The proposed Securities Markets Code is set to give the Securities and Exchange Board of India (SEBI) clearer statutory powers, tighter timelines for investigations and a codified framework for disgorgement, while formally widening regulatory oversight to cover hybrid and newer financial instruments.
By consolidating the SEBI Act, the Securities Contracts (Regulation) Act and the Depositories Act into a single statute, the Code removes long-standing overlaps and jurisdictional gaps that often delayed action and became grounds for litigation, said experts.
“This consolidation eliminates fragmented enforcement and grants SEBI unified jurisdiction across the securities lifecycle from issuance and trading to clearing and settlement,” said Alay Razvi, Managing Partner, Accord Juris.
For companies and intermediaries, the most visible change is the introduction of statutory timelines.
Regulatory balance
Inspections, investigations and interim orders are now subject to defined limitation periods, replacing the open-ended framework under the current law. This is expected to reduce prolonged regulatory overhang, even as SEBI’s coercive powers are strengthened.
The Code expressly codifies SEBI’s powers of search, seizure, inspection and attachment of property, and grants civil-court-like powers for summoning and examining evidence. These powers, which were earlier exercised through a mix of statutory provisions and regulations, are now housed squarely in the parent law, making them easier to invoke in complex market-abuse cases.
“The Code consolidates and expands SEBI’s powers by enabling regulatory impact assessments, establishing regulatory sandboxes for testing new financial products, strengthening inter-regulatory coordination with other authorities, and introducing streamlined enforcement with unified adjudication and disgorgement mechanisms linked to unlawful gains,” said Diviay Chadha, Partner at Singhania & Co.
However, B Shravanth Shanker, Advocate-on-Record at the Supreme Court of India said, “The balance does shift somewhat against regulated entities because intrusive powers and complex remedies are now explicitly housed in one statute with fewer textual ambiguities; but the addition of time‑limits and process constraints gives defence counsel clearer procedural handles. The real tilt will depend on how adjudication is separated from investigation in practice.”
Disgorgement emerges as a central enforcement tool under the Code. Adjudicating officers are given explicit powers to order disgorgement of unlawful gains, moving the remedy from a largely case-law-driven practice to a codified statutory framework.
“Under the Securities Market Code, adjudicating officers will have wider powers, including that of disgorgement,” said Vasudha Goenka, Partner, Cyril Amarchand Mangaldas. “Further, the Code specifically provides that restitution may be provided to any person who has been affected by the default or contravention from the amount disgorged, on satisfaction of conditions stipulated therein.”
The regulatory perimeter is also widened. The definition of “securities” is expanded to explicitly include hybrid instruments, electronic gold receipts, zero-coupon zero-principal instruments and certain rupee bonds issued by multilateral institutions. In addition, the introduction of “other regulated instruments” creates a formal inter-regulatory framework for products that cut across regulators, reducing grey areas in oversight.