On 8 October 2026, the Securities and Exchange Board of India (SEBI) notified the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026. These regulations came into force on 7 November 2026, and replaced the departing SEBI (Settlement Proceedings) Regulations, 2018. Through the new regulations, the market regulator aims to ensure that the settlement of eligible administrative and civil proceedings is streamlined through a structured process.
In this news article, we shall discuss the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 in detail. We shall explain who is eligible to file a settlement under the said regulations and the process that needs to be followed.
The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, is a recent statutory regulatory framework established by the Securities and Exchange Board of India (SEBI). This framework came into force on 7 November 2026. It provides for the process that needs to be followed for settling specific administrative and civil proceedings under securities laws. For clarity, a specified proceeding refers to actions that SEBI may have initiated or that are currently pending before SEBI as well as appeals that are pending before the Securities Appellate Tribunal or the Supreme Court.
These proceedings relate to violations under sections 11, 11B, 11D, 12(3), or 15-I of the SEBI Act, 1992; section 12A or 23-I of the Securities Contracts (Regulation) Act, 1956; or section 19 or 19H of the Depositories Act, 1996. Further, the settlement of administrative and civil proceedings regulations specify who is eligible to submit an application, when applications will be considered and how the terms of settlement are calculated and approved.
Here are the definitions of key terms used under the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, as specified under Chapter - I:
|
Word |
Definition |
|
(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 the Board under regulation 21; |
|
(g) “Panel of Whole Time Member” |
means the panel of two or more Whole Time Members, constituted by the Chairman of the Board; |
|
(h) “report” |
includes examination report, investigation report, inspection report, enquiry report, audit report or any other document containing fact finding by the Board; |
|
(i) "securities laws" |
means the Act, the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Depositories Act, 1996 (22 of 1996), the relevant provisions of any other law to the extent it is administered by the Board, along with the relevant rules, regulations, master circulars, circulars, general or special orders or guidelines, made or issued thereunder; |
|
(j) “settlement amount” |
means an amount determined in terms of regulation 10 for settlement of specified proceeding; |
|
(k) “settlement term” |
means the terms as referred to in regulation 9; |
|
(l) "specified proceeding" |
means the proceeding that may be initiated by the Board or have been initiated and is pending before the Board; or any appeal pending before the Tribunal or the Supreme Court, for the violation of provisions of securities laws, under Section 11, Section 11B, Section 11D, Section 12(3) or Section 15-I of the Act or Section 12A or Section 23-I of the Securities Contracts (Regulation) Act, 1956 or Section 19 or Section 19H of the Depositories Act, 1996, or any statutory modification or re-enactment thereof, as the case may be; |
|
(m) “stage of proceeding” |
is the stage at which specified proceeding is pending at the date of filing of settlement application, as referred to in regulation 12; |
|
(n) "Tribunal" |
means the Securities Appellate Tribunal established under Section 15K of the Act; |
|
(o) “year” |
means calendar or financial year, as applicable. |
Reg. 3(1) of SEBI Settlement Regulations 2026 states that any individual or entity, including companies, promoters, directors, key managerial personnel, intermediaries or other individuals, may apply for settlement of a specific proceeding that has been initiated or is proposed to be initiated by SEBI due to an alleged violation of securities laws.
That said, there are certain restrictions provided under Reg. 6 that prevent certain individuals and entities from applying for settlement. These restrictions are as follows:
Ineligible applicants for the settlement include wilful defaulters, fraudulent borrowers and fugitive economic offenders. Such individuals cannot settle their proceedings.
Settlement applications are generally not accepted while an examination, investigation, inspection or audit is ongoing, except for applications concerning confidentiality.
If an application has been previously rejected, it cannot be resubmitted. A new application for the same alleged default is only allowed under exceptions specified in Regulations 4(3) and 7(4).
SEBI may also decline settlement requests for violations that affect market integrity, lead to widespread investor losses or significantly impact the market, as outlined in Regulation 18(2).
The table below provides important timelines specified under the SEBI Settlement Regulations, 2026.
|
Sr. No. |
Activity |
Timeline |
Regulation |
|
(a) |
Applying to settle a Specified Proceeding pending before SEBI as on 7 November 2026 |
4 February 2027 |
Regulation 4(3) |
|
(b) |
Applying to settle a Specified Proceeding pending at Appellate Stage before SAT or Supreme Court as on 7 November 2026 |
During pendency of Appeal |
Regulation 4(2) |
|
(c) |
Applying to settle when notice, prior to the issuance of SCN is received |
60 days from receipt of such Notice |
Regulation 5(1) |
|
(d) |
Applying for violation based Fast Track Settlement |
30 days from the date of receipt of the notice of fast track settlement. SEBI may extend the time by a further period of 15 days |
Regulation 27(4) read with Reg. 27(6) |
|
(e) |
Applying to settle specified proceeding other than above |
90 days from the date of service of SCN or Supplementary SCN, as the case may be. |
Regulation 4(1) |
|
(f) |
Payment of Settlement Amount under violation based Fast Track Settlement |
Within 30 days from the receipt of SEBI's decision. One may request an extension of an additional 15 days. However, such extension is contingent upon a 1% increase in the Settlement Amount. |
Regulation 27(4)(d) read with Reg. 27(6) and Reg. 42(3) |
|
(g) |
Filing of revised application |
15 days from return of application |
Regulation 3(7) |
|
(h) |
Submitting Revised Settlement Term |
21 days from the date of meeting with the Internal Committee |
Regulation 22(5)(e) |
|
(i) |
Issuance of Demand Notice |
10 days from the decision of Panel of Whole Time Member |
Regulation 25(3) |
|
(j) |
Remit of Settlement Amount |
30 days from the receipt of Demand Notice. Extendable for a period not more than 30 days, subject to an increase in the Settlement Amount by 1% |
Regulation 25(3)(a) read with Reg. 42(3) |
|
(k) |
Exercising Option to settle either under the 2018 Regulations or under the 2026 Regulations |
30 days from the date on which the SEBI notice was received |
Regulation 44(1) |
The settlement amount shall be calculated using the formula specified in Regulation 10. The formula is as follows:
“Settlement Amount (SA) = BA x (S+R+G+A-M)”
Where,
“BA” = Base Amount,
“S” = Stage of Proceeding,
“R” = Regulatory Action Factor,
“G” = Gravity Factor,
“A” = Aggravating Factors,
“M” = Mitigating Factors
Here are a few important points to note:
Where the net sum of (S + R + G + A - M) is less than one, it shall be considered as one.
