The Securities and Exchange Board of India (SEBI) has implemented significant changes to its service regulations to enhance employee conduct standards. These changes include stricter conflict-of-interest measures, tighter investment restrictions, and increased disclosure requirements. Notably, the SEBI (Employees’ Service) (Amendment) Regulations, 2026 now encompass a broader definition of ‘family’ and ‘dependent’ to cover adopted and stepchildren, as well as individuals substantially reliant on an employee.
One key alteration is the introduction of a two-year cooling-off period for former SEBI employees. This period prohibits retired or resigned employees from representing any individual before the regulator in matters related to proceedings, adjudication, settlements, or approvals. Furthermore, the revised regulations mandate employees to disclose any employment negotiations with potential employers within one month of commencement to prevent conflicts of interest.
SEBI has also delineated between permitted and non-permitted investments for its employees. While fresh investments in equities, equity-convertible instruments, or derivatives during an employee’s tenure are prohibited, investments through regulated pooled vehicles like mutual funds and real estate investment trusts (REITs) remain permissible. Additionally, the regulator has limited investments in certain regulated products to 25% of an employee’s total investment portfolio, with specific exemptions for cases like employee stock options for spouses and investments under discretionary portfolio management services.
In a significant move, SEBI has raised the gift disclosure threshold from Rs 10,000 to Rs 50,000, along with providing clearer guidelines on acceptable customary gifts.
