Candour Legal – Best Lawyers in Ahmedabad | Law firm in Ahmedabad
India’s securities regulator has proposed what may be its most consequential overhaul of financial services advertising since the original SEBI (Intermediaries) Regulations, 2008. The consultation paper released on Tuesday 23 June 2026 reflects a recognition that the advertising landscape for SEBI-regulated entities — driven now by Instagram reels, YouTube channels, social media influencers, and app-push notifications — has long outpaced the regulatory framework designed for a print-and-television era. The result has been a patchwork of six different advertisement codes, inconsistently applied across different intermediary categories, creating compliance arbitrage that the CAC is designed to eliminate.
Key Takeaways
- SEBI’s consultation paper dated 23 June 2026 proposes a single Common Advertisement Code (CAC) to replace six separate entity-specific frameworks for stock brokers, depository participants, investment advisers, research analysts, portfolio managers, mutual fund AMCs, and online bond platform providers. The CAC is proposed as a chapter under the SEBI (Intermediaries) Regulations, 2008.
- Celebrity endorsements permitted at the regulated entity’s brand or corporate level only — not for specific products or services. Prior approval from the relevant supervisory body remains required for celebrity content. Definition of ‘celebrity’ now includes social media influencers with 5 lakh+ followers, OTT lead actors, reality show winners and anchors, and AI-generated digital avatars.
- Prior approval for routine advertisements replaced by post-issuance reporting within 24 hours via a unified digital portal. This is the single biggest operational change for compliance teams.
- Dark patterns (as defined by the Central Consumer Protection Authority 2023), false return claims, misleading testimonials, promises of fixed returns, and regulator logo misuse are explicitly prohibited.
- Ratings and rankings from a recognised Past Risk and Return Verification Agency (PaRRVA) may now be used in advertisements, subject to prescribed disclosures.
- Costs of celebrity endorsement campaigns cannot be passed on to investors through expense ratios or customer charges.
- Direct Market Access (DMA) is proposed to be extended to all investors — currently available only to institutional investors — with appropriate safeguards.
- Comment period closes 14 July 2026. Six-month transition period from final notification proposed. This is a consultation paper — SEBI board approval and formal notification are required before it takes effect.
The Six Frameworks the CAC Replaces
The regulatory fragmentation the CAC addresses is genuine. As of today, advertisement obligations for SEBI-regulated entities are governed by six separate instruments: the SEBI Circular on Advertisement Code for AMCs and Mutual Funds; NSE and BSE circulars for stock brokers; SEBI’s advertisement guidelines for Investment Advisers under the SEBI (Investment Advisers) Regulations, 2013; advertisement rules for Research Analysts under the SEBI (Research Analysts) Regulations, 2014; advertisement guidelines for Portfolio Managers under the SEBI (Portfolio Managers) Regulations, 2020; and the OBPP advertisement framework under the SEBI (Online Bond Platform Providers) Regulations, 2022. Each carries different definitions, different prior approval requirements, different disclosure standards, and different enforcement mechanisms. The CAC collapses all six into a single instrument embedded in the SEBI (Intermediaries) Regulations, 2008.
The Celebrity Endorsement Framework: What Is and Is Not Permitted
The celebrity endorsement proposal is the most attention-grabbing element, but the regulatory intent is precise. The existing position — celebrity endorsements not permitted at product level, permitted at industry level for AMCs only with prior SEBI approval — is maintained and extended with greater specificity.
Under the proposed CAC, a regulated entity may engage a celebrity to promote its brand or entity name. The celebrity may appear in advertising that associates the entity with general attributes — reliability, scale, technology, accessibility — but may not endorse specific investment products, schemes, strategies, or expected returns. The consultation paper draws a clear distinction between brand endorsement (a general association with the entity, permitted) and product endorsement (creating perceptions of suitability or expected outcomes that may mislead investors, prohibited).
Prior approval from the relevant supervisory body or exchange is retained for celebrity endorsements — this is the carve-out from the general shift to post-issuance reporting, because the reputational and investor-influence risk of a celebrity endorsement is categorically different from a routine advertisement.
The definition of ‘celebrity’ extends beyond conventional Bollywood actors and cricketers to cover: social media influencers with 5 lakh or more followers on a single handle; OTT lead or co-lead actors in prominent shows; winners, runners-up, or anchors of popular competitive reality shows; and AI-generated digital characters or fictional human-like avatars who hold influence over followers. This last category is particularly significant — it is the first time a SEBI regulation has explicitly addressed AI-generated influencers.
The 24-Hour Post-Issuance Reporting Model
The shift from prior approval to post-issuance reporting for routine advertisements is the structural change with the greatest operational compliance impact. Under the current framework, most regulated entities must obtain prior approval before publishing any advertisement. The CAC replaces this with a requirement to report every advertisement to the supervisory body within 24 hours of issuance via a unified digital portal. For mobile-first formats — SMS, push notifications, pop-up communications — abbreviated disclosures are permitted, provided a hyperlink to the full disclosure on the entity’s official website is included.
The compliance implication is direct: the shift to post-issuance reporting does not reduce the compliance burden — it changes its character. The approval bottleneck is removed, but the monitoring and reporting obligation intensifies. Every advertisement must be logged, tagged, and reported within 24 hours. For large intermediaries running hundreds of simultaneous digital campaigns, this is a significant operational change that will require investment in compliance technology systems.
