SEBI Rolls Out New Settlement Framework From November 7 With Digital Filing and Formula-Based Penalties

The Securities and Exchange Board of India (SEBI) has officially brought into force the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026. Replacing the earlier SEBI (Settlement Proceedings) Regulations, 2018, the revised regulatory framework aims to speed up the resolution of securities enforcement actions, reduce legal backlogs, and introduce objective criteria for penalty determination.

To support market participants transitioning to the new regime, the capital markets regulator has introduced a suite of digital facilitation measures, including an online settlement application facility, a settlement amount calculator, an explainer video, frequently asked questions (FAQs), and a dedicated help desk.

Key Procedural Changes in the 2026 Regulations

The updated framework introduces structured operational timelines, transparent cost mechanisms, and new application routes:

• Extended 90-day window: Entities served with a show-cause notice (SCN) or supplementary SCN by SEBI now have 90 days to submit a settlement application, up from 60 days under the 2018 regulations. This time limitation does not apply to matters pending before the Securities Appellate Tribunal (SAT) or the Supreme Court.
• Pre-notice settlement route: SEBI can now issue a settlement notice prior to issuing a formal show-cause notice, granting the entity 60 days to opt for resolution.
• Revised application fees: The non-refundable application fee is fixed at ₹25,000 for individuals (natural persons) and ₹35,000 for corporate and other applicants, payable via an integrated online gateway.
• Minimum settlement thresholds: The minimum settlement amount stands at ₹3 lakh for first-time applicants and ₹7 lakh for other entities.
• Formula-driven computations: Settlement amounts will be determined using a mathematical model combining the base amount, stage factor, regulatory action factor, gravity of violation, and aggravating or mitigating circumstances. Applying earlier in the proceedings lowers the multiplier, financially incentivising prompt settlement.
• Fast-track settlement options: SEBI has enabled fast-track routes for smaller infractions, including monetary threshold-based cases with settlement amounts up to ₹10 lakh where no disgorgement or remedial directives are required.

Transitional Relief and Revenue Allocation

For older enforcement proceedings already pending as of November 7, 2026, the regulator has provided a one-time 90-day window to apply under the new regulations, provided the entity had not previously filed, withdrawn, or had an application rejected under the 2018 regulations. To account for the delay, applications filed under this legacy window will incur a 20% surcharge over the calculated settlement amount.

Under the notified rules, the recovered settlement amount will be credited directly to the Consolidated Fund of India, while application fees and legal expenses will be routed to SEBI's General Fund.

Market Implications for India Inc.

For listed companies, registered intermediaries, directors, and market operators, the revamped framework moves SEBI's enforcement architecture closer to global regulatory standards. By replacing opaque negotiations with a predictable mathematical formula and public calculation tool, market participants can calculate liability early and avoid prolonged, reputation-damaging litigation before tribunals and appellate courts.