The Securities and Exchange Board of India (SEBI), in its 213th Board meeting held on March 23, 2026, approved regulatory amendments aimed at enhancing ease of doing business while strengthening governance standards across market participants. Among these, key changes have been introduced in relation to:
Amendments to the “Fit and Proper Person” criteria under the SEBI (Intermediaries) Regulations, 2008 – these amendments appropriately balance the regulatory objective of principle-based criteria in the securities market.
Recommendations on conflict-of-interest, disclosures and related matters applicable to SEBI’s Board members and officials – These recommendations are based on a comprehensive review of the existing framework.
KEY REGULATORY CHANGES
Amendments to Schedule II of the SEBI (Intermediaries) Regulations, 2009 – “Fit and Proper Person” Criteria
No automatic disqualification: Pendency of criminal proceedings (including economic offences) will not result in automatic disqualification; principle-based criteria shall apply on case-to-case basis.
Wider disqualification scope: Convictions now include economic offences or any offence under securities laws, in addition to moral turpitude.
Streamlined procedural triggers:
Initiation of winding-up proceedings no longer triggers disqualification; only a winding-up order remains relevant.
SCN-based disqualification limited to proceedings under Sections 11(4) and 11B(1) of the SEBI Act, 1992 (SEBI Act); and non-consideration of registration post-SCN reduced from 1 year to 6 months.
Enhanced procedural safeguards: Express provision for a reasonable opportunity of being heard prior to non-determination as “fit and proper”.
Disclosure obligations: Intimation to SEBI within 15 working days of the stock exchanges of specified events concerning the intermediary, its KMPs, or persons in control.
Removal of default prohibition: The default 5-year bar on fresh registration (where no period is specified) has been omitted; however, any order-specific prohibition continues to apply.
Effective date: Amendments will come into force upon publication in the Official Gazette. For pending matters, SEBI may take administrative steps to withdraw SCN / cases where such action would not be warranted under the amended provisions.
Strengthened Conflict of Interest, disclosures and related matters in respect of Members and Officials of SEBI (High-Level Committee Recommendations)
The Board has accepted key High-Level Committee (HLC) recommendations to strengthen the conflict-of-interest framework for Board members and officials, as follows:
Uniform investment and trading restrictions:
Employee-level trading and investment restrictions in equity and equity-related instruments (except mutual funds) are extended to the Chairman and WTMs; investments in pooled vehicles are permitted where professionally managed by regulated intermediaries.
Investment restrictions applicable on Chairman/WTMs/employees may also be applicable to their spouse and dependent family members, except in unlisted securities, ESOPs and discretionary PMS. Such restriction to be applied prospectively, and existing investments shall be grandfathered.
Investment Management of Chairman and WTMs:
Existing investments (other than permitted investments in mutual funds and pooled vehicles) to be liquidated, frozen, or disposal with an approved trading plan / with prior approval, upon joining;
Equity and equity-linked holdings (including unlisted) to be liquidated or frozen during tenure; any vested options must be exercised prior to joining SEBI.
Insider Classification: Chairman and WTMs expressly included within the definition of “insider”.
Expanded disclosures:
Chairman, WTMs and employees are required to make initial, annual and event-based disclosures of assets, liabilities, trading activities and relationships; Members may make disclosures (no requirement of public disclosures) at the time of assumption of office in relation to including shareholding and past professional assignments, wherein the lookback period is harmonised to 3 years. Part-time members from the Ministry/RBI shall continue to follow the existing disclosure practices of their parent organisation.
Public disclosure by Chairman, WTMs, Executive Directors and Chief General Managers of immovable property aligned with government norms; and details of assets and liabilities to be internally disclosed to SEBI.
Disclosure by member or employee of negotiations or agreement for future employment.
Family Attribution: The definition of “family” to include spouse; dependent children (including adopted and step- children); any person for whom the member/employee serves as a legal guardian, substantially dependent persons related by blood or marriage or to his spouse.
Portfolio concentration limits: Investment exposure to a single SEBI-regulated intermediary by the Chairman, WTMs and employees is capped at 25% of the financial portfolio, with recusal obligations upon breach.
Institutional framework: Establishment of an Office of Ethics and Compliance (OEC) supervised by the Chief Vigilance Officer of SEBI, along with a digital conflict management system and whistleblower mechanisms. Further, a digital system and recusal framework to be put in place to process recusals.
ELP Comments
The revised “fit and proper” criteria signal a move away from automatic, trigger based disqualification towards a more nuanced, principle driven assessment, while simultaneously hardening the consequences of actual convictions in economic and securities law matters. Entities should accordingly align their internal policies, due diligence processes and disclosure systems with these developments. The HLC based conflict of interest framework significantly elevates internal governance, disclosure and ethics standards at SEBI and is likely to shape the regulator’s expectations from intermediaries and listed entities on personal trading, conflict management and board level integrity frameworks. This will increase the transparency and reliability as expected from a central regulatory authority tying all loose ends within the organisation.
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