Sebi issues Common Advertisement Code permitting celebrity brand endorsements for market intermediaries

Key facts

• The Securities and Exchange Board of India (Sebi) notified a Common Advertisement Code (CAC) for market intermediaries through a notification dated October 8.
• The CAC applies to regulated entities including stock brokers, depository participants, investment advisers, research analysts, online bond platform providers, portfolio managers, and mutual funds or asset management companies.
• Celebrities may endorse a regulated entity at the brand or entity level, but endorsements cannot include any inducement or claim regarding a specific product or service.
• Any advertisement featuring a celebrity requires prior approval from the supervisory body, or from Sebi if no such body is specified.
• Expenses incurred towards celebrity endorsements cannot be passed on to clients or charged to the mutual fund scheme.
• Advertisements may use only ratings or rankings assigned by a Past Risk and Return Verification Agency, subject to conditions such as proper explanation of methodology and a statement that ratings are only one factor in choosing a regulated entity.
• Purely educational content without promotional intent is excluded from the advertisement code.
• Abbreviated disclosures are allowed in SMSes, push notifications and pop-ups, provided they include hyperlinks to full details and disclaimers on the regulated entity's official website.
• Sebi has amended the intermediaries regulation to implement the code.
• In a separate notification, Sebi relaxed the requirement of maintaining call recordings of communications with institutional investor clients for research analysts and research entities to reduce compliance obligations.