SEBI (Intermediaries) (Second Amendment) Regulations, 2026: Common Advertisement Code and AI virtual influencers

SEBI's rules on advertising by regulated entities were spread across separate codes for different classes of entity. On 23 June 2026 it released a Consultation Paper on Common Advertisement Code for Specified SEBI Regulated Entities.²⁴

The draft would have sat inside the SEBI (Intermediaries) Regulations, 2008 and covered stock brokers and depository participants, investment advisers and research analysts, online bond platform providers, portfolio managers and mutual funds, with SEBI able to add more entities. It defined "advertisement" broadly to include print, broadcast, digital and outdoor media, including podcasts, streaming services, social media and online news sites. Comments were due on 14 July 2026, according to MediaNama.⁴

The draft proposed to treat a "virtual character", meaning a fictional avatar with lifelike human traits that influences its audience, and covering AI avatars, as a celebrity.⁴ The SEBI Board met on 24 September 2026 (PR No. 59/2026)⁵ and, according to MediaNama, approved the final code that day. The SEBI (Intermediaries) (Second Amendment) Regulations, 2026 were published in the Gazette of India on 9 October 2026, according to MediaNama; SEBI's register lists them under 10 October 2026.¹³

According to MediaNama's analysis of the final text, the code covers stock brokers, online bond platforms, depository participants, investment advisers, research analysts, mutual funds and asset management companies and portfolio managers, and supersedes their existing advertisement codes. Supervisory bodies include the stock exchanges (for brokers and online bond platforms), depositories, the Investment Adviser Administration and Supervisory Body, the Research Analyst Administration and Supervisory Body, AMFI for mutual funds and the Association of Portfolio Managers in India.³

Celebrities and virtual influencers. "Celebrity" includes those in a national publication's top-50 celebrity index in the past year, lead actors in mainstream films, television or OTT series, influencers above the ASCI follower threshold on a single platform, national or international sportspersons, television hosts of at least one season or ten episodes, winners, runners-up or progressing contestants on popular shows, virtual influencers, and anyone SEBI or a supervisory body considers capable of influencing viewers. A virtual influencer is a computer-generated person or avatar with realistic human characteristics. Founders, promoters, directors and senior management in their own firm's advertisements are excluded from the celebrity definition.³

Each advertisement featuring a celebrity needs prior approval from the supervisory body, or SEBI if none exists, which must decide within four working days. Celebrities may endorse the firm at the brand level but cannot make claims about particular products or services, and firms cannot pass celebrity costs to clients or charge them to a mutual fund scheme.³

Other advertisements. No prior approval is needed. Firms must upload each advertisement to the supervisory body's portal within three working days of issue, and the supervisory body must review it within four working days. The reporting mechanics are left to a future SEBI circular, which had not been issued when MediaNama wrote.³

Content rules. Advertisements must carry the firm's name, SEBI registration number, logo and SEBI-specified disclaimers; statistics and charts must cite source and date. They may not contain false, misleading or exaggerated claims, testimonials, guaranteed, risk-free or fixed returns (except for online bond platforms), vague terms such as "high returns" without basis, disparagement of rivals, misuse of SEBI logos, incentives such as vouchers or coupons to induce trading or app downloads, ratings or rankings from anyone other than a Past Risk and Return Verification Agency, or the dark patterns listed in Annexure I of the CCPA's 2023 guidelines. If a third party runs an unauthorised advertisement for a firm, the firm must act within seven days, including by legal action, and tell its supervisory body and disclose the incident on its website.³

SEBI received 412 responses across five proposals, 83% of them in agreement. The final code changed the reporting window for ordinary advertisements from 24 hours to three working days after 28 objections; stopped treating founders and senior management in their own firm's advertisements as celebrities; tied the influencer threshold to ASCI's figure, which ASCI can revise, after 17 respondents proposed at least 10 lakh followers against the draft's five lakh; set four-working-day deadlines for supervisory-body approvals and reviews; and added a ban on vague terms such as "high returns" used without basis. SEBI rejected suggestions to drop post-issuance reporting, to drop celebrity prior approval and to remove the testimonial ban.³

The code is not an AI regulation in general, but it expressly names AI-generated personalities. By classing virtual influencers as celebrities, it subjects their advertisements to the stricter pre-approval track, which is the regime that applies to human celebrities.³

MediaNama identified several open points. First, if a broker uses a virtual influencer, the advertisement may also need to be labelled under India's IT Rules on synthetically generated information, which would put the same content under both SEBI and MeitY, and the article did not resolve how the two regimes interact. Second, stock exchanges will approve celebrity advertisements for their own member brokers, raising questions about the approver's incentives. Third, a founder with a large following can promote the firm without approval because of the founder exemption. Fourth, the code does not address AI-generated investment advice, nor crypto and prediction-market advertisements, which fall outside SEBI-regulated entities.³

MediaNama, which had made submissions on the draft, argued that pre-approval and review of advertisements at scale would be difficult, that banning testimonials while allowing celebrity endorsements is contradictory, that follower thresholds let firms shift to micro-influencers and that AI advice liability should be addressed; the first three concerns remained in the final code, and the question of AI advice liability was not addressed.³

The code complements SEBI's other AI work, including its use of AI to monitor social media for fraud and its separate rule-making on responsibility for AI tools used by regulated entities, which are covered in another entry.

As of 15 October 2026 the Second Amendment Regulations have been notified but have not yet taken effect. They commence 180 days after publication in the Gazette, in April 2027.³ SEBI's detailed circular on how advertisements are to be reported to supervisory bodies had not been issued, and the sources reviewed do not show what ASCI follower number will be used as the influencer threshold.³

The SEBI register page for the regulations lists only the title and date, so the wording of the final regulations was not read directly for this entry; the description of the final code relies on MediaNama's analysis.¹