SEBI Notifies Common Advertisement Code: Celebrities Can Endorse Brands, Not Products

The Securities and Exchange Board of India (SEBI) notified a Common Advertisement Code (CAC) for market intermediaries on 8 October 2026, allowing them to use celebrities for brand-level promotion while barring endorsements of specific financial products or services. The code, inserted into the SEBI (Intermediaries) Regulations, 2008, takes effect on 8 April 2027 and covers stock brokers, depository participants, investment advisers, research analysts, portfolio managers, online bond platform providers, and mutual funds. Separately, SEBI extended the facility to revise the issue size of an initial public offering (IPO) by up to 50 per cent without a fresh draft offer document, and it now covers issues opening on or before 31 March 2027.

What Is SEBI’s Common Advertisement Code?

The Common Advertisement Code is a single set of advertising rules for eight categories of SEBI-regulated financial entities, replacing their separate codes. It prescribes how they may advertise, what they must disclose, which claims are banned, and when celebrities may appear in their promotions.

The code defines an advertisement very broadly. It covers any communication, endorsement or representation in written, audio, visual or verbal form, spread through print, television, radio, podcasts, websites, social media, streaming services, billboards, transit advertising or in-store displays. The test is purpose, not medium. If a communication is issued directly or indirectly by a regulated entity, or on its behalf, and its main effect is to promote, invite or solicit business for a product, service, brand or the entity itself, it falls under the code.

The rules apply only to products and services that come under SEBI’s regulatory purview. A stock broker’s advertisement for a mutual fund distribution service is covered, but an unrelated business venture of the same company is not.

These entities sit at different points in the market chain. A stock broker executes buy and sell orders. A depository participant (DP) holds shares in electronic form for investors. An investment adviser gives personalised advice for a fee, while a research analyst publishes research reports and recommendations. An online bond platform provider (OBPP) runs a digital marketplace for listed bonds. A portfolio manager manages a client’s securities portfolio, and a mutual fund pools money from many investors through an asset management company (AMC). Bringing all of them under one advertising standard removes the earlier situation where similar claims were judged by different rules.

SEBI and the Legal Basis of the Code

The Securities and Exchange Board of India (SEBI) is the statutory regulator of India’s securities market. It was set up in 1988 as an administrative body and received statutory powers through the SEBI Act, 1992, which Parliament enacted on 4 April 1992 as Act No. 15 of 1992. The Act gives SEBI a three-part mandate under Section 11: protect the interests of investors in securities, promote the development of the securities market, and regulate that market. Section 30 of the Act allows SEBI to frame regulations to carry out these functions.

SEBI is headquartered in the Bandra Kurla Complex in Mumbai, with regional offices in New Delhi, Chennai, Kolkata and Ahmedabad. Tuhin Kanta Pandey is its chairperson (as of October 2026). He took charge on 1 March 2025 as the 11th head of the regulator.

The SEBI (Intermediaries) Regulations, 2008 were notified in the Gazette on 26 May 2008 and govern the registration and conduct of market intermediaries. The new advertising rules were inserted into these regulations by the SEBI (Intermediaries) (Second Amendment) Regulations, 2026, issued through notification No. SEBI/LAD-NRO/GN/2026/323 dated 8 October 2026. The amendment adds Chapter IIID, containing Regulations 16G to 16Q, which together form the Common Advertisement Code.

The regulations take effect on 8 April 2027, about six months after publication. Until then, the earlier entity-specific advertisement codes and exchange circulars continue to apply. The delay gives intermediaries time to revise their marketing contracts, train compliance teams and build the reporting systems that the new code expects.

Why SEBI Consolidated Its Advertising Rules

Before the amendment, advertising standards for market intermediaries were scattered across separate instruments. Stock brokers followed exchange circulars. Investment advisers and research analysts had their own master circulars. Mutual funds followed the Fifth Schedule of the SEBI (Mutual Funds) Regulations, 2026 and Chapter 14 of the mutual fund master circular. Portfolio managers had a separate code in their master circular, and online bond platform providers followed yet another annexure.

