SEBI Mandates Pre-Approval for Influencer and AI Avatar Ads

India's Securities and Exchange Board (SEBI) has finalized a Common Advertisement Code, mandating prior approval for ads that feature celebrities, including social media influencers and AI-generated virtual influencers. The new code is set to come into effect in April 2027, 180 days after its official publication in October 2024.

The regulations apply to stockbrokers, mutual funds, investment advisers, and other market intermediaries. Approved in September 2024, the code consolidates and supersedes existing advertising rules for these entities. Each entity's respective supervisory body will be responsible for approving celebrity-led advertisements and reviewing others.

Despite objections raised during a public consultation, notably from MediaNama, which argued that digital ad review at scale is not feasible, SEBI has retained the pre-approval requirement for celebrity advertisements. For non-celebrity ads, the new framework shifts to a post-publication reporting system, requiring firms to submit ads within three days of issuance.

The code also provides clear definitions for 'celebrity,' encompassing influencers exceeding certain follower counts and virtual avatars. Advertisements must avoid misleading claims and include the firm's name, registration number, and mandatory disclaimers.