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Informist, Monday, Mar. 23, 2026

 

MUMBAI – The Securities and Exchange Board of India Monday approved amendments to the "fit and proper person" criteria specified under Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. The changes have been made to balance the regulatory objective of allowing only persons with integrity, honesty, ethical behaviour, reputation, fairness, and character to operate in the securities market with the need to ensure ease of doing business by market participants, the markets regulator said.

 

The pendency of a criminal complaint or first information report filed by SEBI or a charge sheet relating to economic offences will no longer, by itself, be grounds for automatic disqualification, the regulator said. However, the existing principle-based criteria shall apply on a case-to-case basis, it added.

 

The existing disqualification upon conviction for an offence involving moral turpitude has been expanded to include conviction for any economic offence or any offence under securities laws. Initiation of winding-up proceedings shall no longer be grounds for disqualification. However, the existing provision of disqualification upon an order to wind up will stay.

 

An applicant or intermediary will have 15 days to inform SEBI of any event envisaged under Clause 3(b) of the 2008 Regulations involving itself, key managerial personnel, or people in control. Before a person is declared not "fit and proper", the regulator will guarantee the person a fair chance to explain.

 

The rule that automatically bars one from applying for fresh registration for five years when no time period is specified in the relevant order has been removed. However, when the period of debarment is specified, the prohibition on applying for registration during such period shall continue, the market watchdog said.

 

Disqualification upon receipt of a show-cause notice is now limited to proceedings under Section 11B(1) and Section 11(4) of The Securities and Exchange Board of India Act, 1992, rather than all proceedings. Additionally, the mandatory waiting period for registration after a show-cause notice is issued has been halved from one year to six months.

 

These changes will come into effect immediately on publication in the official gazette, SEBI said. For pending cases, authorities can withdraw show-cause notices if they are no longer necessary under the new rules, the regulator added.  End

 

Reported by Simran Rede

Edited by Rajeev Pai

 

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