SEBI Board Meeting, September 24, 2026: New Portfolio Managers Regulations, Settlement Framework Overhaul, and 11 More Key Decisions

Quick Answer

At its 215th meeting held in Mumbai on September 24, 2026 (Press Release No. 59/2026), the SEBI Board approved 13 regulatory measures spanning portfolio management, enforcement settlement, research analyst compliance, advertising rules, commodity derivatives, bullion vaulting, REITs and InvITs, corporate bond listing, market-professional certification, alternative investment funds, accredited investors, and a fourth settlement scheme for a long-running illiquid stock options matter. Among these, a full replacement of the Portfolio Managers Regulations, 2020 and a replacement of the Settlement Proceedings Regulations, 2018 are the most wide-ranging in scope. Both, along with most other items, require formal Gazette notification before taking legal effect.

At a Glance: All 13 Decisions

1. New Portfolio Managers Regulations, 2026

The Board approved the SEBI (Portfolio Managers) Regulations, 2026, which will replace the SEBI (Portfolio Managers) Regulations, 2020 in full. The stated objectives are development of the Portfolio Management Services (PMS) industry, ease of compliance, consolidation of provisions, and removal of redundant clauses. SEBI conducted this review through a stakeholder survey via the Association of Portfolio Managers in India (APMI) and a consultation paper issued on July 23, 2026.

Developmental measures

• Portfolio managers may now invest in IPOs and primary market debt issuances.
• Under Discretionary PMS (DPMS), up to 10% of client AUM may go into investment-grade, non-convertible, unlisted debt securities, with client consent.
• Investment in exchange-traded derivatives is permitted up to 1.25 times of client AUM — a more flexible limit than before.
• Investment in foreign securities is enabled under both DPMS and Non-Discretionary PMS (NDPMS), covering listed equity, debt, REITs, overseas mutual funds, ETFs, index funds, and foreign government debt — governed by FEMA, 1999 and RBI's Liberalised Remittance Scheme.

PRIM — Portfolio Managers Route for Investing in Mutual Fund units

A new route, PRIM, lets portfolio managers invest client funds in direct plans of mutual fund units, including ETFs, index funds, and Specialized Investment Funds (SIFs) of Indian AMCs. An existing portfolio manager can offer PRIM as a separate investment approach with a minimum ticket size of ₹25 lakh. A new applicant wanting to operate strictly within PRIM's permissible securities can seek a dedicated registration, subject to:

Eligible Fund Managers and Independent Fund Managers

Eligible Fund Managers (EFMs) may now manage and advise investment of an eligible investment fund in overseas securities; if that fund invests back into Indian securities, the investment limit stays aligned with the prevailing FPI framework.

A new concept — the Independent Fund Manager (IFM) — allows an individual to manage client portfolios in association with a registered portfolio manager, subject to investor-protection conditions: the registered portfolio manager bears full responsibility and liability for the IFM's activities; the IFM must hold the same qualifications as a Principal Officer; fees flow only to the registered portfolio manager; all IFM-generated orders route through the PM's infrastructure; one PM may work with several IFMs but an IFM may operate under only one PM at a time; clients get a mandatory exit option if an IFM departs or is terminated; and APMI will maintain a central, updated database of active IFMs.

Ease of compliance measures

• Even a graduate is now eligible to serve as Principal Officer — the earlier stricter educational bar is relaxed.
• Dealing-room requirements are relaxed for portfolio managers with AUM below ₹100 crore — SEBI notes this would cover 48% of currently registered PMS entities.
• A standardised Investment Management Agreement (IMA) is introduced for client clarity, with authority to operate demat/trading accounts embedded in it (the RBI-mandated Power of Attorney requirement for bank accounts continues separately).
• Reporting timelines for material and non-material events are harmonised.
• Digital disclosure documents are promoted over physical communication.
• Statutory levies are excluded from the current 0.5% p.a. operating expense cap.

Scale of the rewrite

SEBI states the exercise cut the regulation's length by 53% — from 70 pages to 33 pages — and its word count by roughly 42%, from 19,486 words (including footnotes) to 11,308 words. The number of provisos fell from 47 to 4, and every "notwithstanding" clause has been removed except for one limited use in the Repeal and Savings provision.

Beyond the length reduction, the Regulations have been reorganised so that related provisions previously spread across the text — such as registration and co-investment rules — are now consolidated under common heads, with clearer anchors for concepts like benchmarking and valuations. Various grandfather clauses and transitory provisions have also been removed or modified to carry clear expiration terms, rather than remaining open-ended.

