In line with the approval of its Board for revised settlement regulations, SEBI has notified the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 (2026 Regulations). The Regulations will come into force on 6 November 2026, repealing the existing SEBI (Settlement Proceedings) Regulations, 2018 (2018 Regulations). The settlement route remains unchanged in terms of process flow, i.e.:
ApplicationInternal CommitteeHigh Powered Advisory CommitteePanel of Whole Time Members.
The key changes introduced by the 2026 Regulations relate to the following:
- Who can settle, with some earlier bars removed and others made absolute.
- The time allowed to apply and to pay.
- How the settlement amount is fixed, which is now primarily based on the type of applicant and the violation rather than on the gain made.
- What must be paid or done on top of that amount, such as disgorgement with interest and remedial terms.
Comparative Analysis of the 2018 Regulations with 2026 Regulations
A. Scope of settlement
| Provision | Earlier (2018) | Now (2026) | Impact |
|---|---|---|---|
| Scope of settlement | Acts, rules and regulations administered by SEBI. | Expressly includes relevant SEBI circulars, master circulars, guidelines and general or special orders within the regulatory framework. | Clarifies coverage of violations arising from SEBI-issued directions and instruments. |
| Applicant eligibility | Certain restrictions applied to repeat applications, incomplete investigations and recoverable dues; Additionally, SEBI could decline settlement involving
| Express restrictions apply to specified ineligible persons, including
| Express disqualifications replace certain discretionary eligibility restrictions. |
| Serious violations | SEBI could decline settlement for defaults having market-wide impact, causing losses to numerous investors or affecting market integrity. | SEBI retains discretion regarding such matters, but may settle if:
| Serious matters remain subject to heightened scrutiny, not automatic ineligibility. |
| Reapplication after rejection | An earlier rejection concerning the same alleged default ordinarily barred another application. | A fresh application may be considered at a subsequent stage where the ground for rejection has ceased to exist, subject to payment of an additional 20% of the settlement amount. | Conditional opportunity for a subsequent application. |
| Reapplication after withdrawal | Generally barred; exception on HPAC recommendation with at least 50% increase over the computed settlement amount. | A fresh application may be filed at the same or a subsequent permissible stage of proceedings, subject to payment of an additional 20% of the settlement amount. | Greater flexibility for reapplication, with the additional settlement amount reduced to 20% |
B. Timelines and procedure
| Provision | Earlier (2018) | Now (2026) | Impact |
|---|---|---|---|
| Pre-SCN settlement notice | General pre-SCN settlement notice provision was omitted in 2020; summary settlement notice continued for specified defaults. | Pre-SCN settlement notice is provided for, subject to specified exceptions; ordinarily 60 days to apply. | Restores a pre-SCN settlement opportunity for eligible cases. |
| Time to apply after SCN | Application to be filed within 60 days from service of the SCN or supplementary SCN, whichever is later. The provision permitting condonation of delay was omitted in 2022. This limitation did not apply to proceedings pending before SAT or any court. | Application to be filed within 90 days from service of the SCN or supplementary SCN, whichever is later, without provision for extension. This limitation does not apply to proceedings pending before SAT or the Supreme Court. | Filing period extended from 60 to 90 days, with the exception for appellate proceedings expressly limited to SAT and the Supreme Court. |
| Transitional pending matters | Not applicable | Specified pending matters, including certain applications not filed or earlier returned, withdrawn or rejected under 2018 rules, may apply within 90 days of commencement, subject to 20% additional amount. | One-time transitional opportunity for qualifying pending cases. |
| Internal procedural periods | Revised settlement terms within 15 working days of Internal Committee meeting; demand notice within 7 working days of approval. | Corresponding periods prescribed as 21 calendar days and 10 calendar days, respectively. | Standardises procedural timelines by replacing specified working-day periods with calendar-day periods |
| Settlement payment | Amount payable within 30 calendar days of demand notice; no remittance accepted after the prescribed deadline. | Ordinary 30-day payment requirement retained, with conditional extension up to 30 further days and 1% additional amount. | Limited relief for payment delays. |
| Application fee | ₹15,000 generally; ₹25,000 for a body corporate. | ₹25,000 for individuals; ₹35,000 for other applicants. | Higher prescribed filing fees. |
| Breach of settlement order | Specified non-compliance attracted revocation/withdrawal consequences under the regulations. | Revocation procedure contemplates an opportunity of hearing. | Express procedural safeguard before revocation. |
C. Fast-track settlement
| Provision | Earlier (2018) | Now (2026) | Impact |
|---|---|---|---|
| Violation-based fast track | Summary settlement was available for specified defaults, including delayed or defective disclosures, subject to prescribed application, payment and compliance requirements. | The summary settlement mechanism has been substantially retained as violation-based fast-track settlement, with revised terminology for remedial and regulatory terms. | Existing expedited settlement mechanism substantially retained. |
