SEBI Introduces Formal Procedure for Regulation Making, Amendment, and Review

The Securities and Exchange Board of India (SEBI) has issued new regulations, titled the Securities and Exchange Board of India (Procedure for making, amending and reviewing of Regulations) Regulations, 2025. These regulations, notified in Mumbai on February 13, 2025, came into force on the date of their publication in the Official Gazette. The primary reason for their enactment is to establish a clear and structured process for the creation, modification, and evaluation of regulations by the Board, with a strong emphasis on transparency and stakeholder involvement. The legislation provided: “A regulation for specifying the process of regulation making and for mandating the public consultation and engagement of stakeholders in the interest of transparency and for matters incidental or connected therewith.”

Under the new framework, the Board is empowered to frame regulations necessary to carry out the purposes of various governing Acts, including the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, and the Companies Act, 2013. A key provision mandates public consultation for the purpose of making regulations. The concerned Department(s) of the Board are now required to publish proposals, including draft regulations, the enabling statutory provision, a statement of regulatory intent and objectives, and the process and timelines for receiving public comments on SEBI's official website. Ordinarily, a minimum of 21 calendar days must be provided for receiving these public comments. Following the receipt of comments, the rationale for any rejections must also be published on the official website, ensuring accountability in the feedback mechanism.

The proposed regulations, along with a related agenda paper, are to be considered by the Board in accordance with the Securities and Exchange Board of India (Procedure for Board Meetings) Regulations, 2001. If the agenda paper results from a public consultation, it must include a systematic compilation or summary of the comments received and the remarks of the concerned Department(s). While public consultation is a cornerstone of these regulations, a provision exists for exigency. The Chairperson may dispense with or reduce the public consultation period if it is deemed expedient in the interest of investors and the securities market's regulation and development, and if adherence to the full process would defeat the regulation's purpose. However, information regarding such dispensations or reductions must be subsequently placed before the Board.

The regulations also establish a clear procedure for the amendment and periodic review of existing regulations. Amendments generally follow the same public consultation process as new regulations, subject to certain exceptions. Furthermore, the concerned Departments of the Board are tasked with periodically reviewing regulations in force. This review process considers their stated objectives, experience gained from surveillance and enforcement actions, relevant court or tribunal orders, global best practices, the relevance to a changed environment, and the scope for reducing redundancies and promoting ease of doing business. This ensures that the regulatory framework remains dynamic, effective, and responsive to market needs.

Certain matters are exempt from these regulations, including SEBI's internal organizational affairs, procedural requirements that do not entail substantive policy changes, amendments to these specific regulations, and proposals for which public comments were already sought or received, or regulations approved but not yet notified, prior to the commencement of these regulations. The Board must be informed of instances where these procedures are not applied. A savings clause clarifies that regulations in force before these new regulations remain valid unless amended, repealed, or substituted, and that non-adherence to the specified procedure does not, by itself, invalidate any regulations framed by the Board or actions taken thereunder. These regulations aim to enhance the legitimacy and effectiveness of SEBI's regulatory output by embedding transparency and participatory governance into its core functions.

Keywords: SEBI, Regulations, Public Consultation, Securities Market, Transparency, Regulatory Review, Stakeholder Engagement, India Geo Tags: India, Maharashtra District: Not Applicable