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 hiring another credit rating agency.
The SECP has issued SRO.1755 (I)/2022 to introduce major amendments in the Credit Rating Companies Regulation, 2016.
According to the revised regulations, where a company intends to terminate the rating contract/ agreement with existing credit rating company, and engage another credit rating company, it shall obtain an NOC from the existing credit rating company or continue the rating contract/ agreement with the existing credit rating company for a period of one year. Both the credit rating companies (existing and newly engaged) shall provide credit rating simultaneously for a period of six months falling within the period of one year. After the expiry of one year, the agreement with existing credit rating company shall stand terminated, SECP maintained.
The SECP has also revised the shareholding requirements under the restrictions on Credit Rating Companies. At least 25 per cent shares of a credit rating company shall directly be held for a period of 3 years, from the date of obtaining the license under these regulations by (i) a financial institution or (ii) an insurance company; (iii) a licensed securities exchange; or (iv) a company licensed by the Commission to provide depository, clearing or settlement services in the securities market; or (v) a foreign credit rating agency recognized by or under any law for the time being in force in the country of its incorporation; (vi) an institution as may be notified by the Commission from time to time; or (vii) an individual, subject to approval of the Commission and meeting such fit and proper criteria as may be specified in these regulations; or (viii) university accredited/ recognized by Higher Education Commission”.
Any change in credit rating company’s shareholding that entitles the shareholder to more than ten per cent shareholding shall require prior written approval of the Commission, SECP added.
Copyright Business Recorder, 2022