Operational Circular for Credit Rating Agencies
Summary
This section introduces the SEBI Operational Circular for Credit Rating Agencies, consolidating existing guidelines effective from February 1, 2023. It establishes the legal basis under Section 11(1) of the SEBI Act and Regulation 20 of the CRA Regulations. The document outlines applicability to various market participants including CRAs, debenture trustees, and issuers. This section outlines disclosure requirements for acquirers regarding legal actions, litigation, and fee payments, while mandating board stability and investor communication. It clarifies procedures for the transfer of business between SEBI-registered intermediaries, including registration validity and certificate surrender rules. Additionally, it prescribes guidelines for Credit Rating Agencies (CRAs) during suspension, cancellation, or surrender of their registration, covering client migration, rating validity, and regulatory compliance. This section mandates the standardization of rating symbols and definitions for various financial instruments and requires CRAs to align their scales with regulatory guidelines. It outlines specific requirements for the Operations Manual, including internal policies, employee tra
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Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 prescribes guidelines for registration of Credit Rating Agencies (CRAs), general obligations of CRAs, manner of inspection and investigation and code of conduct applicable on CRAs.
In order to enable the industry and other users to have access to all the applicable circulars/ directions at one place, Operational Circular for CRAs has been prepared.
This Operational Circular is a compilation of the existing circulars as on December 31st ,2022, with consequent changes. The stipulations contained in these circulars have been detailed chapter-wise in this operational circular.
The provisions of the circular shall come into effect from February 01, 2023.
This circular is issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 20 of Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999.
SEBI has operationalized SEBI Intermediary Portal (https://siportal.sebi.gov.in) for the intermediaries, inter alia for CRAs, to submit all the registration applications online.
All applications for registration/ surrender/other requests will be made through SEBI Intermediary Portal only. The applicants will be separately required to submit relevant documents viz. declarations/ undertakings required as a part of application forms prescribed in relevant regulations, in physical form, only for records without impacting the online processing of applications for registration.
All registered CRAs are required to obtain prior approval of SEBI in case of change in control.
In case a CRA holds multiple registrations with SEBI, it shall make only one application to SEBI addressed to 'Chief General Manager, DDHS, SEBI' accompanied by the following information about itself, the acquirer and the directors/ partners of the acquirer.
Whether any action has been initiated / taken under SCRA/SEBI Act or rules and regulations made thereunder? If yes, status thereof along with corrective action taken to avoid such violations in the future. The acquirer shall also confirm that it shall honour all past liabilities / obligations of the applicant, if any.
Whether any investor complaint is pending? If yes, steps taken and confirmation that the acquirer shall resolve the same.
Details of litigation, if any.
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Source: SecMarx — Operational Circular for Credit Rating Agencies. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.