SEBI notifies a revised framework for settling securities law proceedings
SEBI has notified the Settlement of Administrative and Civil Proceedings Regulations, 2026, following the proposals discussed in September’s issue. The framework governs applications by companies, intermediaries and individuals to settle eligible proceedings concerning alleged securities-law violations.
The settlement calculation starts with a base amount: the applicable minimum statutory penalty multiplied by a factor for the applicant’s category. The factor is 2 for an independent director and 3.5 for an executive director, promoter in control or key managerial person. An independent director alleged to have benefited from, or actively participated in, fraud is treated at par with an executive director for this calculation.
The final amount also reflects the stage of proceedings, regulatory history, seriousness of the violation, and aggravating or mitigating circumstances. Disgorgement of wrongful gains is addressed separately. A simplified route is available for calculated settlement amounts up to ₹10 lakh where no disgorgement or remedial terms apply. The distinctions make a director’s actual role and conduct material to the assessment; the lower category factor does not determine the final payment by itself.