The settlement amount for first-time applicants shall not be less than three lakhs rupees. For others, it shall not be less than seven lakhs rupees.
A facility to calculate the settlement amount is available on the SEBI website.
Regulation 11 states that the base amount is considered as the minimum penalty amount applicable as provided under the Act, Securities Contracts (Regulation) Act, 1956 and Depositories Act, 1996. This amount is multiplied by the multipliers applicable as per type of applicant as provided in table below:
|
Sr. No. |
Type of Applicant |
Multiplier |
|
(a) |
Independent Director |
2 |
|
(b) |
Non-executive Director |
3 |
|
(c) |
Executive Director or Promoter in control or Key Managerial Person |
3.5 |
|
(d) |
Other Natural Person |
2.5 |
|
(e) |
Body corporate, Intermediaries, Pooled Investment Vehicles and others |
4 |
|
(f) |
Market Infrastructure Institution |
5.5 |
The fee for filing settlement application with SEBI is given below:
|
S. No. |
Applicant Category |
Filing Fee |
|
(a) |
Natural Person |
Rs. 25,000/- per application |
|
(b) |
Others |
Rs. 35,000/- per application |
The key points below explain how an application for settlement needs to be filed with SEBI:
To file an application for settlement with SEBI, Form (Part A of Schedule I) needs to be used. This form must be accompanied by Undertaking and Waiver (Part B of Schedule I) and the Basis of Computation of the Settlement Amount (Part C of Schedule I). While filing the application, the below-mentioned requirements must be met:
While filing the application, a non-refundable application fee must be paid. The applicable fee totally depends on the applicant category.
A single consolidated application must be filed by the applicant. This application must cover all the specified proceedings arising from same cause of action.
If the applicant is not a natural person, then the application and undertaking and waiver must be executed by a duly authorized person who is responsible for the conduct of its business. Additionally, to file the settlement application, a board resolution must be passed.
According to Regulation 4, the application pertaining to proceedings pending before SEBI is normally filed within 90 days from the date of service of Show Cause Notice or supplementary Show Cause Notice, as the case may be. It is important to note that this limitation does not apply if the proceedings are pending before the Tribunal or the Supreme Court. In case SEBI issues a settlement notice before Show Cause Notice under Regulation 5, then the application has to be filed within 60 days from the receipt of the settlement notice.
SEBI may return the application if it is found to be incomplete, inaccurate or not in conformity with Regulations with reasons. The applicant may then submit a complete and revised application within 15 days from the communication of SEBI. In case of failure to meet this requirement, the application shall be deemed to have been withdrawn by the applicant.
The Securities and Exchange Board of India introduced SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 to provide eligible individuals (natural persons) as well as entities (non-natural persons) a chance to settle their specified administrative and civil proceedings in a streamlined manner with the market watchdog. These regulations specify eligible applicants, prescribed form and process for filing settlement application, applicable processing fee, settlement amount formulas and other crucial terms and conditions.
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Q1. When did SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 come into effect?
A. The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 came into force on 7 November 2026.
Q2. Who is ineligible for filing settlement application with SEBI?
A. Ineligible applicants include wilful defaulters, fraudulent borrowers and fugitive economic offenders.
Q3. What is the fee for filing settlement application with SEBI?
A. For applicants who are natural persons, the filing fee is Rs. 25,000/- per application. For other applicants, the filing fee is Rs. 35,000/- per application.
Q4. What is the formula for calculating settlement amount?
A. The formula for settlement amount calculation is: Settlement Amount (SA) = BA x (S+R+G+A-M).
Q5. Which form is required for filing the application for settlement?
A. Form (Part A of Schedule I) is required for this purpose. This form needs to be accompanied by Undertaking and Waiver (Part B of Schedule I) and the Basis of Computation of the Settlement Amount (Part C of Schedule I).
|
Disclaimer:- This article is for informational purposes only. It should not be taken as legal or financial advice by our readers. While the author has based the summary on the official SEBI regulations and FAQs, please refer to the official government notifications or consult a qualified legal professional before making any decisions. |
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