In order to further enhance governance and accountability of Credit Rating Agencies (CRAs), the following directions are being issued:
In partial modification of para 3B of Annexure A of SEBI circular dated November 1, 2016 regarding MD/CEO being a member of rating committee, it has been decided that:
A. MD/CEO of a CRA shall not be a member of rating committees of the CRA. B. Rating committees of a CRA shall report to a Chief Ratings Officer (CRO). C. One third of the board of a CRA shall comprise of independent directors, if the board is chaired by a non-executive director. In case the board of the CRA is chaired by an executive director, half of the board shall comprise of independent directors. D. The board of a CRA shall constitute the following committees: (i) Ratings Sub-Committee (ii) Nomination and Remuneration Committee E. The Chief Ratings Officer (CRO) shall directly report to the Ratings SubCommittee of the board of the CRA. F. The Nomination and Remuneration Committee shall be chaired by an independent director.
During the rating process, CRAs shall record the minutes of the meeting with issuer management and incorporate it in the rating committee note.
CRAs shall meet the audit committee of the rated entity, at least once in a year, to discuss issues including related party transactions, internal financial control and other material disclosures made by the management, which have a bearing on rating of the listed NCDs.
About the Author
