On November 30, 2018, the Securities and Exchange Board of India (“SEBI”), introduced the SEBI (Settlement Proceedings) Regulations, 2018 (“Settlement Regulations”) (“Notification”). The Settlement Regulations are to be effective from January 1, 2019 and shall replace the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 (“2014 Regulations”). The Settlement Regulations have set out the terms and procedure for settlement of any proceedings initiated and pending before the SEBI or any other forum, for the violation of specified securities laws. 

Some important features of the Settlement Regulations are as follows: 

1. No settlement if default has market wide impact: A default shall not be settled if, in SEBI’s opinion, it has had a market wide impact, caused losses to a large number of investors or affected the integrity of the market.  

2. No settlement of offences by certain category of persons: The SEBI may not settle certain specified proceedings where the applicant is a wilful defaulter, a fugitive economic offender or has defaulted in payment of any fees due or penalty imposed under securities laws. 
3. Wider ambit of the term “securities laws”: The SEBI has the power to administer violation of certain rules and regulations not framed under the SEBI Act, 1992. For instance, certain provisions of the Companies Act, 2013 and the rules framed thereunder are administered by SEBI. To allow for settlement of violation of such laws, the term “securities laws”, as defined in the Settlement Regulations, has been defined to include “any other law to the extent it is administered by the Board and the relevant rules and regulations made thereunder”. Therefore, the SEBI is permitted to settle, subject to certain exceptions, proceedings initiated for violation of “securities laws”.  

4. Settlement with confidentiality: The SEBI may agree to settle “in confidentiality” to benefit applicants who agree to provide “substantial assistance in the investigation, inspection, inquiry or audit, to be initiated or ongoing, against any other person in respect of a violation of securities laws”. 
5. Settlement terms include monetary and non-monetary terms: The terms of settlement may include monetary or non-monetary terms or a combination of the two. Non-monetary terms may include suspension or cessation of business activities for a specified period, disgorgement on account of the action or inaction of the applicant, exit from the management of the company, submit to enhanced internal audit and reporting requirements, locking – in securities, etc.