2. New Settlement Regulations, 2026

The Board approved the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, replacing the SEBI (Settlement Proceedings) Regulations, 2018. These Regulations carry their own commencement clause: they come into force the day succeeding the 30th day from their notification date — meaning the effective date is not yet fixed and depends on when SEBI formally notifies them.

Restructured settlement terms and a new formula

Settlement Terms will now comprise the Settlement Amount, disgorgement of wrongful gains (if applicable), and Remedial and Regulatory Terms (RRT) — the new name for what were earlier called Non-Monetary Terms. The Settlement Amount itself is now calculated by a defined formula rather than case-by-case discretion alone:

The Base Amount is linked to the minimum statutory penalty for the violation, with multipliers based on applicant type. S reflects the stage of proceedings, R a regulatory action factor, G a gravity factor tied to the nature of the default, A aggravating factors, and M mitigating factors. Wrongful gains, loss avoided, or loss caused to investors are excluded from the Base Amount calculation and instead disgorged separately where quantified — removing what SEBI describes as double counting under the earlier framework.

Expanded and faster access to settlement

Adjudication, fraud cases, and interest on disgorgement

RRT will ordinarily not be imposed while settling adjudication proceedings, since those only contemplate monetary penalties — though quantified wrongful gains must still be disgorged, and disclosure-related violations may still require appropriate disclosures. Cases involving misrepresentation of financial statements or diversion/siphoning of funds can be settled too, subject to appropriate RRT, including disclosures and bringing back diverted funds.

Interest on disgorgement is set at 9% per annum from the date of violation to the date of filing the settlement application, for proceedings pending before the Board. For other matters, it runs at 9% p.a. from the violation date to the date of the final order, then at 12% p.a. thereafter until the settlement application is filed. No interest is charged on interest.

3. Relaxed Call-Recording Requirement for Institutional Clients

The Board approved amending the SEBI (Research Analyst) Regulations, 2014 to relax the requirement that Research Analysts (RAs) and Research Entities maintain call recordings of communications with clients that are institutional investors. SEBI states this is meant to ease compliance burden and reduce record-keeping obligations, following a consultation paper issued on May 18, 2026. The press release does not specify what replaces the call-recording requirement for institutional clients or whether recording obligations for other client categories are affected.

4. Common Advertisement Code (CAC)

As an Ease of Doing Business measure, the Board approved a Common Advertisement Code applicable across Stock Brokers, Depository Participants, Investment Advisers, Research Analysts, Online Bond Platform Providers, Portfolio Managers, and Mutual Funds/AMCs — replacing the patchwork of entity-specific advertisement rules currently spread across individual regulations, master circulars, and exchange/supervisory-body circulars.

• Celebrity endorsements for brand-level/entity-level promotion are now permitted, subject to prior approval and safeguards.
• Mandatory prior approval of advertisements is removed (except where celebrity endorsements are involved), replaced by post-issuance reporting within 3 working days.
• Regulated entities may advertise ratings/rankings assigned by a "Past Risk and Return Verification Agency."
• An illustrative list will distinguish routine, factual, and investor-service communications from promotional content that counts as an "advertisement."

The framework was developed with the Industry Standards Forum, stock exchanges, and bodies such as the Association of Mutual Funds in India, factoring in feedback on a consultation paper issued June 23, 2026.

5. FPI Participation in Exchange Traded Commodity Derivatives (ETCDs)

To deepen liquidity, the Board approved permitting FPIs to participate in:

• Non-agricultural index derivatives contracts, whether cash-settled or not.
• Non-cash-settled, non-agricultural commodity derivatives contracts.

Participation in the second category is conditional on FPIs exiting before any delivery obligation arises. The specific safeguard: FPIs must exit positions before entering the Tender Period (three days before contract expiry, i.e., "T-3"), and cannot increase positions from T-3 onward. Before being enabled to trade, an FPI must sign an agreement with its Trading Member/Trading-cum-Clearing Member (TM/TCM) covering how positions will be handled — including squaring off, or devolvement of any residual open position onto the TM/TCM at the Closing Price/Daily Settlement Price on the day of devolvement. Any such devolvement is treated as a trade attracting applicable statutory levies.

6. Amendments to Vault Managers Regulations, 2021

The Board approved amendments expanding and harmonising the SEBI (Vault Managers) Regulations, 2021, which currently govern custody of gold underlying Electronic Gold Receipts (EGRs). With bullion-related instruments (Gold/Silver ETFs, bullion derivatives) growing, SEBI is broadening the framework to cover vaulting for all SEBI-specified bullion related instruments, not just EGRs.

