
The Securities and Exchange Board of India (SEBI) has proposed a significant overhaul of its 'fit and proper' framework for market intermediaries to reduce premature disqualifications based on pending criminal complaints or charge sheets. The regulator aims to replace rigid, rule-based triggers with principle-based assessments focusing on integrity, conduct, and investor risk, aligning with global standards. Key changes include removing automatic disqualification on FIR or charge sheet filings, codifying the right to a hearing, and limiting voting rights instead of mandatory divestment, enhancing procedural fairness and regulatory clarity.
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