The Securities and Exchange Board of India (SEBI) has revised its employee code of conduct, introducing stricter rules on investments, disclosures and post-employment engagements to strengthen its ethics and conflict-of-interest framework.
According to a gazette notification dated 11 July, all new employees will be required to either liquidate, freeze or submit a time-bound plan to dispose of investments that are not permitted under SEBI’s ethics policy at the time of joining. Existing employees holding such investments will also be given a specified period to either exit or freeze these assets.
Under the revised rules, employees who continue to hold non-permitted investments after the prescribed timeline will not be allowed to exercise shareholder rights, vote on company matters, claim corporate action benefits or participate in rights issues related to those investments while in service.
SEBI has also expanded its disclosure requirements. Employees must now declare their professional interests over the previous three years and disclose any discussions or negotiations regarding future employment within 30 days. They will also be required to furnish details of their financial investments, liabilities and non-permitted investments when joining and leaving the regulator.
The revised code further requires employees to report changes in family details, rental agreements and transactions involving immovable property within 30 days. Gifts valued above Rs 50,000 received from friends during weddings or other occasions must also be disclosed.
In another significant change, SEBI has introduced a two-year cooling-off period for former employees. During this period, they will not be permitted to appear before or against the market regulator, a move aimed at reducing potential conflicts of interest after leaving the organisation.
The notification defines non-permitted investments to include equities, equity-linked instruments and equity and commodity derivatives. The restrictions will also extend to specified family members of SEBI employees.
