The Securities and Exchange Board of India (SEBI) on Tuesday proposed a Common Advertisement Code (CAC) for specified regulated entities, seeking to replace multiple entity-specific advertising frameworks with a single set of rules aimed at reducing compliance burdens while strengthening investor protection.
The proposed code will apply to stock brokers, depository participants, investment advisers, research analysts, online bond platform providers, portfolio managers and mutual funds/asset management companies. It will be incorporated into the SEBI (Intermediaries) Regulations, 2008.
Reporting shift
The regulator has proposed to replace the existing requirement of prior approval for advertisements with a post-issuance reporting mechanism. Regulated entities would be required to report advertisements within 24 hours of publication instead of obtaining approvals beforehand.
“In this digital era, regulated entities publish dozens of social media posts, educational reels, and promotional content pieces daily. Subjecting each item to prior approval is neither efficient nor effective,” the regulator said, inviting public comments by July 14.
SEBI has also proposed allowing regulated entities to engage celebrities for brand or entity-level promotion, subject to prescribed conditions. Celebrity endorsements of specific products or services would not be permitted.
The regulator said the proposed framework seeks to create a unified, technology-enabled advertising regime that balances ease of doing business with investor protection.
Another proposal is to replace all existing entity-specific and exchange-specific advertisement codes with a single Common Advertisement Code, creating a harmonised framework across regulated entities and eliminating regulatory complexity.
Ratings disclosure
SEBI also proposes allowing regulated entities to advertise ratings and rankings assigned by a Past Risk and Return Verification Agency (PaRRVA), subject to prescribed conditions and disclosures. The move is intended to enable entities to communicate legitimate distinctions and improve transparency while ensuring adequate safeguards against misleading claims.
To remove ambiguity, the regulator has proposed revising the definition of “advertisement” to clearly distinguish promotional communications from routine or investor-service communications. It has also proposed an illustrative list of communications that would not be treated as advertisements.
In addition, SEBI has proposed the development of a common digital reporting portal by recognised supervisory bodies for advertisement reporting. The platform is expected to improve operational efficiency for entities registered with multiple supervisory bodies while enabling more effective regulatory oversight.