India’s securities regulatory framework has evolved over several decades through multiple legislations enacted at different points in time. While this approach allowed the law to respond to market developments as they emerged, it also resulted in fragmentation across statutes governing securities issuance, trading, intermediaries and enforcement. In December 2025, the Government of India introduced the Securities Market Code Bill, 2025 in the Lok Sabha with the objective of consolidating and modernising the country’s securities laws into a single comprehensive framework.

The Bill seeks to repeal and subsume the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956 and the Depositories Act, 1996. The Companies Act, 2013 continues to remain the principal legislation governing incorporation and internal management of companies, while the proposed Code is intended to function as the central statute governing securities markets and listed entities.

Background and legislative intent

The stated objective of the Securities Market Code Bill is to simplify the legal architecture governing securities markets, eliminate overlaps in regulatory powers and improve ease of compliance. Over the years, similar concepts such as “securities”, “market intermediaries” and “recognised stock exchanges” were defined differently across statutes, often resulting in interpretational disputes and jurisdictional challenges.

The Bill adopts a unified approach by consolidating these concepts into a single statute and aligning the regulatory framework with the current structure of India’s capital markets, which now includes equity, debt, derivatives, hybrid instruments and electronic settlement systems operating at scale.

Structure of the proposed Code

The Bill is structured to bring together substantive market regulation, enforcement powers and institutional oversight under one legislation. It recognises the Securities and Exchange Board of India as the unified regulator for the securities market and provides a common statutory foundation for regulations currently issued under different Acts.

Key components of the Code include: (a) regulation of securities markets and issuers; (b) recognition and supervision of market infrastructure institutions; (c) registration and oversight of intermediaries; (d) disclosure and investor protection framework; (e) investigation, adjudication and enforcement mechanisms

By consolidating these areas, the Bill seeks to reduce procedural duplication while preserving existing regulatory safeguards.

Key changes relevant to listed companies

While the Bill does not introduce immediate new compliance obligations, several proposed provisions are relevant for listed companies from a governance and regulatory perspective.

The Code expressly empowers SEBI to regulate corporate governance standards for listed entities in the interest of investor protection and market integrity. This includes authority over disclosures, shareholder approvals, related-party transactions and obligations of directors and key managerial personnel where such matters have a market-facing impact. Although these requirements are presently governed through the SEBI (Listing Obligations and Disclosure Requirements) Regulations, the Bill provides explicit statutory backing for such regulation.

The Bill also strengthens the legal basis for continuous disclosure requirements. SEBI is empowered to prescribe disclosure obligations not only for listed companies but also for issuers proposing to access the securities market. This reinforces the principle that disclosure standards are driven by market impact rather than merely corporate form.

Unified treatment of market misconduct

The Securities Market Code Bill consolidates provisions dealing with fraud, insider trading, market manipulation and unfair trade practices under a single statutory framework. Currently, these concepts are addressed through separate regulations supported by different parent statutes.

Under the proposed Code:

Market misconduct is governed through harmonised statutory provisions.
Enforcement powers are exercised through a common investigation framework.

Penalty provisions are aligned across violations.

For listed companies, this consolidation is expected to reduce technical defences based on statutory inconsistencies, while placing greater emphasis on substance and materiality in regulatory assessments.

Enforcement and penalty framework

One of the significant structural changes introduced by the Bill relates to enforcement. Investigative powers, adjudication authority and recovery mechanisms are consolidated into a unified chapter. This replaces the fragmented approach under the existing statutes, where similar powers existed under different legal provisions.

The Bill also rationalises the penalty framework by prescribing broader monetary ceilings and enabling SEBI to determine specific penalties through regulations. This approach is intended to allow proportional enforcement based on the nature and impact of the violation, though it also increases reliance on delegated legislation.

From a compliance standpoint, listed companies may see greater consistency in enforcement processes, even as regulatory discretion becomes more centralised.

Market infrastructure institutions and intermediaries

The Bill introduces a single recognition and supervision framework for market infrastructure institutions such as stock exchanges, clearing corporations and depositories. This replaces multiple approval mechanisms that previously existed under different statutes.

Similarly, registration and regulation of intermediaries are consolidated under the Code, with SEBI empowered to specify eligibility criteria, conduct requirements and risk management obligations through regulations.

Although these provisions primarily affect exchanges and intermediaries, listed companies may benefit indirectly from greater systemic clarity and uniform oversight across the market ecosystem.

Relationship with the Companies Act, 2013

The Securities Market Code does not amend the Companies Act. However, it reinforces the distinction between corporate law compliance and market regulation. While the Companies Act continues to govern matters such as board structure, shareholder rights and managerial appointments, the regulatory perimeter for listed entities is increasingly shaped by securities law considerations.

This reflects the continued evolution of the listed company as a market institution subject to enhanced governance standards beyond those applicable to unlisted companies.

Transition and implementation

The Bill provides for continuation of existing SEBI regulations until they are amended or replaced under the new Code. Accordingly, there is no immediate change in compliance obligations upon enactment. However, over time, regulations are expected to be aligned with the consolidated statutory framework.

For listed companies and other stakeholders, close attention will be required as SEBI undertakes consequential amendments to existing regulations to ensure consistency with the new Code.

The Securities Market Code Bill, 2025 represents a significant step in India’s ongoing effort to modernise its financial regulatory architecture. While the consolidation exercise is largely structural, its long-term implications lie in the creation of a unified securities statute that places market regulation, enforcement and governance within a single legislative framework. For listed companies, the Bill reinforces the centrality of securities law compliance and underscores the importance of continuous engagement with an evolving regulatory landscape.

India’s Securities Market Code Bill: An Overview