SEBI board approves conflict of interest, disclosure framework for top officials

The board of the capital markets regulator, Securities and Exchange Board of India (SEBI), on Monday approved several recommendations of a high-level committee on “conflict of interest” requiring the chairman and senior officers to publicly disclose their assets and liabilities to increase transparency and accountability.

Additionally, the Chairman and Whole Time Members (WTMs) are to be brought within the definition of “insider”, SEBI said in its statement after the conclusion of the board meeting.

The committee, chaired by former Chief Vigilance Commissioner Pratyush Sinha, also suggested that all SEBI board members and employees should make initial, annual, event-based and exit disclosures of assets, liabilities, trading activities and family relationships, as well as other professional and relational interests.

“The immovable property details of the Chairman, WTM, Executive Directors and Chief General Managers may be publicly disclosed in line with the requirements already applicable to Government of India All India Service (AIS) and Central Civil Services (CCS) officers. However, details of assets and liabilities in the format to be prescribed would have to be internally disclosed to SEBI,” the regulator said.

However, the restrictions would not apply to part-time members, given their limited role and sphere of influence compared to WTMs. Also, the board approved the setting up of a digital system for management of conflict of interest, a whistleblower system for reporting actual, potential, or perceived conflicts of interest and training and development programmes to foster a culture of ethical conduct.

The board also accepted recommendations in case of recusals relating to material financial interest and other circumstances that may require recusal, as given in the HLC report. Also, it approved a digital system and a recusal framework may be put in place to record disclosure of conflicted relationships as well as to process recusals, including the grant of approvals.

The SEBI board approved a recommendation of the high-level committee (HLC) for a uniform application of restrictions on investments and trading (in equity and equity-related instruments, other than permitted investments in mutual funds) for the Chairman and WTMs as currently applicable to employees.

The report, which was submitted to SEBI Chairman Tuhin Kanta Pandey on November 10, recommended that new investments in any pooled vehicle may be permitted, provided the scheme is professionally managed by a regulated market intermediary.

Among others, the chairman and the WTMs may be required to choose one of the four options for investments held by them at the time of joining: liquidate the investments, freeze the investments, sell the investments according to a trading plan, or sell the investments without a trading plan with prior approval.

Investments in equity and equity-related instruments in commercial ventures (including unlisted companies) must be fully liquidated or kept frozen during the tenure of the Chairman or the WTMs. Vested options, if any, must be exercised before joining SEBI.

The definition of “family” should be aligned for members and employees. Additionally, a member or an employee must disclose any negotiation or agreement regarding future employment.

SEBI said that several key recommendations of HLC were approved by the board without modification, while the board took note of public and media comments, privacy and other concerns expressed by employees with respect to other recommendations of HLC.

The board decided that the decision of the Board on the recommendations of HLC may be suitably incorporated in the 2008 Code on Conflict of Interest for Members of the Board for voluntary adoption as per the current practice.

Also, after deliberations, the board decided to refer certain HLC recommendations to the Central Government for consideration. These included notifying a separate set of regulations for board members and overseeing board Members’ conflicts of interest.

The next steps for implementing the recommendations of HLC include making amendments to the SEBI (Employees’ Service) Regulations, 2001, revising the 2008 Code on Conflict of Interest for members of board and provide necessary operational guidelines.

Further, systems and processes would be put in place for implementing the framework for the management of conflicts of interest within SEBI.

In March 2025, the SEBI board had decided to constitute the committee to undertake a comprehensive review of the existing provisions related to conflict of interest and disclosures of property, investments, liabilities, and other related matters by SEBI members and officials.

The move came in the wake of allegations against former SEBI Chairperson Madhabi Puri Buch, who was accused of holding back on investigations into the Adani group due to a conflict of interest.

The high-level committee comprised Injeti Srinivas as Vice Chairman, Uday Kotak, G Mahalingam, Sarit Jafa, and R Narayanaswamy as members.

Pandey’s predecessor Buch, who demitted office at the end of February 2025, had come under attack last year from now-shuttered Hindenburg Research which alleged that she and her husband held “hidden” holdings in Bermuda and Mauritius entities also drawn upon by the older brother of Adani group founder Gautam Adani, which possibly held the agency back from investigating fraud charges against the powerful conglomerate.

Both Buch and the Adani group had denied all allegations.