Taking lessons from the controversy involving its former Chairperson, the Securities and Exchange Board of India (SEBI) has amended regulations governing employee service. A new clause has been added prescribing liquidation of all non-permitted investment at the time of joining. In addition, employees will need to disclose details of their professional interests during the last three years.These changes are part of the amendments to “The Securities and Exchange Board of India (Employees’ Service) Regulations,” published in the official gazette on July 11. In the substituted regulation 64 related with ‘Restrictions on investment’, the term ‘non permitted investment’ has been used for restriction on an employee or his family members during the employee’s period of service with SEBI. The term includes investments in equity, instruments convertible into equity, and investment or trading in derivatives of equity or commodity.However, investment through a pooled investment vehicle — if the scheme of such pooled investment vehicle is professionally managed by an entity regulated by any financial sector regulator — and investment in units of InVITs and REITs will not part of ‘non permitted investment’A new regulation 64A has been also been added, which prescribes relaxation from restrictions on investments by family members during an employee’s period of servic. Accordingly, there will be no restriction on shares acquired by the spouse under an employee stock options plan. “In case of technical violations arising out of actions of spouse and/or dependent family members, such an inadvertent action shall not be treated as misconduct by the employee affecting his career progression. However, in appropriate cases, penalty imposed may be in the nature of monetary penalty,” the regulation clarified.