Market regulator Securities and Exchange Board of India (SEBI)'s board has finally approved a wide-ranging set of reforms to its own conflict of interest framework, accepting most recommendations of a high-level committee (HLC) chaired by former chief vigilance commissioner Pratyush Sinha, a move that comes in the wake of conflict-of-interest allegations against SEBI's previous chairman Madhabi Puri Buch which both, she and the regulator, had emphatically denied. The
decisions are taken at the 213th meeting of the SEBI board held in Mumbai on 23 March 2026. The SEBI board also cleared multiple reforms spanning alternative investment funds (AIFs), foreign portfolio investors (FPIs), real estate and infrastructure trusts, and internal governance standards.
The reforms, which apply to the SEBI chairman, whole-time members (WTMs), executive directors, chief general managers (CGMs) and other employees, represent a significant tightening of the norms governing how officials of India's capital markets regulator manage their personal investments, declare their assets, and handle situations where their financial interests may conflict with their regulatory responsibilities.
Chairman and WTMs Brought under Insider Definition
The most significant of the approved recommendations is that the SEBI chairman and WTMs will, henceforth, be brought within the definition of 'insider' under insider trading regulations. This means they will be subject to the same restrictions on trading in equity and equity-related instruments that currently apply to SEBI employees, a baseline that was conspicuously absent until now.
Under the approved framework, the chairman and WTMs will be required, at the time of joining SEBI, to choose one of four options for handling their existing equity and equity-related investments: liquidate them, freeze them, sell them according to a pre-disclosed trading plan, or sell them without a trading plan but with prior approval. Investments in equity and equity-related instruments in commercial ventures, including unlisted companies, must be fully liquidated or kept frozen during their tenure. Any vested stock options must be exercised before joining SEBI.
Going forward, new investments in pooled vehicles such as mutual funds managed by regulated market intermediaries will be permitted, but direct equity investments will be subject to the same restrictions applicable to employees, SEBI says in a release.
Spouse and Family Members Also Covered
The approved reforms extend investment restrictions beyond the officials themselves. Investment restrictions on direct shareholdings will now apply to the spouses and dependent family members of the chairman, WTMs, and employees, with carve-outs for investments in unlisted securities, employee stock ownership plan (ESOPs) received as part of a pay package, and investments managed under discretionary Portfolio Management Services where the fund manager acts independently.
These restrictions will apply prospectively, and existing investments will be grandfathered. The definition of 'family' for disclosure purposes has also been aligned and expanded to include the spouse, dependent children including adopted and step-children, any person for whom the member or employee serves as legal guardian, and any other person related by blood or marriage who is substantially dependent on the official.
Asset Disclosures To Be Made Public
On the contentious question of public disclosure of assets and liabilities, one of the HLC's more sensitive recommendations, the SEBI board approved a modified version that balances transparency with privacy concerns raised by employees.
The immovable property details of the chairman, WTMs, executive directors and CGMs will be publicly disclosed, in line with requirements already applicable to all India service and central civil services officers of the government of India. However, the full details of assets and liabilities in a to-be-prescribed format will only be required to be disclosed internally to SEBI, not made public, the market regulator says.
This represents a significant but partial acceptance of the HLC's recommendation. The Sinha committee had recommended that officials at the rank of CGM and above make their assets and liabilities public, but the board, after taking note of privacy and other concerns expressed by employees, limited the public disclosure to immovable property for senior officials.
Part-time members of the SEBI board, drawn from the Union ministries of finance and corporate affairs, or from Reserve Bank of India (RBI), may continue to be guided by the conduct rules of their parent organisations and are not required to make public disclosures.
Concentration Limit on Investments
The board also approved a 25% concentration limit, the new investments by employees, WTMs, and the chairman in financial products managed by any single SEBI-registered intermediary may not exceed 25% of their total financial portfolio. If this limit is breached, the concerned official will be required to recuse themselves from all matters involving that particular intermediary. This provision directly addresses a structural conflict-of-interest risk where a regulator's officials have significant financial exposure to entities they regulate.
New Ethics Infrastructure
The board approved the creation of a new office of ethics and compliance (OEC) to manage the conflict of interest framework for SEBI employees. For the present, this office will be supervised by the chief vigilance officer of SEBI. A digital system for managing conflicts of interest, a whistleblower mechanism for reporting actual, potential, or perceived conflicts, and training programmes to foster ethical conduct will also be established, the market regulator says.
A digital recusal framework will be put in place to record disclosure of conflicted relationships and to process recusals, including the grant of approvals. All officials — employees, WTMs, and the chairman — will be required to make initial, annual, and event-based disclosures of assets, liabilities, trading activities, and relationships.