Dark Patterns, False Claims, and Prohibited Content
The CAC’s prohibitions align SEBI’s advertisement framework with the Central Consumer Protection Authority (CCPA) Guidelines for Prevention and Regulation of Dark Patterns, 2023. Dark patterns — deceptive design elements that manipulate users into taking actions they did not intend — are now explicitly prohibited in advertisements by SEBI-regulated entities. This covers hidden disclosures after commitment, fake countdown timers creating artificial urgency, disguised advertisements presented as editorial content, and interfaces that make cancellation harder than subscription.
Beyond dark patterns, the CAC prohibits: false performance claims not substantiated by PaRRVA-verified data; any promise of fixed returns; misleading testimonials; misleading product or asset class comparisons; use of regulator or exchange logos implying performance endorsement; and passing celebrity endorsement costs to investors through expense ratios or customer accounts.
PaRRVA-Backed Ratings and Rankings in Advertising
One commercially significant proposal is permission to use ratings and rankings assigned by a Past Risk and Return Verification Agency (PaRRVA) in advertisements. The existing framework restricts performance rankings in mutual fund and broker advertising — a restriction the industry has long sought to ease. The CAC permits PaRRVA-verified ratings to be used in advertisements, subject to prescribed disclosures about methodology, period, and benchmarking basis. This gives AMCs, brokers, and other entities a legitimate, regulator-sanctioned channel to highlight superior performance in their marketing material.
DMA for All Investors: The Parallel Proposal
Alongside the CAC, the consultation paper contains a proposal to extend Direct Market Access to all categories of investors. DMA — buying and selling securities directly on the exchange without routing through a broker — is currently available only to institutional investors. SEBI’s proposal would make it available to retail investors as well, subject to appropriate technological infrastructure and risk management safeguards. For brokers, this proposal has potential revenue implications that deserve close analysis before the 14 July 2026 comment deadline.
What Regulated Entities and Compliance Teams Must Do Now
The consultation paper is open for public comment until 14 July 2026. Regulated entities should treat the next three weeks as a window for substantive engagement. Compliance and legal teams should immediately audit existing advertising practices against the CAC’s prohibited content list. Dark patterns in onboarding flows and app interfaces, testimonials on websites that include return claims, and social media posts by associated persons that blur the line between education and solicitation are the three highest-risk categories. The six-month transition period from notification means that, if the CAC is finalised by end-2026, compliance frameworks will need to be operationalised by mid-2027.
Looking Ahead
The CAC is the latest in SEBI’s series of moves to modernise regulatory infrastructure for a digital-first financial services market. The celebrity endorsement framework, despite being the most attention-grabbing element, is not the most legally consequential. The shift from prior approval to 24-hour post-issuance reporting and the explicit prohibition on dark patterns will create more day-to-day compliance work than the celebrity endorsement question. SEBI has signalled clearly that it intends to bring India’s financial services advertising into alignment with the digital reality its investors already inhabit. The 14 July 2026 comment deadline is tight.
Frequently Asked Questions
What is SEBI’s Common Advertisement Code (CAC)?
The SEBI Common Advertisement Code is a proposed unified advertising framework for all SEBI-regulated entities, released as a consultation paper on 23 June 2026. It proposes to replace six separate entity-specific advertisement codes with a single code embedded in the SEBI (Intermediaries) Regulations, 2008.
Are celebrity endorsements now allowed for mutual funds and stock brokers?
Under the proposed CAC, celebrity endorsements are permitted at the brand or entity level only — not for specific products or services. Prior approval from the relevant supervisory body remains required. Celebrities may promote an AMC’s brand generally but cannot endorse specific mutual fund schemes or claim returns.
What changes for compliance teams under the 24-hour reporting model?
Prior approval for routine advertisements is removed. Regulated entities must report every advertisement to their supervisory body within 24 hours of issuance via a unified digital portal. The shift is from advance approval to continuous post-issuance logging and reporting.
What is prohibited under the Common Advertisement Code?
Dark patterns as defined by CCPA 2023 guidelines; false or unverified performance claims; promises of fixed returns; misleading testimonials; misleading product or asset class comparisons; use of regulator or exchange logos implying performance endorsement; celebrity endorsements of specific products; and passing celebrity endorsement costs to investors.
When will the SEBI CAC take effect?
The CAC is currently a consultation paper. Comments close 14 July 2026. A six-month transition period from the date of final notification is proposed. Based on SEBI’s standard timeline, the CAC is unlikely to take effect before mid-2027.
What is the DMA proposal in the same consultation paper?
SEBI has separately proposed extending Direct Market Access to all investors — currently available only to institutional investors. DMA allows direct buying and selling of securities without routing through a broker. Brokers should analyse this proposal and consider submitting comments before 14 July 2026.
Speak to Candour Legal’s Securities and Regulatory team
Candour Legal advises AMCs, stock brokers, investment advisers, research analysts, and portfolio managers on SEBI advertisement compliance, regulatory submissions, and the transition to the new Common Advertisement Code framework.
About the author
Manasvi Thapar, Founding Advocate at Candour Legal, advises financial market intermediaries, AMCs, brokers, and investment advisers on SEBI regulatory compliance, securities law, and corporate governance.
Candour Legal is a full-service Indian law firm with offices in Ahmedabad, Mumbai, and New Delhi. More on our practice areas.
