July 13th, 2026

A. Cover Story

[A.1] SEBI’s New Proposal on Common Advertisement Code for Specified Regulated Entities: A shift from pre-clearance Gatekeeping to 24-Hour Accountability

Imagine running a modern digital marketing campaign where every social media post, educational reel, or push notification has to wait for days or weeks to get regulatory pre-approval. In today’s fast-paced financial ecosystem, this traditional gatekeeping model is severely hampering the ease of doing business approach and has eroded the topical relevance of time-sensitive content.

As an answer to this problem, the Securities and Exchange Board of India (SEBI) has issued a Consultation Paper on a Common Advertisement Code (CAC). SEBI is proposing to overhaul its fragmented, entity-specific rules and consolidate them into a unified statutory chapter under the SEBI (Intermediaries) Regulations, 2008. The goal is to harmonise compliance across stockbrokers, mutual funds, investment advisers (IAs), research analysts (RAs), and online bond platforms (OBPPs) while shifting toward a technology-driven, post-issuance monitoring architecture.

The 24-Hour Post-Issuance Reporting Model

In a massive regulatory relief, the requirement for mandatory prior approval for stockbrokers, OBPPs, IAs, and RAs is proposed to be scrapped. Instead, intermediaries can publish advertisements instantly, provided they upload the content to a centralised digital reporting portal within 24 hours of issuance.

Brand-Level Celebrity Endorsements Permitted

Overturning absolute prohibitions, SEBI will allow regulated entities to leverage celebrities and major finfluencers (defined as individuals with over 5 lakh followers, top OTT actors, or national athletes). However, a strict boundary is drawn. Celebrities can only endorse the brand or entity name, not specific financial products or services. Crucially, celebrity ads still require mandatory prior approval from supervisory bodies.

Greenlight for Ratings and Rankings via PaRRVA

Intermediaries can now use ratings and rankings in their marketing copy, provided they are independently assigned by a Past Risk and Return Verification Agency (PaRRVA) and accompanied by clear methodology disclosures.

Exemptions for Short-Format Media & Education

Due to the digital constraints, SEBI is planning to permit abbreviated disclosures via hyperlinks for formats like SMS, pop-ups, and push notifications as they allow limited characters. Furthermore, genuine educational or investor awareness content with zero promotional intent or call-to-action is completely exempt from the Code.

Strict Prohibitions on Dark Patterns

The code explicitly outlaws deceptive UI/UX practices, target-hitting metrics, and dark patterns, including creating false urgency, deploying forced actions, or setting up subscription traps to trick investors.

Operational & Business Impact

It is expected that the shift away from pre-clearance removes a massive operational bottleneck. Once the code is in place, the campaigns can go live to capture market trends in real time. But it must be noted that this will shift the entire burden of risk onto the internal compliance. As the SEBI’s supervisory bodies will only conduct strict post-issuance monitoring, any single non-compliant live ad could trigger immediate orders to withdraw content, stop client onboarding, or face heavy financial penalties. That means internal review protocols must become bulletproof.

Further, with the formal inclusion of social media influencers under the celebrity definition, compliance teams must establish robust vetting frameworks. Intermediaries will also be held accountable for unauthorised third-party ads. The code mandates that entities must initiate a legal action within 7 days against any unauthorised platform using their name and prominently list these incidents on their website.

Firms operating multiple licenses (e.g., a stockbroker who also runs an OBPP) will no longer have to cross-file across different exchange systems. The introduction of a unified, centralised digital advertisement reporting system will streamline workflows, though it requires compliance teams to adapt to automated API-linked uploading architectures to meet the strict 24-hour deadline.

Be it as it may, the bottom line remains that SEBI is granting the market the commercial freedom it has long requested for digital storytelling, but it comes at the price of absolute internal accountability.

B. Regulatory updates

[B.1] Key Decisions at SEBI Board’s Meeting Dated 19 June 2026

The following key regulatory decisions were approved by the Securities and Exchange Board of India (SEBI) during its 214th Board Meeting held on June 19, 2026 (Press Release No. 33/2026):

Simplified Transmission of Securities

The transmission of securities, that is, transferring assets to legal heirs after an investor’s death, was often hindered by cumbersome documentation and procedural delays. The SEBI board has approved the introduction of a Quick Transmission Processing (QTP) for small-value claims up to ₹10,000 for physical and ₹30,000 for dematerialised holdings with minimal documentation. Further, thresholds for simplified documentation have been doubled to ₹10 lakh for physical and ₹30 lakh for demat holdings. Furthermore, mandatory submission of PAN, probate of wills, and separate NOCs are either removed or simplified. This significantly lowers procedural hurdles for legal heirs, reducing costs and accelerating the settlement of claims for deceased investors.

