SEBI amends circular on Credit Rating Agencies
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In this, rating agencies have been asked to formulate a detailed policy to deal with the situation of non-submission of important information, including quarterly financial statements, by companies. The policy will set out the methodology for assessing the risks associated with the unavailability of critical information.
Markets regulator Sebi on Friday amended its circular on credit rating agencies, asking them to frame a detailed policy by March-end to deal with non-receipt of critical information from companies. The Securities and Exchange Board of India (SEBI) issued a revised circular regarding credit rating agencies, saying that this provision should be completed by March 31, 2023.
In this, rating agencies have been asked to formulate a detailed policy to deal with the situation of non-submission of important information, including quarterly financial statements, by companies. The policy will set out the methodology for assessing the risks associated with the unavailability of critical information. Apart from this, if information is not received from the company for three consecutive quarters, it will have to declare it ‘non-cooperative’ and make arrangements to register that rating within seven days. Prior to this, SEBI had issued an operational circular in January, which was to be implemented from February 1.
But now SEBI has amended it. SEBI has said in the new circular that the managing director or chief executive officer or officer handling business responsibility of a credit rating agency cannot be made a member of the rating committee of an agency. While withdrawing the credit rating of a listed company’s stock, the agency will also issue a press release assigning the rating to the same. In this communique, he will have to give the reason for the withdrawal of the rating.
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