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SEBI Proposes Common Advertisement Code for Regulated Intermediaries

On 23 June 2026, the Securities and Exchange Board of India (“SEBI”) released a consultation paper proposing a Common Advertisement Code (“CAC”) for specified SEBI-regulated entities, aimed at harmonising the fragmented advertisement framework currently applicable across intermediaries. Public comments have been invited until 14 July 2026.

Background

At present, advertisement-related compliance obligations for SEBI-regulated entities are spread across multiple regulations, circulars and exchange-level codes. These frameworks broadly pursue the same objective, ensuring advertisements are fair, balanced, transparent and non-misleading but differ materially in procedural requirements such as approval mechanisms, disclaimers and compliance expectations.

SEBI notes that this fragmented framework has become increasingly impractical, particularly in the context of digital and social media advertising.

The proposed CAC would apply to specified investor-facing intermediaries including:

• Stock Brokers
• Depository Participants
• Investment Advisers
• Research Analysts
• Online Bond Platform Providers
• Portfolio Managers
• Mutual Funds / Asset Management Companies
• Any other entity specified by SEBI

Why SEBI is Proposing a Common Code

SEBI identifies three key issues in the current framework:

1. Fragmented Compliance Requirements: Entities registered in multiple capacities may need to comply with multiple advertisement codes and seek approvals from multiple regulators or supervisory bodies for the same communication.
2. Operational Burden of Prior Approvals: Many intermediaries currently require pre-clearance of advertisements from exchanges or supervisory bodies. SEBI notes that this model is inefficient for high-volume digital communications such as social media posts, educational reels and app-based promotions.
3. High Compliance Costs for Smaller Players: Smaller intermediaries such as individual investment advisers, research analysts and newly registered online bond platform providers face disproportionate compliance burdens under the approval-heavy regime.

Key Proposals

1. Shift from Prior Approval to Post-Issuance Reporting

The most significant proposal is SEBI’s move away from a mandatory prior approval framework.

For most advertisements, regulated entities would no longer need prior approval. Instead, advertisements must be reported to the relevant supervisory body within 24 hours of issuance.

This marks a major shift from ex-ante approval to ex-post monitoring. However, celebrity endorsements would remain subject to prior approval.

2. Celebrity Endorsements Allowed at Brand Level

SEBI proposes to permit celebrity endorsements across all specified regulated entities, subject to restrictions.

The endorsement may only be at the brand/entity level and not for specific products or services.

This means a celebrity may endorse a regulated entity’s brand but cannot promote a particular investment product, service or scheme in a manner that may influence investment decisions.

SEBI has also proposed a broad definition of “celebrity,” covering:

• Film and television personalities
• Influencers with over 5 lakh followers per handle
• National-level sportspersons
• Popular anchors and hosts
• Virtual influencers or avatars
• Any person SEBI considers capable of influencing viewers

3. Ratings and Rankings to be Permitted

Current advertisement codes largely prohibit the use of rankings and ratings.

Under the CAC, SEBI proposes to permit use of ratings/rankings only if assigned by a Past Risk and Return Verification Agency (PaRRVA). Such rankings must satisfy safeguards including:

• Methodology disclosure
• Source transparency
• Explanation that rankings are only one factor for investor consideration
• Market-wide comparability across relevant participants

This indicates SEBI’s attempt to balance commercial differentiation with investor protection.

4. Relaxation for Short-Format Digital Content

SEBI acknowledges that full disclaimers are impractical in short-format communications such a SMS, Pop-ups, Push notifications and similar concise digital messaging.

Where space constraints prevent inclusion of full disclosures, entities may provide a hyperlink to complete disclosures hosted on their official website. This is a notable accommodation for digital-first communication models.

5. Educational Content Carve-Out

SEBI proposes that purely educational or investor-awareness content should not be treated as advertisements, provided it carries no promotional intent.

Examples include content explaining:

• SIPs
• Financial concepts
• Balance sheet reading
• General financial literacy

This exemption aims to remove ambiguity that previously discouraged regulated entities from publishing educational material.

However, the exemption is conditional, branding must remain minimal and communications must avoid promotional calls to action.

6. Explicit Prohibition on Dark Patterns

The CAC introduces an express prohibition on the use of dark patterns, incorporating principles from the 2023 Central Consumer Protection Authority guidelines.

SEBI specifically identifies practices such as:

• False urgency (artificial scarcity or countdown pressure)
• Forced action (requiring unrelated steps or disclosures)
• Subscription traps (difficult cancellation flows)

This reflects SEBI’s increasing focus on interface-level investor protection, especially for digital platforms.

Key Compliance Requirements Under the Proposed CAC

1. All advertisements would need to satisfy common baseline standards.
2. Mandatory disclosures include name of regulated entity, SEBI registration number, entity logo (if any) and prescribed disclaimers
3. Advertisements must be true, fair, accurate, complete and umambigous.

Key Prohibitions

Advertisements must not contain:

• False, misleading or exaggerated claims
• Assured / risk-free return claims
• Fixed return claims (except limited cases such as OBPPs)
• Unfair comparisons with competitors
• Misleading asset-class comparisons
• Unsubstantiated performance claims
• Testimonials
• Use of SEBI or market infrastructure institution logos/images without permission
• Offensive or unlawful content

SEBI also proposes restrictions on inducements such as coupons, vouchers, tokens and incentives for trading or app downloads

Supervisory and Enforcement Framework

SEBI proposes a centralised digital advertisement reporting portal to be developed by supervisory bodies. Regulated entities would upload advertisements or links to advertisements within 24 hours of publication. Supervisory bodies would monitor compliance and report violations to SEBI.

Enforcement actions may include:

• Direction to withdraw advertisements
• Restrictions on future advertisements
• Suspension of onboarding new clients
• Monetary penalties
• Summary proceedings under the SEBI (Intermediaries) Regulations, 2008

A 6-month transition period is proposed from notification of the CAC.

Our Take

The CAC is less about changing substantive advertising standards and more about modernising compliance architecture. SEBI is effectively moving from a fragmented, approval-driven framework to a technology-enabled surveillance model. The proposal retains core investor protection safeguards such as prohibitions on misleading claims and guaranteed returns, while relaxing procedural friction for legitimate business communications.

The most consequential shift is the replacement of pre-approval with post-issuance monitoring, signalling SEBI’s recognition that digital advertising cannot be regulated through legacy approval pipelines.

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