Employment Disclosures and Future Jobs
The approved framework also requires that any SEBI member or employee must disclose any negotiation or agreement for future employment — a provision aimed at preventing situations where an official's regulatory decisions might be influenced by the prospect of a future role with an entity they currently regulate.
What Goes to the Union Govt
Two significant recommendations of the HLC are referred to the Union government rather than being acted upon directly by the SEBI board. The first concerns the notification of a separate set of regulations specifically for board members — since the Union government is the appointing authority for SEBI board members and prescribes their terms of service, the board determined that the Union government is the appropriate authority to take a decision on this.
The second concerns oversight of the conflict of interest of board members, including the creation of a proposed oversight committee on ethics and compliance — this too has been referred to the Union government for consideration.
The Context: Buch Controversy and the Sinha Committee
The HLC, chaired by Mr Sinha, was constituted in March 2025, tasked with reviewing conflict-of-interest regulations and strengthening norms governing property, investment, and liability disclosures of SEBI officials. The committee's constitution gained urgency in the context of conflict-of-interest allegations against former SEBI chairman Ms Puri Buch, allegations that she and SEBI denied, prompting public debate about whether SEBI's existing disclosure and conflict-of-interest framework was adequate for an institution with the regulatory power and market sensitivity that SEBI commands. (
Read: Conflict of Interest and Disclosure Norms In SEBI: Pratyush Sinha-led Panel Submits Report)
The board's approval of the Sinha committee's recommendations represents SEBI's institutional response to that debate. Whether the adopted framework — which stops short of full public disclosure of all assets and liabilities and refers the most sensitive oversight questions to the Central government — is adequate will be a matter for continued public scrutiny.
The next steps include amendments to the SEBI (Employees' Service) Regulations, 2001, revision of the 2008 code on conflict of interest for board members, and the establishment of the systems and processes needed to operationalise the new framework.
Relief for Alternative Investment Funds
SEBI has introduced greater flexibility for AIFs, particularly in winding up schemes and surrendering registrations.
The regulator acknowledged that several AIFs face practical challenges in closing operations due to pending litigation, tax demands or unresolved expenses. Under the revised framework, such funds may retain liquidation proceeds beyond their tenure under specified conditions and may be classified as 'inoperative funds' subject to reduced compliance requirements.
This move is expected to ease regulatory pressure on funds that are no longer actively investing but remain operational due to procedural constraints.
Net Settlement for Foreign Portfolio Investors
In a significant step towards improving market efficiency, SEBI has allowed net settlement of funds for foreign portfolio investors (FPIs) in the cash market.
Currently, FPIs are required to separately fund purchases and deliver securities for sale, thereby increasing liquidity requirements. The new system enables offsetting of buy and sell transactions within the same settlement cycle, thereby reducing funding costs and operational inefficiencies.
The reform is likely to benefit large institutional investors, especially during periods of high trading volumes such as index rebalancing.
Boost to Retail Participation in Social Investments
SEBI has lowered the minimum investment threshold for social impact funds (SIF) under AIF regulations to ₹1,000 from ₹2 lakh earlier.
The move is aimed at encouraging greater retail participation in impact investing and supporting the growth of the social stock exchange ecosystem. By making such investments more accessible, the regulator says it seeks to broaden the investor base beyond high-net-worth individuals.
Changes for REITs and InvITs
The SEBI board has also approved amendments to regulations governing real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).
These changes are intended to address operational challenges and provide greater flexibility in investment structures. Among the key measures, InvITs will be allowed to retain investments in certain entities even after project completion under specified conditions, while also being given expanded avenues for deploying funds.
Revised ‘Fit and Proper’ Criteria
SEBI has updated the 'fit and proper person' criteria applicable to market intermediaries, aiming to strike a balance between investor protection and ease of doing business.
Under the revised norms, the mere pendency of a first information report (FIR) or criminal complaint will not automatically disqualify an entity. However, stricter provisions have been introduced for cases involving convictions related to economic offences and violations of securities laws.
The framework also ensures that entities are given a reasonable opportunity to be heard before being declared unfit.
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I wish there were similar foundations to scrutinize various other government entities.
One that I wish would come under the scanner is the Office of the Charity Commissioner. A NGO that I know of has tried to close down for 5 years now and still ongoing. It has less than 10 lakhs INR yet the matter keeps getting postponed for some trivial reason or another.
NGOs in other countries do stellar social work but in India people are afraid to setup an NGO because they are shaken down for bribes and generally hounded for minor problems. Think how much good could be done by well meaning individuals. But India's corruption stymies all efforts to improve life for ordinary citizens.