SEBI Proposes Common Advertisement Code for Specified Regulated Entities

 

Background and Context

The Securities and Exchange Board of India (SEBI) released a Consultation Paper on June 23, 2026, proposing a Common Advertisement Code (CAC) to replace the existing fragmented, entity-specific advertisement frameworks that currently govern regulated entities in the Indian securities market. The CAC is proposed to be embedded in the SEBI (Intermediaries) Regulations, 2008, and would apply uniformly across Stock Brokers, Depository Participants, Investment Advisers, Research Analysts, Online Bond Platform Providers, Portfolio Managers, and Mutual Funds/Asset Management Companies (AMCs).

The existing advertisement regime is characterised by a multiplicity of entity-specific and exchange-specific codes, each with varying requirements, prior approval processes, and reporting mechanisms. This has resulted in regulatory complexity and disproportionate compliance burden for regulated entities. The proposed CAC seeks to address these concerns by establishing a harmonised, principles-based framework that balances ease of doing business with robust investor protection.

Key Proposals under the Common Advertisement Code

a) Transition from Prior Approval to Post-Issue Reporting

One of the most significant departures from the existing framework is the proposed abolition of mandatory prior approval for advertisements. Under the CAC, regulated entities would be required to submit post-issuance reports within 24 hours of publishing an advertisement. This shift is expected to significantly reduce turnaround time and operational bottlenecks, enabling regulated entities to respond more agilely to market developments while maintaining regulatory accountability.

b) Celebrity Endorsements Permitted

The CAC proposes to permit regulated entities to engage celebrities for brand-level or entity-level promotion, subject to prescribed conditions and prior approval. This marks a notable liberalisation from the current position, under which celebrity endorsements have been a contested area. The prior approval requirement specifically for celebrity endorsements is retained as a safeguard, reflecting the heightened potential for investor influence that such endorsements carry.

c) Unified Advertisement Code

All existing entity-specific and exchange-specific advertisement codes are proposed to be replaced by a single CAC. This consolidation is intended to eliminate regulatory fragmentation, reduce the compliance burden on entities operating across multiple segments, and ensure a consistent standard of investor communication across the securities ecosystem.

d) Recognition of PaRRVA Ratings and Rankings

The proposed framework permits regulated entities to advertise ratings and rankings assigned by the Past Risk and Return Verification Agency (PaRRVA), subject to prescribed conditions. The recognition of PaRRVA-assigned ratings in advertisements is envisaged to enable regulated entities to communicate legitimate performance distinctions to investors, while promoting transparency and ensuring adequate safeguards against misleading claims.

e) Greater Clarity on What Constitutes an Advertisement

To remove the ambiguity that has persisted in the existing framework regarding the scope of the term "advertisement", the CAC proposes a revised definition that clearly delineates promotional communications from routine, factual, and investor-service communications. Additionally, an illustrative list of communications that will not be treated as advertisements is proposed, providing regulated entities with greater clarity and predictability in their compliance obligations.

f) Common Reporting Portal

The framework proposes that Supervisory Bodies shall develop digital platforms for advertisement reporting by regulated entities. For entities subject to multiple supervisory bodies, a common platform is envisaged to prevent duplication and streamline compliance. This technology-enabled reporting mechanism is expected to bring operational efficiency and enhance regulatory oversight simultaneously.

Regulatory Significance

The proposed CAC represents a meaningful step in SEBI's ongoing effort to rationalise and modernise the regulatory framework governing the conduct of market intermediaries. The shift from a prior-approval model to a post-issuance reporting regime is consistent with the broader regulatory philosophy of reducing unnecessary process friction while placing greater responsibility on regulated entities to exercise internal compliance oversight. At the same time, the retention of prior approval for celebrity endorsements reflects a calibrated approach that recognises the distinct risks associated with high-visibility promotional activities in the financial services sector.

Practitioners advising Stock Brokers, Depository Participants, Investment Advisers, Research Analysts, Portfolio Managers, Online Bond Platform Providers, and AMCs should note that the final CAC, once notified, will necessitate a review of existing internal advertisement approval processes, compliance calendars, and disclaimers. The revised definition of "advertisement" and the illustrative exclusion list will be particularly relevant in determining the applicability of the code to investor communications, social media content, and educational material.