Re-introduction of Open Market Buybacks

Previous buy-back regulations relied heavily on tender offers and book-building, as buying from the open market was paused in 2025. With shifts in the taxation framework, SEBI sought to reintroduce open market buy-backs through stock exchanges. Effective August 1, 2026, the SEBI Board has permitted companies to again undertake buy-backs through stock exchanges. Key safeguards include a 66-working-day completion limit, a 40% minimum fund utilisation mandate in the first half, and freezing promoter holdings at the ISIN level to prevent inadvertent trading. Additionally, the appointment of a merchant banker is now discretionary. This change will provide companies with greater flexibility and efficiency in capital allocation while ensuring market transparency and preventing promoter-led market manipulation.

Intraday Borrowing for Mutual Funds

Mutual funds often face temporary liquidity mismatches during trading hours due to differences in settlement timings for pay-ins/pay-outs or forex obligations. SEBI Board has permitted AMCs to avail intraday borrowings for specific operational needs (e.g., settlement mismatches, derivative MTM payments). This is subject to strict safeguards. It cannot be used for leverage, must be repaid by the end of the day, and requires board-approved policies. This permission ensures smoother operational liquidity management and minimises the risk of settlement failures.

GARUDA Mechanism for AIFs

Alternative Investment Funds (AIFs) faced lengthy timelines for launching new investment schemes. The SEBI Board has approved the “Green-Channel: AIF Rollout Upon Document Acknowledgement” (GARUDA) mechanism. Now, the regular schemes can be launched within 10 working days, while schemes for accredited investors and angel funds can be launched immediately upon filing. This mechanism will materially accelerate the speed of capital deployment in private markets and reduce administrative lead times.

Other Key Regulatory Amendments

Some of the other key approvals given by SEBI include alignment of SEBI regulations on securitised debt instruments with RBI norms, that is, permitting single-asset securitisation for RBI-regulated entities and shifting disclosure responsibilities from the originator to the servicer.

The SEBI board has also enabled municipalities to raise funds for refinancing existing debt and clarified operational requirements for pooled finance vehicles to encourage retail participation.

Also, the Capacity Building Fund (CBF) shall be transferred from NABARD to a dedicated Section 8 company (SSE-CBF) to streamline capacity-building efforts.

Lastly, the board approved a regulatory review theme for FY 2026-27 to assess and improve the framework for SME capital raising.

C. Case Laws

[C.1] Order of Priority: Admiralty Act & Merchant Shipping Act

The Bombay High Court in Axis Trustee Services Ltd v. M.T Prem Mala addressed a dispute over the priority of claims involving the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, and the Merchant Shipping Act, 1958. Let us first examine the scope of two relevant sections under these two Acts.

Admiralty Act

Section 10 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, lays down the legal order in which courts pay off debts when a seized ship is sold. The law creates a strict three-tier hierarchy to ensure creditors get paid fairly. The hierarchy functions as follows: (1) Maritime Liens – These are top-priority claims, e.g., unpaid crew wages, salvage fees, and damages for personal injury; (2) Registered Mortgages – These are formal bank loans or financial charges secured against the ship; and (3) All Other Claims – This includes general trade debts, such as unpaid fuel (bunker) bills or port fees.

A maritime lien is treated as the highest priority because these claims are tied to the vessel itself. Even if the ship is sold, the new owner is still responsible for the lien. For example, if a ship is seized and sold, the crew must be paid their wages first. Any remaining money then goes to the bank that holds the mortgage, followed by the suppliers.

If multiple claims fall into the same tier, the court shares the money equally among those creditors. If there are multiple salvage claims (fees for rescuing the ship), the most recent rescue claim gets paid before older ones.

Merchant Shipping Act

Section 52 of the Merchant Shipping Act, 1958, protects registered mortgages on ships. If the person who borrowed the money goes bankrupt (insolvent), the lender’s right to the ship remains safe. The ship or share will not become part of the bankrupt person’s general assets to be divided among other creditors. It works just like a home loan. If the borrower fails to repay the money, the bank can take the home.

Normally, when someone goes bankrupt, all their things are gathered to pay everyone they owe. However, Section 52 makes an exception. It states that a registered mortgage is not affected by any act of bankruptcy committed by the mortgagor after the date of registering the mortgage. This means that even if the borrower is bankrupt and still has the ship in their possession, the lender’s claim is protected.

Dispute before High Court

The dispute before the High Court of Bombay involved Axis Trustee Services Ltd. (the applicant) and the vessel MT Prem Mala, which belonged to an insolvent company currently under the Corporate Insolvency Resolution Process (CIRP). Following the vessel’s arrest and sale in admiralty proceedings, the sale proceeds were deposited with the High Court. Axis Trustee Services, a decree holder based on a registered mortgage, sought a determination of priorities and the release of balance proceeds.

