Sebi tightens staff conduct norms, sharpens conflict-of-interest rules
Mumbai, Jul 13, 2026
The market regulator has imposed a two-year cooling-off period for former employees, tightened investment restrictions and expanded disclosure and conflict-of-interest requirements
The Securities and Exchange Board of India (Sebi) has notified a slew of changes to its employee service regulations, sharpening conflict-of-interest norms, tightening investment curbs and widening disclosure requirements.
Under the Sebi (Employees' Service) (Amendment) Regulations, 2026, the definitions of 'family' and 'dependent' have been expanded to include adopted and stepchildren, as well as individuals substantially dependent on employees. This broadens the scope of compliance obligations, especially in areas such as investments and disclosures.
In another major change, Sebi has imposed a two-year cooling-off period during which former employees cannot represent clients before the regulator in proceedings or settlements. Additionally, employees must disclose any job negotiations within a month of such engagement.
"An employee leaving the service on account of retirement or resignation or otherwise shall not appear before or against the Board on behalf of any other person in any matter or quasi-judicial proceeding (including adjudication) or settlement or approval matter for a period of two years from the date of being relieved from service," the amendment notification states.
A key change is the introduction of a clear distinction between 'prohibited' and 'permissible' investments. Employees are now barred from investing directly in equities, equity-convertible instruments and derivatives. However, investments through regulated pooled vehicles such as mutual funds and REITs are exempt.
"An employee or his family members shall not make any fresh investment in non-permitted investments during the period of service of the employee with the Board," the notification states.
The rules also cap exposure to certain regulated investment products at 25 per cent of an employee's total investments. Limited exemptions have been carved out, including for employee stock options granted to spouses and discretionary portfolio management services.
Gift rules have been tightened, raising the disclosure threshold for gifts from Rs 10,000 to Rs 50,000, while clarifying acceptable customary exchanges.
[The Business Standard]
