How a SEBI regulation is made: from consultation paper to notification
SEBI does not change its rules by internal decision alone. Since February 2025, its own procedure regulations set out a fixed process: what a consultation paper must contain, the minimum comment period, and when a regulation actually takes effect.
When SEBI changes a rule affecting listed companies, intermediaries or investors, the change does not simply appear — since February 2025, SEBI has followed a formal, self-imposed procedure for how any regulation is made, amended or reviewed, set out in its own Securities and Exchange Board of India (Procedure for Making, Amending and Reviewing of Regulations) Regulations, 2025.
Where the power comes from
SEBI’s general power to make regulations comes from Section 30(1) of the Securities and Exchange Board of India Act, 1992: “The Board may, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act.” The 2025 procedure regulations do not replace this power — they govern how SEBI exercises it: what must be published before a new regulation is made, and in what order.
The consultation step
Before a new regulation (or amendment) is finalised, SEBI is required to publish a consultation paper on its own website. That paper must contain:
- the proposal itself, including the draft text of the proposed regulation;
- the statutory provision under which the regulation is being made;
- a statement of SEBI’s regulatory intent and objectives for the proposal; and
- the process and timeline for the public to submit comments.
A minimum of 21 calendar days is ordinarily provided for public comments. After the comment window closes, SEBI is required to publish, on its own website, its rationale for rejecting any comments it does not accept.
Board approval
Once public comments have been considered, the proposal — along with the comments received (or a summary of them) and SEBI’s own remarks on those comments — goes to SEBI’s Board for approval as a formal agenda item. A regulation is not made until the Board approves it.
When it takes effect
A regulation made this way takes legal effect on the date it is published in the Official Gazette — not on the date SEBI’s Board approves it, and not on the date a press release describes it. The Gazette notification is the actual legal instrument.
When SEBI can skip the consultation step
The 2025 procedure regulations allow SEBI’s chairperson to dispense with public consultation, or shorten the comment period, where the Board considers that following the full process would defeat the purpose of the regulation — for example, where investor protection or market stability call for a faster response. Certain other categories (SEBI’s own internal administrative matters, and procedural regulations) are also exempt from the consultation requirement.
A general timeline
Not every regulation follows this exact sequence in practice — the timeline can be longer when comments raise substantial issues, or shorter where consultation is dispensed with — but the ordinary sequence set out in the 2025 procedure regulations runs: consultation paper published → at least 21 calendar days for public comment → SEBI publishes its response to comments → Board approval → Gazette notification, which is when the regulation actually becomes law.
This article describes the mechanics of how a regulation comes into being. It takes no position on the merits of any specific SEBI regulation, past, pending or proposed.