Companies are required by the Securities and Exchange Commission of Pakistan (SECP) to obtain the No-Objection Certificate (NOC) from the current credit rating agency (CRA) before hiring a different CRA.
To introduce significant revisions to the Credit Rating Companies Regulation, 2016, the SECP has issued SRO.1755 (I)/2022.
In accordance with the revised regulations, a company must obtain a 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 if it intends to terminate the rating contract/agreement with the existing credit rating company and engage another credit rating company. For a period of six months that falls within the span of a year, both credit rating companies (current and newly hired) must offer credit ratings concurrently. According to SECP, the agreement with the current credit rating company will be cancelled when a year has passed.
The SECP has also revised the shareholding requirements under the restrictions on Credit Rating Companies. At least 25 percent 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 the 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”.
