SEBI Proposes Common Advertisement Code for Regulated Entities

SEBI has released a consultation paper proposing the introduction of a Common Advertisement Code (CAC) for specified regulated entities in the securities market. The proposal seeks to establish a uniform framework governing advertisements, replacing the existing entity-specific requirements with a harmonised code.

The proposed framework is intended to simplify compliance, promote consistency and enhance transparency in advertisements issued by regulated entities.

1. Common Advertisement Code Proposed

SEBI has proposed a Common Advertisement Code (CAC) that will serve as a unified framework for advertisements issued by specified regulated entities.

The proposed code seeks to replace the existing advertisement norms prescribed separately under different regulatory frameworks.

2. Regulated Entities Covered

The proposed Common Advertisement Code will apply to various SEBI-regulated entities, including:

• Stock Brokers;
• Depository Participants;
• Investment Advisers;
• Research Analysts;
• Portfolio Managers; and
• Mutual Funds.

The unified framework is intended to ensure consistent advertising standards across the securities market.

3. Replacement of Entity-Specific Advertisement Frameworks

SEBI has proposed replacing the current entity-specific advertising requirements with a single, common code.

This is expected to:

• Eliminate regulatory inconsistencies;
• Simplify compliance obligations; and
• Promote uniform advertising practices across regulated entities.

4. Post-Issue Reporting in Place of Prior Approval

One of the key proposals is to replace the existing prior approval requirement for advertisements with a post-issue reporting mechanism.

The proposed change aims to reduce procedural delays while maintaining regulatory oversight through reporting requirements.

5. Celebrity Endorsements Permitted with Safeguards

The consultation paper also proposes permitting celebrity endorsements in advertisements issued by regulated entities.

Such endorsements would be allowed subject to the prescribed:

• Conditions;
• Disclosures; and
• Regulatory safeguards.

The proposal seeks to balance marketing flexibility with investor protection.

6. Objective of the Proposal

The proposed Common Advertisement Code aims to:

• Establish a uniform advertisement framework across regulated entities;
• Simplify compliance requirements;
• Reduce procedural burdens;
• Promote transparency and responsible advertising practices; and
• Strengthen investor protection through appropriate disclosures.

7. Public Comments Invited

SEBI has invited comments and suggestions from stakeholders on the proposed Common Advertisement Code contained in the consultation paper.

8. Key Takeaway

SEBI has proposed introducing a Common Advertisement Code (CAC) for specified regulated entities, including stock brokers, depository participants, investment advisers, research analysts, portfolio managers, and mutual funds. The proposal seeks to replace entity-specific advertising frameworks with a uniform code, introduce post-issue reporting rather than prior approval, and permit celebrity endorsements subject to prescribed conditions and disclosures.

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