Sebi revamps settlement rules to speed fund recovery and protect shareholders
The Securities and Exchange Board of India approved new settlement regulations aimed at faster recovery of misappropriated funds and stronger shareholder protection.
SEBI's board approved the Settlement of Administrative and Civil Proceedings Regulations, 2026, which overhaul how financial misrepresentation and fund-siphoning cases are resolved. The new framework links settlement amounts to a defined formula, treats wrongful gains separately, and creates a fast-track route for specified violations. Companies will receive a settlement notice before a show-cause notice, allowing a 60-day period to submit a settlement application.
Chairman Tuhin Kanta Pandey emphasized that settlements must include disgorgement and, where applicable, remedial and regulatory terms to safeguard shareholders. The regulator expects quicker recovery of diverted funds with interest, while retaining non-monetary penalties. Legal experts noted the process mirrors the U.S. Wells notice but differs by inviting settlement prior to formal charges.
Why it matters
The new rules could return misappropriated money to investors faster and reduce lengthy court battles.
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