On 13-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on Suspension, Cancellation or Surrender of Certificate of Registration of a Credit Rating Agency (‘CRA’) to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
Key Points:
- To surrender certificate of registration:
- Within 15 days of the Order or request, CRA needs to disclose it on its website and communicate to its client.
- Should not take any new clients.
- Without any extra costs, clients should be allowed to withdraw assignments.
- Migration to other CRAs having certificate of registration should be facilitated.
- Comply with CRA Regulations and circulars.
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Should share information and pay fees to SEBI, when required, and co-operate.
- When winding up:
- Return cancelled registration certificate to SEBI.
- Do not fraudulently represent himself as the holder of certificate.
- Suspend the tasks for which the certificate was granted.
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Should co-operate with SEBI until the wound-up process is complete.
- Suspension of certificate:
- Suspend activities for which the certificate was granted.
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Co-operate with SEBI
- The Credit Ratings of the client will be valid until the client withdraws and/ or migrates the assignment in case of cancellation or surrender of Registration.
- In case of Suspension of certificate of registration, the credit ratings will not be valid during the period of suspension.
- The CRA, the registration of which is cancelled, surrendered or suspended, it’s services cannot be used by listed entities.
- In case of Issuers Not Cooperating, for 6 months from the date of downgrade to non-investment grade, no CRA will assign any new ratings to such issuer until it resumes cooperation or rating is withdrawn.
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*Kriti Kumar, Editorial Assistant has reported this brief.