The Securities and Exchange Board of India (SEBI) board on Monday adopted a revised conflict-of-interest framework for its chairman, whole-time members (WTMs) and employees, accepting most recommendations of a high-level committee (HLC) with some modifications on disclosures.
A key change is that detailed disclosures of assets and liabilities of senior officials will remain internal to SEBI, instead of being made public, amid concerns of privacy. The board, however, allowed for public disclosure of immovable property details.
The revised framework, based on recommendations of a high-level committee (HLC), largely retains stricter investment and trading restrictions, brings the chairman and WTMs under the definition of “insider”, aligns the definition of “family”, and mandates disclosures of future employment negotiations. A digital system for conflict management, whistleblower reporting and ethics training has also been cleared.
It also approved setting up an Office of Ethics and Compliance, to be overseen by the chief vigilance officer for now, and extended investment restrictions to spouses and dependent family members prospectively, with existing holdings grandfathered.
The notification of the revised framework and formation of an oversight committee on ethics and compliance has been referred to the Central Government.
Addressing concerns around spousal investments in the unlisted space, chairman Tuhin Kanta Pandey said: “The spouses are acting independently on their own resources… You can’t circumvent it by putting your money through your spouse.”
He said that recusals would continue to apply in situations involving relatives or potential conflicts.
On adopting the HLC recommendations, Pandey said the board had chosen to move ahead even where changes are not yet codified in regulations.
Separately, the board approved net settlement of funds for foreign portfolio investors (FPIs) in the cash market, aimed at reducing funding costs and forex outflows. Fund netting allows FPIs to pay or receive only the net difference between buy and sell positions, instead of settling each trade separately. The framework will be implemented after system changes, with a deadline of December 31, 2026. Securities will continue to be settled on a gross basis.
The regulator also eased “fit and proper person” norms by removing automatic disqualification based solely on pending complaints or FIRs, while tightening eligibility in cases of convictions for economic offences and securities law violations. Other decisions included measures for AIFs, social impact funds and REITs/InvITs.