| Monetary threshold fast track | No distinct monetary-threshold approval route. | Specified matters with settlement amount up to ₹10 lakh and without disgorgement or remedial terms may proceed without HPAC consideration, subject to eligibility. | Simplified route for qualifying lower-value matters. |
| Non-availment of fast track | Subsequent settlement governed by stage and restrictions applicable to summary settlement defaults. | Settlement at a later permissible stage may be available subject to applicable conditions and stage-related computation. | Non-use of initial route need not foreclose all subsequent settlement. |
D. Settlement amount
| Provision | Earlier (2018) | Now (2026) | Impact |
|---|---|---|---|
| Computation methodology | Settlement amount was derived from an Indicative Amount, calculated using prescribed base amounts and factors relating to the stage of proceedings, regulatory action, gravity of violation and other relevant circumstances. | Settlement amount is calculated using a Base Amount linked to the statutory minimum penalty, adjusted for the stage of proceedings, regulatory action, gravity of violation, and aggravating and mitigating factors. | Shift from violation-specific benchmark amounts to a statutory-penalty-linked computation framework. |
| Determination of Base Amount | Base amounts were prescribed under Schedule II for different categories of violations, considering factors such as transaction value, trading volume, price impact and applicant classification, as applicable. | Base Amount is determined by multiplying the minimum statutory penalty by the prescribed applicant-category multiplier, subject to specified exceptions and adjustments. | Statutory minimum penalty and applicant classification become the principal determinants of the starting amount. |
| Applicant-category multipliers | Applicant classification was relevant to prescribed base amounts, but no uniform multiplier linked to the statutory minimum penalty was prescribed. | Multipliers range from 2 for independent directors to 5.5 for market infrastructure institutions, with separate classifications for other individuals, directors, promoters, KMPs and entities. | Introduces a uniform category-based multiplier framework in place of the earlier category-specific benchmark amounts. |
| Minimum settlement amount | Indicative Amount was subject to minimum thresholds of ₹3 lakh for first-time applicants and ₹7 lakh for others. | The minimum thresholds of ₹3 lakh and ₹7 lakh are retained. The aggregate computation factor is also subject to a prescribed minimum of one. | Existing minimum thresholds continue, with an additional floor linked to the Base Amount. |
| Aggravating factors | Prescribed factors included seriousness and duration of violation, investor impact, deliberate misconduct, abuse of trust and other specified circumstances. | Broadly retains the aggravating-factor framework, except:
| Expands the scope for upward adjustment of settlement amounts in cases involving aggravating circumstances. |
| Mitigating factors | Prescribed reductions were available for cooperation, corrective action, voluntary disclosure, delay under 7 days, wrong-format disclosure, PSU applicants, small companies below ₹10 crore in disclosure cases, insolvency or liquidation and other specified mitigating circumstances. | Broadly retains the mitigating-factor framework, except:
| Expands the scope for downward adjustment based on mitigating circumstances. |
| Counting of defaults | Settlement amount was calculated for each count of default (like each instance of non-disclosure or delayed disclosure or each trade), with the number of counts determined jointly or separately based on the nature and circumstances of the violations. | Prescribes specific rules for grouping multiple related transactions or violations as a single count of default, for example:
| Greater clarity on when multiple transactions or violations are treated as a single default rather than separate defaults, thereby affecting the overall settlement amount. |
E. Disgorgement and remedial terms
| Provision | Earlier (2018) | Now (2026) | Impact |
|---|---|---|---|
| Disgorgement and interest | Disgorgement of unlawful gains or losses avoided was permitted as an additional settlement term under Regulation 9(2)(c). Investor losses and unlawful gains were also relevant in determining settlement terms. No uniform interest methodology was prescribed. | Expressly provides for disgorgement in addition to the settlement amount, covering:
| Clearer distinction between settlement amount and disgorgement, with prescribed interest rates to account for the period during which unlawful gains or benefits were retained. |
| Remedial and regulatory terms | Settlement could include non-monetary measures such as suspension of business, exit from management, restrictions on market access, lock-in of securities, independent compliance reviews, enhanced audits and employee training. | Broadly retains the earlier measures under the framework of remedial and regulatory terms, with additional provisions for clawback and restitution, disclosure of settlements and violations affecting audited financial statements, and return of siphoned funds with interest. Also specifies circumstances for voluntary debarment, including serious violations and cases involving key operators or repeat offenders | Expands and clarifies the scope of non-monetary settlement obligations, particularly regarding recovery of diverted funds, corrective disclosures and accountability for serious misconduct. Listed companies may face additional disclosure obligations as part of settlement. |
