The Securities and Exchange Board of India (Sebi) has introduced several amendments to its service regulations for employees. These changes aim to strengthen norms related to conflicts of interest, investment restrictions, and expanded disclosure requirements.
Expansion of Definitions and Post-Employment Restrictions
Under the Sebi (Employees' Service) (Amendment) Regulations, 2026, the definitions of 'family' and 'dependent' have been broadened. They now include adopted and foster children, as well as individuals who are significantly reliant on the employees. This substantially increases the scope of compliance obligations, particularly in areas of investment and data disclosure.
Another significant change is the introduction of a two-year cooling-off period. During this time, former employees are prohibited from representing clients before the regulator in proceedings or dispute resolutions. Furthermore, employees are required to notify about any job negotiations within one month of those negotiations commencing.
Prohibition on Certain Investments
A clear distinction has been made between prohibited and permitted investments. Employees are now barred from making direct investments in stocks, equity convertible instruments, and derivatives. However, investments through regulated asset pools, such as mutual funds and REITs, are exempt from this prohibition.
The notification states that an employee or their family members must not make new investments in non-permitted asset classes during the employee's tenure at the Board. The rules also establish a limit on exposure to certain regulated investment products—25 percent of the employee's total investment volume. Limited exceptions are provided, for instance, for employee stock options granted to spouses and discretionary portfolio management services.
Tightening Gift Rules
Rules concerning gifts have been tightened. The threshold for disclosing gifts has been raised from ₹10,000 to ₹50,000, and acceptable customs for gift exchange have been clarified.