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SEBI issues circular on Suspension, Cancellation or Surrender of Certificate of Registration of a Credit rating Agency

SEBI

SEBI

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:

  1. 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.
    • Should share information and pay fees to SEBI, when required, and co-operate.

  2. 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.
    • Should co-operate with SEBI until the wound-up process is complete.

  3. Suspension of certificate:
    • Suspend activities for which the certificate was granted.
    • Co-operate with SEBI

  4. 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.
  5. In case of Suspension of certificate of registration, the credit ratings will not be valid during the period of suspension.
  6. The CRA, the registration of which is cancelled, surrendered or suspended, it’s services cannot be used by listed entities.
  7. 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to non-investment grade, no CRA will assign any new ratings to such issuer until it resumes cooperation or rating is withdrawn.

  8. *Kriti Kumar, Editorial Assistant has reported this brief.

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