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Latest from the Regulator - August 2026
1. Parliamentary panel seeks longer cooling-off period for SEBI chief to avoid conflict of interest
A Parliamentary Standing Committee on Finance has recommended extending the mandatory cooling-off period for the SEBI Chairperson and Whole-time Members from one year to two years before they may accept employment with securities market intermediaries or other associated entities. The proposal is aimed at strengthening regulatory independence and mitigating potential conflicts of interest.
The recommendations form part of the Committee's report on the Securities Markets Code, 2025, tabled in Parliament on 23 July 2026. The proposed legislation seeks to consolidate three key securities laws: the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, and the Depositories Act, 1996; into a unified legal framework.
Among its key governance recommendations, the Committee has also proposed:
• Institutionalising a transparent, merit-based appointment process for SEBI board members through a mechanism such as the Financial Sector Regulatory Appointments Search Committee (FSRASC).
• Extending legal protection for actions taken in good faith to officials of Market Infrastructure Institutions (MIIs) and the Securities Appellate Tribunal (SAT), in addition to SEBI officials.
The Committee also highlighted the absence of a dedicated regulatory framework for Virtual Digital Assets (VDAs), noting that their exclusion from the proposed Code creates a regulatory grey area despite growing retail investor participation. It urged the Government to examine the need for a comprehensive regulatory framework for crypto-cryptoassets and, in the interim, consider a regulatory mechanism through recognised Self-Regulatory Organisations (SROs) operating under the oversight of the designated regulator.
2. RBI Proposes Broader Test for Determining Foreign Control of Indian Companies
The Reserve Bank of India (RBI) has proposed amendments to the Foreign Exchange Management (Non-debt Instruments) Rules to broaden the criteria for determining when an Indian company is considered to be under foreign control. The draft proposals are intended to provide greater regulatory clarity and align the assessment of control with evolving investment and governance structures. Public comments have been invited until 31 August 2026.
Under the proposed framework, a company may be regarded as foreign-controlled if a foreign investor:
• Holds 10% or more voting rights;
• Has the right to appoint a majority of the board of directors; or
• Exercises control or significant influence over key management or strategic policy decisions.
The proposed changes are expected to have important implications for foreign direct investment (FDI), particularly in private equity transactions, mergers and acquisitions, joint ventures, and shareholder agreements where governance rights extend beyond equity ownership. Legal and industry experts have noted that introducing a quantitative threshold alongside governance-based tests could broaden the scope of entities classified as foreign- controlled, potentially increasing regulatory and compliance obligations for investors and companies. If implemented, the revised framework would represent a significant evolution in India's foreign investment regime by shifting the assessment of control beyond ownership alone to include governance rights and decision-making influence, reinforcing transparency while reshaping the regulatory treatment of foreign investments
3. MCA Proposes Unified Digital Platform to Modernise India's Insolvency Ecosystem
The Ministry of Corporate Affairs (MCA) has released a blueprint for the Integrated Platform for Insolvency Ecosystem (iPIE), a unified digital platform designed to streamline insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), 2016.
The proposed platform aims to establish an end-to-end digital ecosystem by integrating key institutions and stakeholders, including the MCA, Insolvency and Bankruptcy Board of India (IBBI), National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT), insolvency professionals, lenders, information utilities, valuers, and prospective resolution applicants. It is intended to replace fragmented processes with a single, interoperable technology platform that enables seamless information sharing and workflow management across the insolvency lifecycle.
Key objectives of the proposed iPIE include:
• Digitising the entire insolvency lifecycle, from case initiation through resolution and liquidation;
• Enabling real-time information exchange among authorised stakeholders;
• Reducing manual intervention and duplication through integrated digital workflows;
• Improving transparency, efficiency and traceability across insolvency proceedings; and
• Supporting faster resolution timelines by addressing procedural delays and information gaps.
The initiative represents one of the most significant technology-driven reforms to India's insolvency framework since the enactment of the IBC.
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Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'. Currently it is associated with over 31,000 senior executives from Govt, PSU and Private organizations of India and abroad.
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Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
