NOC of existing credit rating agency made mandatory
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for companies to obtain the No Objection Certificate (NOC) from the existing Credit Rating Agency (CRA) before engaging another rating agency. credit rating.
The SECP issued SRO.1755(I)/2022 to introduce major changes to the Credit Rating Companies Regulations 2016.
According to the revised regulations, when a company intends to terminate the rating contract/agreement with the existing credit rating company and engage another credit rating company, it must obtain a NOC from the credit rating company. existing credit rating or continue the rating contract/agreement with the existing credit rating company for a period of one year. Both credit rating companies (existing and newly engaged) must provide credit rating simultaneously for a period of six months falling within the one year period. After the one-year expiration, the agreement with the existing credit rating company will be terminated, the SECP maintained.
The SECP notifies the regulatory framework
The SECP has also revised shareholding requirements as part of the restrictions on credit rating companies. At least 25% of the shares of a credit rating company must be directly owned for a period of 3 years from the date of obtaining authorization under this Regulation by (i) a financial institution or ( ii) an insurance company; (iii) a recognized stock exchange; or (iv) a company licensed by the Commission to provide custody, clearing or settlement services in the securities market; or (v) a foreign credit rating agency recognized by or under any law currently in force in the country of its incorporation; (vi) an institution which may be notified by the Commission from time to time; or (vii) a natural person, subject to the approval of the Commission and meeting the fit and proper criteria specified in these Rules; or (viii) a university accredited/recognized by the Higher Education Commission”.
Any change in the credit rating company’s shareholding that entitles the shareholder to a stake of more than ten percent must require prior written approval from the Commission, the SECP added.
Copyright Business Recorder, 2022