F. Transitional provisions and pending proceedings
| Provision | Earlier (2018) | Now (2026) | Impact |
|---|---|---|---|
| Fresh settlement opportunity for pending proceedings | Not Applicable | Provides a transitional 90-day window (4th February 2027) for specified pending proceedings, including cases where no application was filed or an earlier application was rejected, returned or withdrawn, subject to an additional 20% settlement amount. | One-time opportunity to settle older pending proceedings, including matters where the earlier settlement opportunity was exhausted. |
| Applications already approved by the Panel | Not Applicable | Applications where settlement terms have already been approved by the Panel of Whole Time Members continue under the 2018 Regulations. | Protects previously approved settlement terms from recalculation under the new framework. |
| Applications recommended by HPAC but awaiting approval | Not Applicable | Applicants may choose, within 30 days of SEBI’s notice, between proceeding on the earlier recommended terms and fresh processing under the 2026 Regulations. | Allows applicants to evaluate which settlement framework is more favourable. |
| Applications pending before HPAC | Not Applicable | Applications for which HPAC has not yet made its recommendation are processed under the 2026 Regulations, including a fresh Internal Committee meeting. | Pending applications are reconsidered under the new framework, potentially affecting settlement amounts and terms. |
| Existing summary settlement notices | Not Applicable | Summary settlement notices issued under the 2018 Regulations are deemed to have been issued under the 2026 Regulations. | Ensures continuity of existing notices without requiring fresh issuance. |
Key Takeaways and Action Points
The 2026 Regulations introduce significant changes to the settlement framework, particularly in relation to eligibility, timelines, computation of settlement amounts, disgorgement and remedial obligations. The following considerations merit attention:
1. Entities with pending proceedings
- Review pending proceedings and previously rejected, returned or withdrawn settlement applications to assess eligibility under the transitional provisions, including the 90-day application window and applicable additional settlement amount.
- Where settlement terms have been recommended by the High Powered Advisory Committee but are awaiting approval, evaluate the existing terms against the revised computation framework before exercising the available option.
2. Listed companies and promoters
- Assess settlement eligibility, particularly in light of the restrictions applicable to wilful defaulters, fraudulent borrowers and fugitive economic offenders.
- Consider the financial implications of disgorgement and applicable interest, as well as potential disclosure, restitution and other remedial obligations.
3. Intermediaries and Market Infrastructure Institutions
- Evaluate the impact of applicant-category multipliers on settlement amounts, particularly the prescribed multipliers of 4 for entities and 5.5 for market infrastructure institutions.
- Strengthen internal compliance, monitoring and corrective mechanisms, as regulatory conduct and remedial measures may influence settlement terms.
4. Directors and Key Managerial Personnel
- Assess individual exposure separately from that of the company, considering the applicable applicant-category multipliers and the nature of individual involvement.
- Independent directors should particularly consider the mitigating provisions relating to absence of personal benefit, subject to the prescribed conditions.
5. All Settlement Applicants
- Monitor the prescribed application timelines, including the 60-day period following a settlement notice, 90-day period following a show-cause notice and applicable fast-track timelines.
- Assess the total financial implications of settlement, including settlement amount, disgorgement, interest and any additional amounts applicable to subsequent applications.
- Maintain adequate records of cooperation, corrective measures and compliance history, as these may influence the determination of settlement terms.
Overall, the revised framework calls for earlier assessment of settlement options, careful evaluation of financial exposure and greater attention to corrective compliance measures. The Regulations will become effective from 6th November 2026, and the one-time window for pending proceedings closes on 4 February 2027. Entities with pending or likely proceedings should review their position now.
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Disclaimer: This document has been prepared for general information and knowledge-sharing purposes only and provides a broad overview of the key changes introduced by the SEBI Settlement Regulations, 2026. It is not intended to be exhaustive or constitute legal advice or a legal opinion. Readers are advised to refer to the applicable regulations, circulars and regulatory clarifications and seek professional advice based on the specific facts and circumstances of their case.
- Deepika Vijay Sawhney is an Advocate by Profession and Member of the Delhi High Court Bar Association. She has done bachelor of law and is also a Member of the ICSI.
- She holds an experience of more than 18 years in advising corporates on varied legal issues.