The result was duplication. A stock broker that also operated as an online bond platform provider had to satisfy two sets of rules at the same time. Small advisers often struggled to judge which disclosure standard applied to a social media post, a podcast or a sponsored video. SEBI also found that the older codes left room for interpretation on whether general financial literacy content counted as an advertisement.

SEBI issued a consultation paper on the Common Advertisement Code on 23 June 2026 and invited public comments until 14 July 2026. The proposal set out four goals: make compliance easier, protect investors through mandatory risk warnings, remove inconsistencies between entity categories, and shift supervision from pre-approval to technology-enabled post-issuance monitoring.

The consultation drew a range of responses. Some participants opposed celebrity endorsements altogether, arguing that investors may follow the face rather than examine the product. Others said SEBI’s proposed follower threshold for social media influencers was too low and should be raised. A section of the industry asked for post-facto reporting even for celebrity advertisements. SEBI’s board cleared the framework in September 2026, and the final notification followed on 8 October 2026.

The final code keeps one exception to the ease-of-business shift. Advertisements featuring celebrities still need prior approval from the supervisory body, or from SEBI where no supervisory body has been designated. For other advertisements, the framework moves the check to the post-publication stage, with reporting requirements to be prescribed through circulars.

Celebrity Endorsements: Brands Allowed, Products Barred

The most visible change is the permission for celebrities to appear in financial advertisements. Under Regulation 16K, a celebrity may endorse a regulated entity at the brand level or the entity level. The advertisement may mention the names of the products or services the entity offers. What it cannot do is make an inducement or a claim, directly or indirectly, about any specific product or service.

The distinction matters. A film actor can say that a broking firm is trustworthy, experienced or technologically advanced. The same actor cannot say that a particular mutual fund scheme will deliver better returns, that a specific advisory service is suitable for retirement, or that a bond platform offers the safest products. SEBI’s reasoning is that a brand endorsement signals a general association with the company, while a product endorsement can shape an investor’s view about suitability or expected outcomes.

Three conditions apply to every celebrity advertisement. First, it needs prior approval from the supervisory body, or from SEBI if no supervisory body has been specified for that entity. Second, the advertisement must carry the prescribed disclaimers. Third, the cost of the celebrity endorsement cannot be passed on to clients, and in the case of mutual funds, it cannot be charged to the scheme. That last rule protects investors from indirectly funding a marketing expense that benefits the AMC’s brand.

The change is significant because celebrity endorsement was earlier allowed only in a limited way for mutual funds, and that too at the industry level with SEBI’s prior approval. Brokers, advisers and portfolio managers had no clear route to use a well-known face. During the consultation, some respondents argued that allowing celebrities would favour large firms that can afford them. SEBI retained the permission but limited its scope to brand promotion, which keeps the celebrity away from product-level claims.

Who Counts as a Celebrity?

A celebrity under the code is a person who falls in any of eight listed categories, including top-50 names in a national celebrity index, lead actors, major sportspersons, television hosts, winners of televised competitions, large-following influencers and virtual influencers.

The definition also excludes founders, promoters, directors, key managerial personnel and senior managers of the advertising entity when they appear in their own firm’s advertisement. A promoter explaining the company’s services is therefore not treated as a celebrity endorsement. The ASCI, whose follower threshold is used for influencers, is a self-regulatory advertising body set up in 1985 and based in Mumbai.

Mandatory Disclosures for Every Advertisement

Every advertisement must identify the entity behind it. Regulation 16I requires the name of the regulated entity, its SEBI registration number, its logo if it has one, and the disclaimers that SEBI specifies from time to time. This rule closes a practical gap. An investor who sees a promotional message on social media should be able to confirm whether the sender is actually registered with SEBI.

