Research Analyst (RA) advertisements must contain specific mandatory information and disclosures. These requirements ensure that clients and prospective clients have all necessary information to make informed decisions. This article provides a comprehensive technical analysis of the mandatory information and disclosures required in RA advertisements.
Regulatory Basis
The mandatory information and disclosures for RA advertisements are specified in the Advertisement Code circular dated April 5, 2023 (SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2023/51).
Mandatory Information in Advertisements
1. Name and Registration Details
Requirement: Every advertisement must contain the following details:
Name of the RA as registered with SEBI
- The exact name as it appears on the SEBI registration certificate
- Not just the brand name or trade name
Registered Office Address
- The complete registered office address
- Must be the address as per the SEBI registration
SEBI Registration Number
- The full SEBI registration number
- Must be accurate and current
Logo/Brand Name/Trade Name
- The logo, brand name, or trade name of the RA
- Must be displayed prominently
CIN of the RA (if applicable)
- For body corporates
- The Corporate Identification Number
2. Accurate, True, and Complete Information
Requirement: Information which is accurate, true and complete in unambiguous and concise language.
Implications:
- No false or misleading statements
- No omissions of material facts
- Clear and understandable language
- No ambiguity
3. Standard Warning
Requirement: Standard warning in legible fonts (minimum 10 font size):
"Investment in securities market are subject to market risks. Read all the related documents carefully before investing."
Critical Requirements:
- Minimum 10 font size
- Legible and readable
- No addition or deletion of words
- Verbatim text
4. Audio-Visual Media Requirements
Requirement: For audio-visual media based advertisements:
- The standard warning in visual media based advertisement must be accompanied by a voice over reiteration
- Both visual and voice over must be audible in a clear and understandable manner
- The standard warning containing 20 words running for at least 10 seconds may be considered as clear and understandable
5. Language Translation
Requirement: Whenever the advertisement is being issued in a language other than English:
- The standard warning must be accurately translated in the language of the advertisement
- The translation must be accurate and complete
6. SMS/Message/Pop-up/Social Media Requirements
Requirement: In case the mode of advertisement is SMS, Message, Pop-up, Social Media, etc. and the details such as full name, logo/brand name, full registered office address, SEBI registration number, membership number of a SEBI recognized supervisory body, and standard disclaimer are not mentioned:
- Official website hyperlink must be provided
- The website must contain all such details
7. Security Examples
Requirement: In case any specific security/securities are displayed in the advertisement as examples:
"The securities quoted are for illustration only and are not recommendatory."
8. Registration Disclaimer
Requirement: Advertisements and communications/correspondences with clients shall include the disclaimer:
"Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors."
Detailed Analysis of Each Disclosure
1. Name and Registration Details
| Element | Requirement | Rationale |
|---|---|---|
| SEBI Registered Name | Exact name from certificate | Identify the registered entity |
| Registered Office Address | Complete address | Provide contact information |
| SEBI Registration Number | Full number | Verify registration status |
| Logo/Brand Name | Prominently displayed | Brand recognition |
| CIN | If applicable | Corporate identification |
2. Standard Warning
| Element | Requirement | Rationale |
|---|---|---|
| Wording | Verbatim | Consistent message |
| Font Size | Minimum 10 | Readability |
| Placement | Clear and visible | Noticeability |
| Translation | Accurate | Understandability |
3. SMS/Social Media
| Element | Requirement | Rationale |
|---|---|---|
| Hyperlink | Required if full details cannot be included | Access to full information |
| Website Content | Must include all details | Complete disclosure |
4. Illustration Disclaimer
| Element | Requirement | Rationale |
|---|---|---|
| Disclaimer | Required for security examples | Prevent misinterpretation |
5. Registration Disclaimer
| Element | Requirement | Rationale |
|---|---|---|
| Disclaimer | Registration does not guarantee performance | Manage expectations |
Sample Compliance Checklist
| Requirement | Compliant? |
|---|---|
| Name as per SEBI certificate included | ☐ |
| Registered office address included | ☐ |
| SEBI registration number included | ☐ |
| Logo/brand name/trade name included | ☐ |
| CIN included (if applicable) | ☐ |
| Information is accurate, true, and complete | ☐ |
| Standard warning included with 10 font size | ☐ |
| Standard warning text is verbatim | ☐ |
| Audio-visual warning has voice over | ☐ |
| Translation is accurate (if applicable) | ☐ |
| Website hyperlink provided (if applicable) | ☐ |
| Illustration disclaimer included (if applicable) | ☐ |
| Registration disclaimer included | ☐ |
Common Compliance Gaps
1. Using Brand Name Instead of Registered Name
Some RAs use only their brand name without the SEBI-registered name.
Solution: Include the SEBI-registered name along with the brand name.
2. Incomplete Standard Warning
Some RAs use an incomplete or modified version of the standard warning.
Solution: Use the exact wording without any changes.
3. Inadequate Font Size
Some RAs use font size smaller than 10 for the standard warning.
Solution: Use at least 10 font size.
4. No Website Hyperlink in SMS/Social Media
Some RAs do not provide a hyperlink in SMS or social media advertisements.
Solution: Provide a hyperlink to a webpage with all required information.
5. Missing Registration Disclaimer
Some RAs omit the registration disclaimer.
Solution: Include the registration disclaimer in all advertisements.
Conclusion and How Anuj Desai & Associates Can Help
Mandatory information and disclosures are essential for RA advertisement compliance.
Anuj Desai & Associates offers specialized services to help RAs comply with advertisement disclosure requirements:
- Review of all advertisements for mandatory information
- Guidance on disclosure inclusion and placement
- Compliance audit and advisory
Contact us today to ensure your advertisements contain all mandatory information. Our team will review your advertisements and provide a tailored compliance roadmap.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified professionals for legal and compliance matters. Anuj Desai & Associates is a SEBI compliance consulting firm based in India.