SEBI Settlement Rules Changed: New Formula To Decide Amount, Faster Route For Cases Up To Rs. 10 Lakh

SEBI has changed how companies and individuals can settle cases with it. Anyone accused of breaking securities rules can offer to pay an amount and accept some conditions, so the case ends without a long fight.

The regulator has now notified the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, which set out how this will work. SEBI says the aim is to make the process simpler, clearer and faster, and to leave less room for arbitrary calls on how much someone must pay.

How the amount will be worked out

The settlement amount will now come from a formula. SEBI first fixes a base amount, which is linked to the minimum penalty that securities law prescribes for that violation. That base is then raised or lowered depending on how far the case has gone, whether the entity has faced SEBI action before, how serious the violation is, and any factors that count against or in favour of the applicant. Legal costs are added on top.

Earlier, wrongful gains, losses avoided and losses suffered by investors could end up inside the settlement calculation, which meant the same money was counted twice. Under the new rules these are kept out of the base amount. Where they can be worked out, SEBI will recover them separately.

So every settlement will now have three parts: the settlement amount, the return of wrongful gains where there are any, and remedial and regulatory conditions, which were earlier called non-monetary terms.

Fast track for smaller cases

There are now two fast-track routes. The first is based on money. If the settlement amount is Rs 10 lakh or less, the case goes straight from SEBI's internal committee to a panel of whole-time members, skipping a step.

The second is based on the type of violation, and it covers certain disclosure-related lapses. In these cases SEBI sends a notice with the amount to be paid. The entity can accept and pay, and once the money is in, the panel passes the settlement order.

Serious cases are covered too

Cases involving wrong financial statements or diversion of funds can also be settled, but only with proper remedial conditions. These include making the right disclosures and bringing back the money that was moved out.

How to apply, and by when

An entity can apply to settle at any stage. The application must be in the prescribed format, with an undertaking and a waiver, and with the details SEBI needs to calculate the amount. The application fee is Rs 25,000, non-refundable, for individuals and other applicants alike, and it has to be paid through the payment gateway. If the applicant is a company or another entity, an authorised person must sign the undertaking and waiver. If SEBI returns an application, the applicant has 15 days to send a complete, corrected one.

For a case already pending before SEBI, there is a deadline. An application will generally not be considered if it comes more than 45 days after the show-cause notice, or the supplementary notice, whichever is later. The limit doesn't apply to cases pending before a tribunal or the Supreme Court. There is also a separate 90-day period for certain pending cases covered by the transition provisions.

Settlement notice before the show-cause notice

SEBI can now warn an entity about the likely charges, and the action it may face, before issuing a show-cause notice. After such a settlement notice, the entity gets 60 days to apply for settlement. This does not apply where interim directions or prosecution are already done with, or in cases the rules specifically exclude. SEBI can also change the kind of action it plans to take.