SEBI Issues Guidelines For Credit Rating Agency On Suspension, Cancellation Of Registration Certificate
CRA will not take any new clients, further allow its clients to withdraw any assignment given to the CRA
Capital markets regulator SEBI on Thursday came out with fresh norms pertaining to cancellation, suspension and surrender of registration certificate of a credit rating agency.
Listed entities or issuers who have obtained credit rating from a CRA whose registration is cancelled or suspended or surrendered, will have to obtain credit rating from another registered CRA holding a valid registration certificate, the Securities and Exchange Board of India said in a circular.
After submitting a request for surrender of registration certificate to SEBI, the concerned CRA will have to disclose prominently on its website about such a request and communicate the same to its clients within 15 days, the Securities and Exchange Board of India said in a circular.
In addition, CRA will not take any new clients, further allow its clients to withdraw any assignment given to the CRA, without any additional cost to such clients and facilitate an orderly migration of assignments as desired by clients to other CRA(s) holding a registration certificate.
Following the acceptance of request, CRA while commencing the winding up process, will have to return the registration certificate and will not represent itself to be a holder of certificate for carrying out rating related works. In case of suspension of the certificate, the CRA, during such period of suspension, will suspend undertaking activity.
"In case of cancellation of certificate of registration, the credit ratings assigned by the CRA shall be valid till such time the client withdraws the assignment and/or migrates the assignment to another CRA as specified or the CRA is wound-up, whichever is earlier," SEBI said.
In case of surrender of certificate, the credit ratings assigned by the CRA whose certificate of registration is being surrendered, will be valid till such time the client withdraws the assignment or migrates to another CRA, or the date of acceptance of surrender by SEBI, whichever is earlier, while in case of suspension of certificate, the credit ratings assigned by the CRA, whose certificate of registration is suspended, will not be valid during the period of suspension.
In case of cancellation or surrender registration certificate, the credit rating assigned by such CRA will be treated as withdrawn upon an issuer furnishing an undertaking that another rating is available for listed or proposed to be listed debt securities from other SEBI-registered CRA.