The Securities and Exchange Board of India’s (SEBI) new Settlement of Administrative and Civil Proceedings Regulations, 2026, came into force on Saturday, November 7.
The revised framework sets out the process for eligible persons and entities to settle specified administrative and civil proceedings under securities laws.
Notified on October 8, the regulations replace the SEBI (Settlement Proceedings) Regulations, 2018, subject to transitional and saving provisions.
Under the new framework, an applicant can seek settlement of specified proceedings at different stages, subject to the eligibility criteria and conditions prescribed by SEBI.
What is the application fee under the new regulations?
The regulations prescribe a non-refundable application fee of ₹25,000 for natural persons and ₹35,000 for other applicants. The fee has to be paid through the designated payment gateway.
This is separate from the settlement amount payable by the applicant.
The settlement amount is calculated using a prescribed formula:
Settlement Amount = Base Amount × (Stage of Proceedings + Regulatory Action Factor + Gravity Factor + Aggravating Factors – Mitigating Factors).
The calculation takes into account the nature and seriousness of the alleged default, the stage at which the application is filed and other specified factors.
The minimum settlement amount is ₹3 lakh for a first-time applicant and ₹7 lakh for other applicants. Under the regulations, a first-time applicant is one against whom no adverse order has been passed by SEBI’s adjudicating officer or the Board and who has not previously obtained a settlement order from SEBI as of the application date.
What is the deadline for filing a settlement application?
For specified proceedings pending before SEBI, an application will not be considered if it is filed after 90 days from the date of service of the show-cause notice or supplementary show-cause notice, whichever is later.
This 90-day restriction does not apply in the same manner to proceedings pending before the Securities Appellate Tribunal (SAT) or the Supreme Court.
A separate transitional provision applies to specified proceedings pending when the new regulations commenced on November 7. Applicants who had not previously filed a settlement application, or whose application was rejected, returned or withdrawn under the 2018 regulations, have 90 days from the commencement of the new framework to apply, subject to the prescribed conditions.
For such transitional applications, the settlement amount will be 20% higher than the amount calculated under the prescribed formula.
What is the settlement notice mechanism?
The 2026 regulations also provide for a settlement notice before the issuance of a show-cause notice.
Under this provision, SEBI may issue a notice outlining the substance of probable charges and proposed enforcement action, giving the concerned entity an opportunity to apply for settlement within 60 days of receiving the notice.
However, this mechanism does not apply where interim directions or prosecution are contemplated or in cases covered by specified exclusions under the regulations.
The issuance of a settlement notice does not guarantee that the application will be accepted or that the proposed enforcement action will remain unchanged.
What happens after an application is filed?
Applicants have to submit the prescribed application form along with an undertaking, waivers and the basis for calculating the proposed settlement amount.
An applicant must submit complete information and respond to SEBI’s communications during the process. The regulator can return an incomplete application, giving the applicant 15 days from the communication to submit a revised and complete application.
The settlement framework provides for examination of applications by an Internal Committee and a High Powered Advisory Committee, with the Panel of Whole Time Members taking the decision on acceptance or rejection.
The settlement terms may include the settlement amount, disgorgement of wrongful gains or losses averted or caused to investors, and remedial or regulatory requirements, wherever applicable. Disclosures may also form part of the settlement terms.
Filing an application does not prevent SEBI from issuing interim civil or administrative directions to protect investors or maintain the integrity of the securities market.
Can an applicant withdraw or refile a settlement application?
An applicant can withdraw an application before the decision of the Panel of Whole Time Members accepting or rejecting it is communicated.
However, refiling a rejected application is permitted only at a subsequent stage of the proceedings, provided the reason for the earlier rejection no longer applies. A withdrawn application can be refiled at the same or a subsequent stage.
In both cases, refiling is subject to an additional 20% settlement amount, as prescribed under the regulations.
SEBI’s new settlement rules kick in: Fees, 90-day deadline and application process explained