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SEBI to Revisit ‘Fit and Proper’ Chargesheet Disqualification

8 October 20251 min read
BANKING & FINANCESEBI to Revisit ‘Fitand Proper’ChargesheetDisqualification8 October 2025safalsetu.com

Why in the news

The market regulator agreed in court to re-examine a rule that deems a person unfit once charged, without conviction.

Key facts

  • Hit by the clause: KMPs and directors of market intermediaries.
  • Review test: natural justice and proportionality.
YearDevelopment
2004Fit and proper framework starts
2008Folded into SEBI (Intermediaries) Regulations
Nov 2021Automatic triggers replace case-by-case review
2023Brokerages petition the court

The disputed clause

  • Clause 6, Schedule II: anyone named in a chargesheet or accused of an economic offence is not fit and proper.
  • Fairness worry: penalty arrives before guilt is judicially decided.

SEBI’s stand

  • Balance market integrity and individual rights, curbing misuse.

Exam angle

  • Court: Bombay High Court.
  • Applies to brokers, mutual funds, investment advisers, rating agencies.

Test yourself

1. Before which court did SEBI say it would review its fit and proper person provision?

SEBI informed the Bombay High Court of its review.

2. In which year was the fit and proper person framework first introduced, as per these notes?

It was introduced in 2004 and later subsumed under the 2008 regulations.

3. Which clause makes a person named in a chargesheet automatically not fit and proper under SEBI rules?

The notes cite Clause 6, Schedule II of SEBI (Intermediaries) Regulations.

This topic is part of Daily Current Affairs 8 October 2025 (15 topics).

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