The code recognises that some formats leave little room for text. For text messages sent through the Short Message Service (SMS), pop-ups, push notifications and similar short electronic messages, an entity may provide a hyperlink to the full details and disclaimers on its official website when character limits make it impossible to include them in the message.

Equally important is what the code leaves out. Regulation 16J lists communications that are not advertisements. These include educational or informational content meant to spread financial knowledge, provided the entity’s branding is minimal and incidental and the content has no promotional call to action. If such content is paid for from funds earmarked for investor education and awareness, it must be reported to the supervisory body or SEBI for post-facto monitoring. The exemption stops firms from disguising sales pitches as public education.

Other exclusions cover research reports shared with existing clients that make no performance claims, factual lists of products and services, communications required by regulation, responses to a client’s request for information, basic details about the entity, product demonstrations that do not solicit business, greetings and condolence messages, recruitment notices, sponsorship of television shows or events where only the entity’s name and logo appear, and feedback surveys sent to registered clients. A communication that promotes a product or solicits interest in it remains an advertisement even if it is wrapped in educational language.

Regulation 16L lays down general obligations. Advertisements must be true, fair, accurate, complete and unambiguous. They cannot be designed to be misunderstood or to hide the significance of a statement, and they cannot exploit an investor’s lack of experience or knowledge. Excessive technical or legal jargon that confuses rather than informs is also barred. Where an advertisement displays a specific security or scheme as an example, it must carry the disclaimer that the security or scheme is quoted as an example and not as a recommendation, placed on the same page or video frame rather than at the end.

Statistical claims, graphs and charts must cite their source and the period they relate to. Entities cannot offer vouchers, coupons, tokens, monetary certificates or subscription plans to induce trading, reactivate dormant accounts, push investments or encourage app downloads. A suspended entity cannot advertise during the suspension period. If an unauthorised third party issues an advertisement without the entity’s consent, the entity must act within seven days of learning about it, inform the supervisory body and disclose the incident on its website.

Ratings and Rankings: The PaRRVA Route

Advertisements often use star ratings, league tables and comparative rankings to signal quality. Regulation 16N now limits this practice to ratings and rankings assigned by a Past Risk and Return Verification Agency, or PaRRVA. An entity cannot use a self-devised ranking, or a rating whose method is not open to scrutiny.

Four conditions apply. The rating or ranking must be properly explained, either in the advertisement or through a link to the PaRRVA website or the entity’s website, where an investor can read the meaning and methodology. The advertisement must state that ratings and rankings are only one factor among several when choosing a regulated entity. The rating must come from a study or survey that covers all relevant market participants in that category, so that the comparison is complete and objective. SEBI can add further conditions through circulars.

What Is PaRRVA?

The Past Risk and Return Verification Agency (PaRRVA) is an independent body that verifies the historical risk and return claims of investment advisers, research analysts and algorithmic trading providers. Under the Common Advertisement Code, regulated entities may use only ratings or rankings assigned by PaRRVA in their advertisements.

SEBI issued the framework for PaRRVA on 4 April 2025. A pilot phase began on 8 December 2025, and regular services started on 4 May 2026. CARE Ratings Limited was recognised as the PaRRVA, with the National Stock Exchange (NSE) acting as the PaRRVA Data Centre. Investment advisers and research analysts who want to show their track record must enrol with the agency and share their advice or recommendations regularly. The agency then verifies the data prospectively, so an entity cannot claim a verified record for a period before it joined.

The framework is meant to solve a long-standing problem. Advisers and analysts had genuine reasons to show their performance, but the absence of a neutral verifier made it easy for unverified or selectively chosen numbers to reach investors. A common verification standard gives honest firms a way to advertise their record while giving investors a way to compare like with like.

What Advertisements Cannot Say

Regulation 16O lists the claims and techniques that are barred. An advertisement cannot contain content that is false, misleading, luring, biased, deceptive, exaggerated or ambiguous, nor can it rest on assumptions or projections. Testimonials are prohibited outright. This is a notable change, since customer testimonials are a standard marketing device in the financial sector.