Conversely, the Indian Oil Corporation Ltd. (IOCL) opposed this application. IOCL argued that its claim constituted a maritime lien, which under Section 10 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, holds priority over a registered mortgage. It also filed an admiralty suit alleging the vessel caused physical damage to its jetty in 2019.

Thus, the core procedural question was whether the court could determine these priorities immediately or if it must await the adjudication of IOCL’s pending suit regarding the alleged damage.

Issues and Outcome

Issue No. 1: Whether the provisions of the Merchant Shipping Act, 1958, prevail over the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, in determining the order of priority of maritime claims?

The applicant contended that as a decree-holder of a registered mortgage, it should be governed by the Merchant Shipping Act, which it characterised as a special statute, and that should supersede the Admiralty Act. The Court rejected this, clarifying that the Merchant Shipping Act is primarily regulatory, covering shipping administration, seafarer safety, and navigation. It does not specifically govern the ranking of maritime claims or liens. Conversely, the Admiralty Act, 2017, is the dedicated statute for defining and settling maritime claims, liens, and their procedural enforcement, including the order of priorities. The court held that the two statutes serve different purposes, and the Merchant Shipping Act cannot be deemed a special statute to override the specific priority framework established in Section 10 of the Admiralty Act.

Issue No. 2: Can the Court determine the priority between a registered mortgage holder and an alleged maritime lien holder before the underlying maritime claim is adjudicated?

Section 10 of the Admiralty Act ranks a maritime lien as first in priority, while a registered mortgage is ranked second. IOCL’s claim relied on the assertion that the physical damage to its jetty was caused by the operation of the vessel, which, if proven, constitutes a maritime lien under Section 9(1)(e).

The court reasoned that the classification of IOCL’s claim as a maritime lien is contingent upon the factual findings in IOCL’s pending admiralty suit. Just because of the causal link, whether the loss was indeed caused by the operation of the vessel is a disputed fact awaiting trial. It is premature for the Court to conclude that IOCL holds a maritime lien. Therefore, the Court held that the determination of priority must await the final outcome of IOCL’s suit to avoid premature and potentially incorrect ranking of claims.

Issue No. 3: Is a maritime lien extinguished against the sale proceeds of a vessel if the suit is filed after the vessel has been ordered to be sold by the High Court?

The applicant argued that IOCL’s lien should be extinguished under Section 9(2) because the claim arose in 2019 and the vessel was ordered sold in May 2020, whereas IOCL filed its suit in September 2020. The court clarified that Section 9(2) provides that a maritime lien survives if the vessel is arrested or seized, leading to a forced sale prior to the expiry of the one-year statutory period. Since IOCL’s cause of action arose on October 17, 2019, the one-year period would have expired on October 16, 2020. Because the vessel’s sale was ordered in May 2020 and IOCL filed its suit in September 2020, both occurring within the one-year window, the maritime lien did not extinguish and effectively transferred to the sale proceeds.

[C.2] Arbitration clause must disclose a determination to go for arbitration and not a mere possibility

In Nagreeka Indcon Products Private Limited v. Cargocare Logistics (India) Private Limited, the Supreme Court (April 17th, 2026) reaffirmed the principle that an arbitration agreement or arbitration clause must disclose a determination to refer the dispute for arbitration and not a mere possibility that the dispute can be referred for arbitration to be binding on all the parties.

In this case, the dispute arose after the respondent-carrier delivered a consignment to a buyer in the USA without requiring the original bill of lading or payment, causing the appellant-manufacturer to suffer a financial loss. When the appellant sought to invoke arbitration based on “Clause 25” in the bill of lading, the respondent refused. They argued that the clause was not a mandatory arbitration agreement.

Clause 25 read as follows:

25. Arbitration: The contract evaluated hereby or contained herein shall be governed by and construed according to Indian Laws. Any difference of opinion or dispute thereunder can be settled by arbitration in India or a place mutually agreed with each party appointing an arbitrator.

The Supreme Court, after examining Clause 25, held that the word ‘can’ indicates a future possibility or a choice and not an obligation. Unlike ‘shall’, which mandates action, ‘can’ does not create a binding agreement to arbitrate. As the clause only provided for the possibility of arbitration, the court concluded that it required further mutual consent from both parties at the time a dispute arose. Since the respondent did not consent to arbitration, the application for the appointment of an arbitrator was rightly dismissed.

This ruling reinforces that for an arbitration agreement to be binding, it must clearly express a mandatory obligation to arbitrate. Clauses that merely provide an option or a hope for arbitration and require future agreement to proceed do not constitute valid enforceable arbitration agreements under the Arbitration and Conciliation Act, 1996.