SEBI’s common advertising code opens a controlled route to celebrity promotion

SEBI has finalised a Common Advertisement Code covering stock brokers, bond platforms, advisers, researchers and fund businesses. The notification is dated 8 October and was posted on 10 October. It takes effect on the 180th day from publication in the Official Gazette.[1]

Celebrity endorsements will be permitted at brand or entity level with prior supervisory approval. They may name products, but cannot make product-specific claims or inducements. The endorsement expense cannot be passed to clients or charged to a mutual-fund scheme.[1]

SEBI’s June consultation identified a fragmented system of advertising requirements across regulated entities. Its proposed common approach sought to streamline compliance, distinguish promotional material from routine communication and move most advertisements towards reporting after publication, while retaining prior approval for celebrity campaigns.[2]

The final regulations leave reporting requirements to SEBI’s further specifications. Brokers should therefore distinguish the adopted advertising standards from the June proposal’s suggested reporting mechanics.[1]

NSE’s current member guidance still describes prior approval for promotional websites, social posts, brokerage plans, app promotion and material from business partners. It also requires controls over employees and channel partners who publish such content. Those existing processes give firms an identifiable workflow to update as the common regime is implemented.[3]

The new code excludes educational communication only with minimal incidental branding and no promotional call to action. Product promotion or solicitation brings a communication back within the advertising definition.[1]

For unauthorised third-party advertising, firms must initiate appropriate action within seven days of learning of it, notify their supervisor and publish details on their website.[1]

The transition is also a distribution project. Updating a central marketing template will have limited effect if affiliates, employees and business partners continue circulating older approved creatives. NSE’s guidance already makes the member responsible for relevant promotional content across those channels, giving compliance teams a practical starting point for the change.[3]

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