No advertisement may promise or assure guaranteed, risk-free or indicative returns, directly or indirectly. A promise of fixed returns is also banned, except for online bond platform providers and any other entity that SEBI may allow in a specified form. The exception reflects the nature of bonds, where the coupon is fixed at issuance, but it does not give a bond platform room to promise that the issuer will not default.

Entities cannot disparage or discredit other regulated entities, their products or services, make unfair comparisons, or imitate another entity’s advertisement. Comparing one product or asset class with a different asset class in a way that creates a misleading impression is barred. Advertisements cannot exploit an investor’s lack of knowledge, use exaggerated slogans that do not match the product’s risk and return profile, or carry the logos, images or symbols of SEBI and market infrastructure institutions unless specifically permitted.

References to past performance must follow SEBI’s prescribed manner, and an advertisement cannot imply that past performance will repeat. Vague descriptors such as high yield, high rated or high returns, used without any basis, are prohibited, as is any content that is indecent, vulgar or offensive. Anything that cannot lawfully be published is also out.

The code adds a separate ban on dark patterns, as specified in Annexure I of the Guidelines for Prevention and Regulation of Dark Patterns, 2023 issued by the Central Consumer Protection Authority (CCPA). Dark patterns are interface designs that push a user towards a choice they did not intend, such as hiding the cost of a subscription, adding an item to a cart without consent, or making cancellation difficult. For a financial advertisement, a dark pattern can turn a disclosure into a formality that the investor never really sees.

Non-compliance can invite action under Chapter V of the Intermediaries Regulations, which deals with defaults and allows SEBI to suspend or cancel registration. SEBI can also proceed under the SEBI Act and direct supervisory bodies such as exchanges, depositories, IAASB, RAASB, AMFI and APMI to act against their members. SEBI’s consultation paper proposed common digital platforms for advertisement reporting, so that an entity registered with more than one body does not file the same material in multiple formats. The operational details are to be issued through circulars.

IPO Issue Size Relaxation Extended to March 2027

The second part of SEBI’s October action concerns the primary market. On 12 October 2026, SEBI communicated to the Association of Investment Bankers of India (AIBI) that issuers may increase or decrease the fresh issue size of an IPO by up to 50 per cent without filing a fresh draft offer document. The relaxation applies to IPOs that open on or before 31 March 2027.

Under the normal framework, a change of more than 20 per cent in the estimated fresh issue size requires the company to file fresh draft documents with SEBI. That means repeating much of the disclosure, review and approval process. The temporary relaxation raises the limit to 50 per cent, provided the main object of the issue does not change. These requirements sit within the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, known as the ICDR Regulations, which govern the terms of public issues, rights issues and preferential allotments.

The procedural conditions are specific. The book running lead manager must file an updated offer document reflecting the revised size and update the relevant sections of the draft red herring prospectus (DRHP), which is the preliminary offer document filed with SEBI. The lead manager must conduct due diligence, record a justification for the revision and make a public addendum available so that investors know the size has changed. The relaxation covers only the fresh issue, which raises new capital for the company. It does not cover the offer for sale (OFS) component, where existing shareholders sell their shares.

SEBI first introduced the concession in April 2026, when volatility linked to the West Asia conflict made it difficult for issuers to fix a fundraising size months in advance. That window was available for draft papers filed until 30 September 2026. The extension to March 2027 responds to representations from AIBI, which argued that IPO sizes often need to change with business needs and market conditions.

The timing reflects a busy primary market. In the July to September 2026 quarter, 69 mainboard IPOs raised ₹90,482 crore and 92 small and medium enterprise (SME) issues raised ₹4,167 crore, taking total fundraising to ₹94,649 crore. India also ended the financial year 2025-26 (FY26) as the world’s largest IPO market by number of issues and the third largest by funds raised. In FY26, 219 companies listed and raised a record ₹1.8 lakh crore, including 108 mainboard IPOs that mobilised ₹1.7 lakh crore.

