settlement application shall be invalidated on ground of any defect in procedure or determination of the settlement term or on account of any vacancy in or any defect in the constitution of any committee under Chapter V. (2) Nothing in these regulations shall prohibit the Board from revoking the settlement order where the applicant fails to pay any difference due to any discrepancy in arriving at the settlement term. (3) The applicant shall continue to be bound by the waivers given in respect of limitation or laches in respect of initiating or continuing or restoring of any legal proceeding and the waivers given in sub-paras (d), (e) (f) and (g) of para 12 of the undertaking and waivers as provided in Part-B of the Schedule-I. Explanation. - For the removal of doubts, it is clarified that the power to seek the difference under this regulation shall include and always be deemed to have included the profit....
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.... and Exchange Board of India (Settlement Proceedings) Regulations, 2018, shall be deemed to have been constituted under these regulations; (d) Any reference to the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018 under any other regulations shall be deemed to be a reference to these regulations. SCHEDULE-I (See regulation 3) Part-A [See regulation 3(2)] FORM Application for settlement (For Office use only) Date of receipt of the application: Application Registration Number: (Instructions: All particulars, including submission regarding details of loss caused to investors, profit made and proposed settlement amount must be filled, else application shall be returned. Put 'NA' only where NOT APPLICABLE.) Before the Securities and Exchange Board of India In the matter of................................ 1. Name/Trade name of the applicant/co-applicants: (a) Registration no., if applicable: (b) Date of Registration, if applicable: (c) PAN/DIN/CIN number, as available: 2. If stock broker, name of the stock exchange: 3. If authorised person, name of stock broker with wh....
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....dent applicant, include details relating to passport and national identity document, if any); (c) In case of a foreign body corporate applicant, include details relating to incorporation, place of business, registration details with any non-Indian financial sector regulatory authority. (d) Any other relevant document (s)/submissions. (Signature of the applicant) Verification I,...................................son/daughter/wife of (Name in block letters) Shri/Ms ............... being the applicant/authorised representative (in case of body corporate) of ..............................do hereby verify and affirm on oath that this application and the contents thereof are true to my knowledge and belief and as per the records and that I have not suppressed any material facts and shall keep the Board informed without delay, of any other relevant information that may come to my notice. (Signature of the applicant) Date: Place: Part-B [See regulation 3(2)] Undertakings and Waivers Format [Undertaking to be submitted by each applicant, along with the self -attested application with stamp duty duly paid] I/We,.........................
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....or deny the findings of fact and conclusions of law' (strike off whichever is not applicable), and agree to abide by the settlement order as may be passed in accordance with the Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026 and guidelines and circulars issued by the Board in that regard. (11) I/We waive my/our right of taking any legal proceedings against the Securities and Exchange Board of India concerning any of the issue covered in the settlement order that may be passed. (12) I/We further waive the following: (a) the findings of fact and conclusions of law; (b) the proceeding before the Board or any officer of the Board; (c) the right to all post-hearing procedures; (d) appeal/review before the Tribunal/courts; (e) any plea relating to such provisions of the regulations or other requirements of law, including conflict of interest, as may be construed to prevent any member or officer of the Securities and Exchange Board of India from participating in the proceeding, including settlement proceeding or assisting or advising the Internal Committee, Hig....
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....oceedings) Regulations, 2026, you may make an application within sixty days of receipt of this notice seeking settlement of aforesaid proceeding Your application for settlement shall be considered in accordance with SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 and filing of any application pursuant to this notice does not guarantee settlement of probable proceeding. 4. Irrespective of anything contained in this notice, the Board reserves the right to modify the proceeding and allegations to be brought against you and this notice shall not confer any right to seek settlement or avoid any action initiated or to be initiated by the Board. 5. If the settlement application is not filed within the aforesaid period of sixty days, the Board may initiate any proceeding against you in accordance with law. Name, designation and signature Encl: As above Part-B (See regulation 27) Format To, Date: ................. Address Sub: Notice of violation based fast track settlement in the matter of .................................................. During the course of examination/ investigation/ inspection/ audit/ inquiry, in th....