SEBI (Credit Rating Agencies) (Amendment) Regulations, 2023 - Legal Update

Introduction

The Securities and Exchange Board of India (SEBI) (Credit Rating Agencies) (Amendment) Regulations, 2023, focus on regulating Environmental, Social, and Governance (ESG) rating providers. These regulations aim to enhance transparency and reliability within the ESG rating industry, representing a significant advancement for the sector.

Application for Grant of Certificate

1. Application Requirement: Individuals wishing to operate as ESG rating providers after the regulations come into effect must apply to the Board for a certificate.

2. Form Submission: Applications should be made using Form A of the Fifth Schedule and must include a non-refundable application fee, as specified in Part A of the Sixth Schedule, to be paid according to Part B of the Sixth Schedule.

3. Registration Categories: Applicants must choose one of the following categories for registration: Category I or Category II.

Eligibility Criteria

To qualify for the certificate, applicants must meet the following criteria:

1. Company Incorporation: The applicant must be incorporated as a company under the Companies Act, 2013.

2. Memorandum of Association: The applicant must list ESG rating activities as a primary objective in its Memorandum of Association.

3. Business Plan Submission: The applicant must submit a business plan to the Board, including:
– A target breakeven date.
– Projected revenue and the number of clients to be serviced within two years of certification.
– Details of anticipated cumulative cash losses until the breakeven date, including the areas where these losses will occur.

Targets should focus on operations within the securities markets, specifically related to issuers listed or proposed for listing on a recognized stock exchange. The targets must be reasonable and self-set by the applicant.

Conclusion

In summary, the SEBI regulations represent a crucial step in standardizing and improving the ESG rating industry. The structured application process and stringent eligibility criteria are designed to ensure that ESG rating providers operate with transparency and reliability.

For more details, Click on the below-given link.

Download – SEBI (Credit Rating Agencies) (Amendment) Regulations, 2023