A consequential circular will follow to operationalise storage, quality standards, reconciliation, inspection, audit, insurance, security, infrastructure, risk management, and grievance redressal requirements. The proposals were deliberated in the Commodity Derivatives Advisory Committee, factoring in public consultation feedback from August 2026.

7. Depository Receipts on REIT and InvIT Units

The Board approved amending the SEBI (REIT) Regulations, 2014 and SEBI (InvIT) Regulations, 2014 to create an enabling provision for issuing Depository Receipts (DRs) on REIT and InvIT units, aimed at attracting foreign capital. The detailed operational framework will follow via a separate circular after the amendments are notified. Initially, DRs are envisaged to be issued and listed in India's International Financial Services Centre (IFSC), with all foreign investors — including NRIs — able to invest in them. This proposal followed recommendations of SEBI's Hybrid Securities Advisory Committee and a consultation paper issued August 4, 2026.

8. Ease of Doing Business Measures for InvITs and REITs

Unitholder-approval threshold

Certain matters currently require approval by 75% of all outstanding units — a bar SEBI notes has become hard to clear given diverse ownership and non-voting unitholders. The threshold changes to 75% of total votes actually cast, aligning with the Companies Act, 2013 approach.

Exit offer framework on change of sponsor

• Multi-sponsor exits: where one of several sponsors exits, the exit offer can now be made by either the outgoing sponsor/its group entities, or the continuing sponsor/its group entities.
• "Dissenting unitholders" redefined: previously this covered anyone who didn't vote in favour (capturing non-voters too); it now means only unitholders who voted against the resolution. Unitholder notices must carry an explicit disclaimer that any exit option is offered only to those voting against.
• Minimum public unitholding (MPU) after exit offers: previously, tendered units were accepted only proportionately to preserve MPU, limiting how much of an exit a dissenting unitholder could actually get. Now, all tendered units must be accepted; if MPU falls below the minimum threshold as a result, compliance must be restored within one year of completing the exit offer.

This change is stated to align with the SEBI (Substantial Acquisition and Takeover) Regulations, 2011 read with the Securities Contracts (Regulation) Rules, 1957.

Remote common infrastructure as real estate

REITs can already invest in common infrastructure whether co-located with a project or not, but the definition of "real estate" only referenced common infrastructure in the context of "composite" projects — so remote common infrastructure didn't qualify. The definition is amended to explicitly include remote common infrastructure, to support environmental sustainability goals.

These proposals followed recommendations of the Hybrid Securities Advisory Committee and a consultation paper issued August 6, 2026.

9. Relaxation of Mandatory NCD Listing Under LODR Regulation 62A

The Board approved amending Regulation 62A of the LODR Regulations, 2015. Currently, an issuer listing an NCD for the first time must also list all its outstanding unlisted NCDs issued on or after January 1, 2024, within three months of the new listing — creating operational challenges (ISIN limits, covenant-monitoring systems) and cost, even though disclosures are largely common across series. The amendment restricts the mandatory listing requirement to only prospective NCD issuances, aiming to encourage first-time debt listing by new issuers. This followed a consultation paper issued August 10, 2026 and recommendations of the Corporate Bonds and Securitization Advisory Committee.

10. Amendment and Renaming of the CAPSM Regulations, 2007

The Board approved changes to the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007:

• The age/experience-based exemption "cut-off date" shifts from the notification date to the date of appearing for the exam or obtaining Continuing Professional Education (CPE).
• Completion of certain new courses/programmes will itself count as grant of certification.
• The Regulations are renamed the SEBI (Certification of Specified Persons in the Securities Markets) Regulations, 2007.

11. Extending AIF Investor Protection to All Fund Structures

The Board approved amending the SEBI (Alternative Investment Funds) Regulations, 2012 to extend a specific investor protection — currently available only to investors in AIFs structured as a Trust — to investors in all forms of AIFs. Under a trust structure, the fund manager or its officers cannot use trust assets to cover their own losses, damages, or expenses (including the cost of resolving investor disputes); this protection now extends regardless of the AIF's legal form. This followed a consultation paper issued July 23, 2026.

12. Review of the Accredited Investor (AccI) Framework

Accreditation under either route (manager-led or Accreditation Agency) is valid for three years, and manager-led accreditation is portable across AIF, SIF, and PMS products within the same group, subject to safeguards. The changes followed a consultation paper issued August 13, 2026 and recommendations of the Alternative Investment Policy Advisory Committee (AIPAC).

