Recent SEBI Developments Every Corporate Lawyer Should Know

The Securities and Exchange Board of India (SEBI) continues to play a crucial role in shaping India’s corporate and securities landscape. Over the past year, courts, parliamentary bodies, and SEBI itself have introduced important changes that directly impact companies, compliance officers, investors, and corporate lawyers.

For anyone practising or studying corporate and securities law, staying updated is no longer optional but it is essential. This article highlights some of the most important recent SEBI-related developments and explains why they matter in day-to-day corporate practice.

1. SEBI Must Share Investigation Reports With the Accused

In a significant ruling, the Delhi High Court held that SEBI cannot prosecute an accused without sharing the investigation report relied upon for initiating proceedings.

The Court made it clear that - An investigation report forms the foundation of SEBI’s prosecution. Withholding such a report violates Article 21 of the Constitution, which guarantees a fair trial. Claims of regulatory confidentiality cannot override principles of natural justice.

This judgment strengthens procedural fairness and gives accused parties a meaningful opportunity to defend themselves. For corporate lawyers, this ruling is vital while handling SEBI enforcement actions, show-cause notices, and criminal complaints.

2. Parliamentary Review of SEBI Ombudsman Powers

A Parliamentary Standing Committee is currently reviewing the Securities Markets Code Bill, 2025, with special focus on the proposed SEBI Ombudsman mechanism.

Key concerns raised include:

1. Whether the Ombudsman may become an extra appellate layer before the Securities Appellate Tribunal (SAT).
2. The need for clear jurisdiction and timelines for resolving investor complaints.

If implemented properly, this framework can strengthen investor protection. However, unclear provisions may increase compliance burdens for companies. Corporate lawyers must closely track this development, as it may change how investor grievances are handled in the future.

3. SEBI’s Strong Stand on Insider Trading

SEBI has recently passed several important orders in insider trading cases-both exonerating and penalising parties.

• In the Adani-SB Energy case, SEBI dropped insider trading charges after finding that trades were based on publicly available information.
• In contrast, SEBI has impounded large sums and imposed market bans in cases involving misuse of unpublished price-sensitive information (UPSI).

These orders underline one key lesson - timely disclosures, proper compliance systems, and clear information barriers are critical for listed companies.

Corporate lawyers advising boards, promoters, and senior management must ensure strict adherence to insider trading regulations.

4. SEBI Gets Power to Takedown Online Content

The Central Government has authorised SEBI under the IT Rules, 2021, to issue takedown orders against online content that threatens market integrity.

This allows SEBI to act against Fake investment advisory platforms, Market manipulation through social media and Misleading financial influencers.

For corporate lawyers, this is particularly relevant in the digital age where companies, founders, and financial products are constantly discussed online. Legal teams must now factor in digital compliance and reputational risk along with traditional securities laws.

5. Crackdown on Unregistered Investment Advisers and Finfluencers

SEBI’s action against unregistered finfluencers including bans and freezing of unlawful gains sends a strong message that Giving investment advice without registration is illegal and Calling it “education” does not offer protection under the law.

This development is crucial for startups, fintech platforms, and content creators operating in the finance space. Corporate lawyers must guide clients on registration requirements, advertising norms, and liability risks.

6. Consent Orders Do Not Stop Criminal Proceedings

The Bombay High Court recently clarified that SEBI consent orders do not shield individuals or companies from criminal prosecution.

Even if a party settles with SEBI, Criminal cases under IPC or anti-corruption laws can continue independently and Regulatory settlements operate only within SEBI’s administrative framework.

This ruling is important for advising clients who believe that settling with SEBI closes all legal risks - it does not.

7. SEBI Penalties After Insolvency Are Not Recoverable in CIRP

The NCLT Mumbai ruled that penalties imposed by SEBI after the commencement of insolvency proceedings cannot be claimed under the Insolvency and Bankruptcy Code (IBC).

This provides clarity on: The priority of claims during CIRP and The limited scope of regulatory penalties once a moratorium begins.

Corporate lawyers dealing with insolvency, restructuring, and regulatory overlaps must take note of this position.

Conclusion

Recent SEBI developments show a clear trend of Stronger enforcement, Greater procedural fairness, Increased focus on investor protection and Adaptation to digital and social media risks.

For corporate lawyers, these changes affect advisory work, compliance strategy, litigation, and risk management. Understanding SEBI’s evolving approach is essential for providing accurate and future-ready legal advice.

Staying updated is not just about knowing the law - it is about anticipating how regulators and courts will apply it.

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