New Delhi, Sep 27 (SocialNews.XYZ) The Securities and Exchange Board of India’s (SEBI) proposed overhaul of settlement norms could help speed up the recovery of diverted funds and strengthen shareholder protection in cases involving financial misrepresentation and siphoning of money, according to SEBI officials and legal experts.
The market regulator approved the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, at its board meeting last week, introducing changes aimed at resolving such matters without prolonged litigation. The revised framework provides for a defined formula for calculating settlement amounts, separate treatment of wrongful gains, fast-track settlements in certain cases and wider access to the settlement mechanism.
The regulations are yet to be notified and will come into effect 30 days after their notification.
SEBI Chairman Tuhin Kanta Pandey said investor protection in cases involving diversion or siphoning of funds would not be limited to the settlement amount. He said disgorgement and Remedial and Regulatory Terms (RRT), wherever applicable, would also form an important part of the process.
“Shareholders’ interest can be protected in a variety of ways. One of the sure ways is that if there is a siphoning of money, it should come back first. That is non-negotiable,” Pandey said.
He added that settlement should be viewed as involving not only the settlement amount but also disgorgement and RRT, where applicable.
Under the approved framework, the settlement amount will be determined using a defined formula, while RRT will be imposed wherever required. Pandey said the settlement amount would be “certain times of the penalty”.
A settlement does not amount to an admission or denial of guilt. However, it would involve a financial impact on the company or individual concerned and could allow the regulator to resolve proceedings more quickly.
As part of the new process, SEBI will issue a settlement notice before issuing a show-cause notice. Entities receiving such a notice will have 60 days to submit a settlement application.
The proposed mechanism could also have implications for disclosure requirements by listed companies. SEBI whole-time member Kamlesh Chandra Varshney said companies are required to make disclosures when they receive a show-cause notice, but a settlement notice may not necessarily trigger the same requirement because it is not a show-cause notice.
“Most probably, because it (settlement notice) is not a show-cause notice, that may not arise. But we will examine that particular aspect,” Varshney said.
Source: IANS
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