13. Fourth Settlement Scheme for BSE Illiquid Stock Options (2014–2015)

SEBI has introduced a fourth Settlement Scheme, under Section 15JB of the SEBI Act, 1992 read with Regulation 26 of the (outgoing) 2018 Settlement Regulations, addressing non-genuine trades by certain entities in Illiquid Stock Options (ISOs) on the BSE. Three earlier schemes ran in 2020, 2022, and 2024, under which a large number of entities settled. This Scheme, recommended by the High Power Advisory Committee (HPAC) and approved by SEBI's Competent Authority, was placed before the Board for information rather than for approval as a regulation.

It covers non-genuine trades executed in BSE's stock options segment between April 1, 2014 and September 30, 2015, where enforcement proceedings remain pending before any authority or forum — Adjudicating Officer, SAT, courts, or a Recovery Officer.

Modalities for applying under the Scheme will be announced separately.

Frequently Asked Questions

Are these new SEBI regulations already in force?
No, in most cases. The Board has approved these measures; they take legal effect once formally notified in the Official Gazette. The Settlement Regulations, 2026 specifically come into force the day after the 30th day from their notification date.

What replaces the Portfolio Managers Regulations, 2020?
The SEBI (Portfolio Managers) Regulations, 2026, approved at this meeting, which will supersede the 2020 Regulations once notified.

What is PRIM?
The Portfolio Managers Route for Investing in Mutual fund units — a route allowing portfolio managers to invest client funds in direct plans of mutual funds, ETFs, index funds, and SIFs, subject to a ₹25 lakh minimum ticket size and a 1% management fee cap.

How is the new SEBI settlement amount calculated?
Using the formula: Settlement Amount = Base Amount × (S + R + G + A − M) + Legal Costs, where the Base Amount is tied to the minimum statutory penalty and the other factors reflect the stage of proceedings, regulatory action, gravity, aggravating factors, and mitigating factors.

By how much has the Vault Manager net worth requirement increased?
From ₹50 crore to ₹75 crore.

Can FPIs now trade commodity derivatives in India?
Yes, subject to conditions — they may participate in non-agricultural index derivatives (cash-settled or not) and non-cash-settled non-agricultural commodity derivatives, but must exit non-cash-settled positions before the Tender Period (three days before contract expiry).

What is the new threshold for REIT/InvIT unitholder approvals?
75% of total votes actually cast, replacing the earlier 75% of all outstanding units.

Who is covered by the fourth Illiquid Stock Options Settlement Scheme?
Entities with pending enforcement proceedings relating to non-genuine trades in BSE's stock options segment between April 1, 2014 and September 30, 2015.

Who Should Be Watching This

CorpLawUpdates Analysis

The single most consequential item for the PMS industry is arguably not the developmental measures but PRIM and the Independent Fund Manager concept together — they effectively create a lighter-touch entry path into fund management adjacent to the PMS licence, at a capped fee, which could reshape distribution economics for smaller managers and AMCs alike. For enforcement practice, the new settlement formula is a genuine structural shift: moving from a largely discretionary process to a defined formula with explicit aggravating/mitigating factors should make outcomes more predictable, though the true test will be how SEBI calibrates the S, R, G, A, and M factors in practice once the Regulations are notified and the first orders are passed under them.

For REIT/InvIT market participants, the shift from "75% of all units" to "75% of votes cast" is a practical unlock — it directly addresses a documented approval bottleneck rather than a theoretical one. Compliance and legal teams across the industries covered by the Common Advertisement Code should treat this as a genuine unification exercise: firms currently juggling multiple entity-specific advertisement frameworks now need a single updated internal advertisement-approval workflow, built around post-issuance reporting rather than pre-clearance.

Because none of these regulations (other than the Settlement Regulations' own commencement clause) have a confirmed notification or effective date yet, firms should treat this press release as a signal to begin internal readiness work — updating compliance manuals, IMAs, advertisement approval workflows, and net worth planning (for Vault Managers) — rather than as a trigger for immediate action.

Source Note

Document: SEBI Press Release No. 59/2026, "Key decisions taken in the SEBI Board Meeting dated 24th September, 2026" — 215th meeting of the SEBI Board, held in Mumbai. Issuing authority: Securities and Exchange Board of India, Communications Division, SEBI Bhavan, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051. Primary sources: the press release cited above, and the current text of the SEBI (Portfolio Managers) Regulations, 2020, SEBI (Settlement Proceedings) Regulations, 2018, SEBI (Vault Managers) Regulations, 2021, SEBI LODR Regulations, 2015, and SEBI (Alternative Investment Funds) Regulations, 2012, all published on SEBI's official website.

This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Several measures described here are Board approvals pending formal Gazette notification; readers should verify the notified text and effective dates on SEBI's official website before taking action.