SEBI eases advertising code for mutual fund industry

Mumbai: SEBI has loosened the advertising code for the mutual fund industry making it more ‘principle-based, rather than rule-based'.

The rationale behind the change in the advertising code was that the existing regulations were rule-based and imposed a lot of restrictions. AMCs had difficulty in complying with the many prescriptive norms on advertisements (such as mandatory disclosures in standard warnings, font sizes, time for audio visual display).

With respect to the amendment, SEBI has mandated that the advertising, which would include all forms of communication, should avoid extensive use of technical or legal terminology'. It should also be devoid of any extensive details which “may detract the investors”.

Information contained in the advertisement should be timely and consistent with the disclosures made in the documents, such as the scheme information document, statement of additional information and key information memorandum. The standard warning in print form is required to be in legible fonts. In the audio-visual format, the advertisement is required to be in 14 words running for at least 5 seconds. This may be considered as clear and understandable.