SEBI board approves rewritten settlement rules and new portfolio manager regulations
The SEBI Board, at its 215th meeting held in Mumbai on 24 September 2026, approved a wide set of regulatory changes, the most significant being two full replacements of existing regulations. First, the SEBI (Portfolio Managers) Regulations, 2026 will replace the 2020 Regulations, cutting the regulatory text from 70 to 33 pages and the number of provisos from 47 to 4, while removing most "notwithstanding" clauses. The rewritten regulations allow portfolio managers to invest client money in IPOs and primary market debt, permit up to 10% of a client's assets under management in unlisted investment-grade debt, and create two new categories of intermediary: the Portfolio Managers Route for Investing in Mutual Funds (PRIM), and Independent Fund Managers (IFMs), who operate under a registered portfolio manager's supervision and full liability.
Second, the Board approved the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, replacing the Settlement Proceedings Regulations, 2018. These introduce a "settlement notice" that SEBI must ordinarily issue before a show-cause notice, giving an entity 60 days to apply for settlement; extend the period to apply for settlement after a show-cause notice from 60 to 90 days; add a fast-track route for settlement amounts up to ₹10 lakh; and prescribe a new formula for computing the settlement amount, keeping it separate from disgorgement of wrongful gains. Both sets of regulations take effect once formally notified.
Quick checkUnder SEBI's new Settlement Regulations, 2026, what must SEBI ordinarily do before issuing a show-cause notice in an enforcement matter?- Publish the proposed penalty in the Official Gazette for public comment
- Refer the matter compulsorily to the Securities Appellate Tribunal
- Issue a "settlement notice" giving the entity 60 days to apply for settlement
- Obtain the prior approval of the Ministry of Finance
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Answer: C. The SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 require SEBI, except where prosecution or an interim order is contemplated, to issue a settlement notice before the show-cause notice, giving the noticee 60 days to apply for settlement — a pre-litigation opportunity new to this framework.
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