This relaxation is separate from SEBI’s earlier one-time extension of the validity of IPO observation letters. An observation letter is SEBI’s formal observation on a draft offer document, and it remains valid for a limited period. The October communication deals only with changes to the fresh issue size, not with the validity of those letters.

What the Code Means for Investors and Intermediaries

For investors, the clearest gain is a shorter list of claims that can mislead them. Advertisements can no longer promise assured returns, parade testimonials, hide a rating’s methodology or bury a risk warning behind a link that does not work. When a celebrity appears, the investor knows that the person is speaking about the company and not certifying a particular scheme. When an adviser or analyst shows a track record, the numbers must come through PaRRVA rather than from a self-made performance chart. Separately, an investor with an unresolved complaint against a listed company or a registered intermediary can approach SEBI’s SEBI Complaints Redress System (SCORES), where the entity must file an action taken report within 30 days.

The code also makes the boundary between education and promotion explicit. Purely educational content with minimal branding and no call to action is outside the rules. That gives advisers and analysts room to explain concepts such as systematic investment plans, diversification or bond yields without treating every video as a regulated advertisement. Content funded from investor education budgets still faces post-facto monitoring, which prevents firms from using that exemption to run a soft sales campaign.

For intermediaries, the compliance burden changes shape rather than disappearing. Routine advertisements no longer wait for prior approval, which should shorten campaign timelines and reduce paperwork. In exchange, entities must maintain records, report advertisements after publication, vet celebrity contracts for prior approval, keep endorsement costs out of client charges and mutual fund scheme expenses, and act quickly against unauthorised third-party promotions. A firm that runs campaigns across television, social media, podcasts and text messages will need a single internal review process that covers every format.

The framework also has limits. Celebrity advertisements still need prior approval, so a fast-moving campaign around a market event may not be possible. Smaller brokers and advisers may find brand endorsements expensive, which could widen the visibility gap between large and small firms. Supervisory bodies will need enough staff and technology to monitor a much larger volume of post-issuance reporting. SEBI will issue operational circulars, and the months before 8 April 2027 will show how quickly the reporting portals and internal compliance systems are ready.

The wider context is SEBI’s effort to clean up financial communication at a time when advice travels through social media, podcasts and short videos. The new code does not regulate every influencer who talks about stocks. It does, however, make the registered entity responsible for the advertisements it issues and for unauthorised promotions it fails to challenge. For investors who rely on such content, the practical test remains the same: check the SEBI registration number, read the disclaimer and treat a familiar face as a brand signal, not investment advice.

Key Takeaways

• SEBI notified the Common Advertisement Code on 8 October 2026 through the SEBI (Intermediaries) (Second Amendment) Regulations, 2026, inserting Chapter IIID (Regulations 16G to 16Q); it takes effect on 8 April 2027.
• The code covers stock brokers, depository participants, online bond platform providers, investment advisers, research analysts, mutual funds, AMCs and portfolio managers.
• Celebrities may endorse a regulated entity at the brand or entity level, but cannot make any inducement or claim about a specific product; such advertisements need prior approval, and the cost cannot be passed to clients or charged to a mutual fund scheme.
• Advertisements may use only PaRRVA ratings or rankings; CARE Ratings Limited is recognised as the PaRRVA, with NSE as its data centre, and regular services began on 4 May 2026.
• The code bans guaranteed or risk-free return claims, testimonials, misleading comparisons and dark patterns listed under the CCPA’s Guidelines for Prevention and Regulation of Dark Patterns, 2023.
• SEBI extended the 50 per cent fresh issue size revision facility, against the normal 20 per cent threshold, for IPOs opening on or before 31 March 2027 without a fresh DRHP, and it excludes the offer for sale.