The Securities and Exchange Board of India (SEBI) has officially notified the SEBI (Employees’ Service) (Amendment) Regulations, 2026.
This amendment brings sweeping changes to internal governance, strictly regulating how SEBI employees and their families handle investments, disclose financial interests, and transition into post-regulatory careers.
To monitor these compliance baselines, SEBI has also formalized the Office of Ethics and Compliance (OEC).
Here is a breakdown of the key regulatory tightening that corporate professionals, financial market stakeholders, and legal practitioners need to know.
Ban on “Non-Permitted Investments”
Under the rewritten Regulation 64, SEBI employees and their family members are barred from making fresh investments in speculative or direct market instruments during their service tenure.
What is Prohibited?
- Direct equity shares.
- Instruments convertible into equity.
- Trading or investing in equity or commodity derivatives.
What is Permitted?
To ensure employees can still plan for their financial future, exceptions have been carved out for:
- Mutual funds and pooled investment vehicles, provided they are professionally managed by an entity regulated by a financial sector regulator (like AMCs).
- Units of REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts).
- Spouses acquiring equities strictly via corporate ESOPs as part of their independent salary package.
Rules for New Joiners: If an individual holds restricted equities upon joining SEBI, they must either liquidate them, freeze them for their entire service duration, or sell them using a strict, OEC-approved trading plan. No voting rights can be exercised on these shares while employed at SEBI.
Overhauled Disclosure Framework
Regulation 66 mandates an absolute transparency model. SEBI personnel must submit comprehensive disclosures at the time of joining and exiting the board.
| Disclosure Type | Frequency & Thresholds |
|---|---|
| Family & Relatives | Complete list of family and relatives as defined under Section 2(77) of the Companies Act, 2013. |
| Past Professional Interests | Details of any advisory, consultancy, or employment held in the preceding 3 years. |
| High-Value Financial Transactions | Mandatory reporting if any transaction value exceeds two times the employee’s monthly basic pay. |
| Property & Rental Changes | Real estate transactions (buying, selling, renting out, or gifting) must be reported within one month from the end of the month the transaction occurred. |
Strict Conflict Recusal & Post-Employment Cooling-Off
To safeguard institutional integrity and prevent market bias, two structural firewalls have been introduced:
- Mandatory Recusal (Regulation 66A): Employees must completely recuse themselves from any official matter, file access, or decision-making process involving an entity where a conflict of interest exists. A conflict is triggered automatically if a family member or relative holds a Key Managerial Personnel (KMP) or senior management role in that entity.
- Two-Year Cooling-Off Period (Regulation 55): Upon resigning, retiring, or leaving SEBI, former employees are strictly prohibited from appearing before or against SEBI on behalf of any third party in any quasi-judicial, adjudication, settlement, or administrative approval proceedings for a period of two years.
