SEBI has proposed significant amendments to the Settlement Proceedings Regulations, 2018, introducing a revised penalty framework, extended timelines, and streamlined processes for enforcement settlements.
Revised Settlement Framework Proposed by SEBI
On 15 October 2026, SEBI issued a consultation paper proposing a comprehensive overhaul of the Settlement Proceedings Regulations, 2018. The proposed changes aim to enhance transparency, encourage early resolution of enforcement actions, and align settlements with evolving market practices and regulatory objectives.
Key proposals include a revised penalty formula based on disgorgement of ill-gotten gains plus interest, with potential reductions for early settlement. The timeline for filing settlement applications is proposed to be extended from 30 to 90 days after issue of notice, allowing better response preparation. The framework also introduces a tiered disgorgement model and greater clarity on eligibility criteria, including exclusions for serious market abuse or repeat offenders.
Additionally, SEBI has proposed simplifying procedural requirements, such as consolidation of documents and digital submission formats, to expedite decision-making. The consultation seeks stakeholder input by 3 November 2026.
"The proposed framework balances deterrence with incentive for cooperation,"noted SEBI in its discussion paper.
For legal practitioners, these changes signal a move toward a more predictable and structured settlement regime. Advising clients on enforcement exposure will now require early assessment of settlement eligibility under the proposed norms, particularly regarding disgorgement calculations and procedural timelines. The reforms may reduce litigation burden but demand meticulous documentation to support settlement applications.
Citations
- SEBI (Settlement Proceedings) Regulations, 2018 (Proposed Amendments, 2026)
