Insights · Regulatory Defence
SEBI Settlement Regulations 2026: What Changes From 7 November
What the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 change: the time limits, the formula, the fast track and the one-time window.
The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 replace the 2018 settlement rules from 7 November 2026. The time to apply after a show cause notice rises from 60 to 90 days, SEBI can offer settlement before issuing a notice, and the settlement amount now follows a formula in which applying earlier costs less.
Key points
- Notified by SEBI on 6 October 2026, published in the Gazette on 7 October, in force from 7 November 2026
- 90 days to apply after a show cause notice or supplementary notice, whichever is later
- A new settlement notice before a show cause notice, with 60 days to apply
- A one-time 90-day window for older pending cases, at a 20% higher amount
- A fast track for smaller cases where the amount is up to Rs 10 lakh
The time limits
| Situation | Time to apply | Regulation |
|---|---|---|
| Settlement notice before a show cause notice | 60 days from receipt | 5 |
| Show cause notice issued, matter pending before SEBI | 90 days from service, or from a supplementary notice if later | 4(1) |
| Matter pending before the SAT or the Supreme Court | The 90-day limit does not apply | 4(2) |
| One-time window for older pending cases | 90 days from commencement, at a 20% higher amount | 4(3), 4(4) |
| Payment after the demand notice | 30 days from receipt | 25(3) |
The settlement notice is not issued where SEBI contemplates interim directions or prosecution.
How the amount is worked out
The settlement amount is the base amount multiplied by the sum of the stage factor, the regulatory action factor, and the gravity and aggravating factors, less mitigating factors. If that sum falls below 1, it is taken as 1. The stage factor is what rewards moving early.
| When you apply | Stage factor |
|---|---|
| Voluntarily, on your own initiative | 0.20 |
| Before a show cause notice | 0.40 |
| After a show cause notice | 0.60 |
| Pending before the designated member or authority | 0.80 |
| Pending before the Securities Appellate Tribunal | 1.00 |
| Pending before the Supreme Court | 1.50 |
Settlement terms are made up of the settlement amount, disgorgement of wrongful gains where applicable, and remedial and regulatory terms.
The fast track
There are two routes. Under regulation 27, SEBI can issue a fast-track notice for certain violations, and the person generally has 30 days to apply, pay and comply. Under regulation 28, a calculated amount of up to Rs 10 lakh, with no disgorgement or remedial terms, moves straight from the Internal Committee to the Panel.
What cannot be settled
- A case where the applicant is a wilful defaulter, a fraudulent borrower or a fugitive economic offender
- A default on which an earlier application was rejected, subject to exceptions
- A default whose examination, investigation, inspection or audit is still pending, other than through the confidentiality route
- Matters with market-wide impact, large investor losses or an effect on market integrity may not be settled, although SEBI can consider them where monetary and remedial terms can address the concern
Applications already pending
Terms already approved by the Panel continue on those terms. Where the advisory committee has made a recommendation but the Panel has not approved it, the applicant can choose, within 30 days of SEBI’s notice, between fresh processing under the 2026 rules and the amount recommended under the 2018 rules. Applications with no recommendation yet go to a fresh Internal Committee meeting under the 2026 rules.
Settle or contest under the new rules
- Work out the likely amount now, at the current stage and at the next one. The cost of waiting is now visible.
- Test the evidence. Cases that rest on inferences from trading data can often be answered.
- Consider the wider effect: the settlement order is public, and other proceedings on the same facts continue.
- Diarise the 90 days from the notice. SEBI’s power to relax time limits does not extend this window.
This summary draws on the published regulations and practitioner notes, so check the Gazette text for your case. For how proceedings run, see SEBI proceedings.