The Securities and Exchange Board of India (SEBI) has proposed a comprehensive revamp of the ‘fit and proper person’ framework that governs market intermediaries such as brokers, investment advisors and other key participants in India’s securities markets.
The move, outlined in a consultation paper, is aimed at enhancing procedural clarity, fairness and reducing regulatory uncertainty.
Under the proposed changes to Schedule II of the Intermediaries Regulations, 2008, SEBI seeks to clearly codify the right to a hearing, refine and narrow the scope of events that can disqualify a person, and introduce greater transparency around regulatory actions. Currently, SEBI’s practices include giving an opportunity to be heard, but the reform would explicitly state this in the regulations to remove ambiguity.
Among the key proposals is the removal of automatic disqualification triggered merely by the initiation of winding‑up proceedings; only a final order would be considered while assessing fitness. The regulator also wants intermediaries or applicants to inform SEBI within seven days of any event that could potentially lead to disqualification.
Other suggested changes include reducing the cooling‑off period after show‑cause notices from one year to six months, clarifying how group entity disqualifications affect intermediaries, and modifying rules around shareholding and voting rights for persons declared not fit and proper. SEBI has invited public comments on these proposals until February 25, 2026.
SEBI (Securities and Exchange Board of India) ne apne ‘fit and proper person’ framework ka revamp propose kiya hai, jo brokers, investment advisors aur dusre market intermediaries ko govern karta hai.
Ye step transparency, fairness aur regulatory clarity badhane ke liye hai.
Proposed changes ke under, SEBI right to hearing ko clearly codify karna chahta hai, disqualification events ko narrow karna chahta hai, aur regulatory actions ko zyada transparent banana chahta hai. Abhi tak, SEBI hearing ka mauka deta hai, lekin naye framework me ye explicitly rules me hoga.
Kuch key proposals:
- Winding-up proceedings ke shuru hone se automatic disqualification hata di jaayegi; sirf final order ko consider kiya jayega.
- Intermediaries ko 7 din ke andar SEBI ko inform karna hoga agar koi aisi event ho jo disqualification la sakti ho.
- Show-cause notice ke baad cooling-off period 1 saal se 6 mahine karne ka proposal.
- Group entity disqualifications aur shareholding/voting rights ke rules me clarity.
SEBI ne public comments ke liye invite kiya hai jo 25 February 2026 tak submit kiye ja sakte hain.
Ye overhaul market ke liye zyada predictable aur fair environment create karne ki koshish hai.