Executive Summary:
This circular, effective August 1, 2024, modifies the Master Circular for Credit Rating Agencies (CRAs) to promote ease of business and uniformity in handling appeals related to rating actions following periodic surveillance. It specifies timelines for dealing with issuer appeals and clarifies disclosure requirements. CRAs must update their processes and disclosures accordingly, with monitoring through half-yearly internal audits.
Key Points / Main Content:
* **Timelines for Periodic Surveillance:**
* CRAs must communicate the rating to the issuer immediately, but no later than 1 working day after the Rating Committee meeting, endeavoring to do so on the same day.
* Issuers have 3 working days from the Rating Committee meeting to request a review/appeal of the rating.
* CRAs must disseminate a press release on their website and notify the Stock Exchange/Debenture Trustee within 7 working days of the Rating Committee meeting.
* **Disclosure Requirements:**
* CRAs must maintain an archive of all disclosures on their website for at least 10 years, including rating press releases.
* Exceptions with specific frequencies:
* List of non-cooperative issuers: Daily
* Disclosures when ratings are not accepted by the issuer: 12 months
* Disclosure of delay in periodic review: 12 months
* **Record Keeping and Accessibility:**
* CRAs must maintain records of disclosures for 10 years and share them with Debenture Trustees upon request.
* Disclosures must be available on the CRAs website under the issuer-specific Press Releases/Rating Rationale section, where applicable.
Impact Analysis:
* **Credit Rating Agencies (CRAs):**
* Impact: CRAs must adhere to the new timelines for communicating ratings and handling appeals, as well as the clarified disclosure requirements.
* Action Required: Update internal processes to comply with the revised timelines, modify disclosure practices as needed, and prepare for monitoring through half-yearly internal audits.
* **Issuers:**
* Impact: Issuers have a defined timeline for appealing rating decisions made during periodic surveillance.
* Action Required: Be aware of the 3-day timeline for requesting a review of ratings and ensure timely submission of appeals.
* **Debenture Trustees:**
* Impact: Debenture Trustees can request records of disclosures from CRAs.
* Action Required: Utilize the ability to request and review disclosure records from CRAs as needed.
Key Entities Referenced
Credit Rating Agencies: Registered Credit Rating Agencies (CRAs) regulated by SEBI, the addressees of this circular.
Master Circular for Credit Rating Agencies: A key policy document governing CRAs, specifically Chapter III, which is being modified by this circular. Referenced by SEBIHODDHSDDHS POD3PCIR202447 dated May 16, 2024.
Stock Exchanges: Entities to which CRAs must disseminate press releases and information.
Debenture Trustees: Entities to which CRAs must disseminate press releases and information and share records upon request.
Securities and Exchange Board of India: Regulatory body (SEBI) issuing the circular and responsible for overseeing the securities market in India.
Securities and Exchange Board of India Act, 1992: The governing legislation that empowers SEBI to issue this circular and regulate the securities market. Specifically, Section 11 1 is mentioned.
CRA Regulations: Regulations governing Credit Rating Agencies. Regulation 20 and 22 are specifically mentioned.
August 01, 2024: Effective date from which the circular's provisions become applicable to Credit Rating Agencies.
CIRCULAR
SEBI/HO/DDHS/DDHS-PoD-3/P/CIR/2024/97 July 04, 2024
To,
All Registered Credit Rating Agencies (CRAs),
Dear Sir/ Madam,
Sub: Measures for Ease of Doing Business for Credit Rating Agencies (CRAs) –
Timelines and Disclosures
(Modification to Chapter III of the Master Circular for Credit Rating Agencies
dated May 16, 2024)
1. Para 28.3.3 of the Master Circular for CRAs - SEBI/HO/DDHS/DDHS-
POD3/P/CIR/2024/47 dated May 16, 2024 (“Master Circular”), prescribes the
timeline to be followed by CRAs for dissemination of Press Release on CRA’s
website and intimation of the same to Stock Exchanges/ Debenture Trustees,
pursuant to rating committee meeting in respect of periodic surveillance of ratings.
2. In order to promote Ease of Doing Business and bring about uniformity in dealing
with appeals, based on consultation with stakeholders including CRAs, it has been
decided to provide specific timelines for dealing with appeals made by the issuer
in respect of rating actions carried out pursuant to periodic surveillance of ratings.
Accordingly, Para 28.3.3 shall stand modified as follows:
Periodic surveillance
Scenario Timeline - immediately but not later than
Communication of the rating to the 1 working day* of the Rating Committee
issuer meeting
Request for review/ appeal of rating 3 working days of the Rating Committee
by the Issuer meeting
Page 1 of 3Scenario Timeline - immediately but not later than
Dissemination of Press Release on 7 working days of the Rating Committee
CRA’s website and intimation of the meeting
same to Stock Exchange/
Debenture Trustee
* While an outer timeline of 1 working day has been specified, CRAs shall endeavor
to communicate the rating to the issuer on the same day as the Rating Committee
meeting.
3. Para 31.1.2 of the Master Circular is as under:
“An archive of all disclosures should be maintained by CRAs on their website, for
at least 10 years. This also includes ratings press releases by CRAs”.
However, the disclosures mentioned below shall be made as per the period/
frequency specified for the respective disclosure in the Master Circular:
3.1. Disclosure of list of non-cooperative issuers – Daily (Para 11.6 of the Master
Circular)
3.2. Disclosures in case of rating not accepted by an issuer – 12 months (Para
28.5.2 of the Master Circular)
3.3. Disclosure in case of delay in periodic review – 12 months (Para 28.6 of the
Master Circular)
4. CRAs shall continue to maintain records in respect of the said disclosures for a
period of 10 years, which may be shared with Debenture Trustees upon request.
Further, disclosures in respect of the said aspects shall continue to be made
available by the CRAs on their website under the issuer-specific Press Releases/
Rating Rationale section of the respective issuer, wherever applicable.
5. Applicability: The circular shall be applicable with effect from August 01, 2024.
Page 2 of 36. Monitoring: Monitoring of this circular shall be done in terms of the half-yearly
internal audit for CRAs, mandated under Regulation 22 of the CRA Regulations
and circulars issued thereunder.
7. This circular is issued with the approval of competent authority, in exercise of the
powers conferred by Section 11 (1) of Securities and Exchange Board of India Act,
1992 read with the provisions of Regulation 20 of CRA Regulations to protect the
interest of investors in securities and to promote the development of, and to
regulate, the securities market.
Yours faithfully,
Sarika Kataria
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No.022-2644-9411
Email ID - sarikak@sebi.gov.in
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