They would have to monitor the exchange’s website for disclosures made by the issuer.
SEBI asked rating agencies to carry out a review of the ratings upon the “occurrence of or announcement/news of material events” including financial results, any significant decline in share/bond prices of the issuer or group companies if it is not in line with the overall market movement and any attachment or prohibitory orders against the company.
Besides, rating agencies would have to seek a “No Default Statement” from the issuer at the end of each month.
In the rating actions, disclosure report by CRAs would include key financial indicators and ratios for the issuer for the last and current financial year, in tabular form, as well as any other significant information relevant to the issuer and its sector, the regulator said.
SEBI has asked rating agencies to make disclosures in case of considerable delay in providing information by the issuer.
“If the issuer does not share information sought by the CRA within seven days of seeking such information from the issuer, even after repeated reminders from the CRA, the CRA shall take appropriate rating action depending upon the severity of information risk of the issuer,” the regulator noted.
Rating agencies have to accept an appeal from the issuer with regard to review of rating within five working days.
“In case rating is not accepted by the issuer within a month of communication of rating by the CRA to the Issuer, the same shall be disclosed as ‘Non Accepted Rating’ on the CRA’s website,” SEBI said.
CRAs have been advised to refrain from giving indicative ratings without having a written agreement in place.
“In case such indicative ratings are provided by the CRA, it shall be considered as aiding and abetting the Issuer in suppression of material information by the CRA,” SEBI said.
Last month, SEBI had said it plans to soon come out with a detailed discussion paper on credit rating agencies as it seeks to check the menace of rating shopping and pick-and-choose approach in their actions.
Separately, SEBI has asked Debenture Trustees to have adequate systems to ascertain the status of payment of interest/principal by issuer companies on due dates in timely manner and efficiently share such information with the CRAs.
The stock exchanges have been asked to disclose the information submitted by the Debenture Trustees immediately on its website.