Regulation 28V - Entities connected with a promoter or a rating agency not to be rated - Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999

1 [ Entities connected with a promoter or a rating agency not to be rated 28V . (1) No ESG rating provider shall, rate an issuer or securities of any issuer, which is a borrower of its promoter or a subsidiary of its promoter or an associate of its promoter, if (a) there are any common Chairpersons, or directors between the ESG rating provider and the borrower or the subsidiary or the associate of the promoter; or (b) there are common employees between the ESG rating provider and the borrower or the subsidiary or the associate of the promoter. (2) No ESG rating provider shall, rate an issuer or securities of any issuer, which is its promoter; (3) An ESG rating provider shall neither assign any ESG rating to an issuer promoted by it or its associates, nor rate securities of such issuers. (4) No ESG rating provider shall rate an issuer or securities of such issuer, if the ESG rating provider has a Chairperson, director or employee who is also a Chairperson, director or employee of the issuer: Provided that the ESG rating provider may, subject to the provisions of sub-regulation (1) rate an entity having a common independent director if, (a) the independent director does not participate in the discussions on ESG rating decisions, and (b) the ESG rating provider makes a disclosure in the ESG rating announcement of such issuer (about the existence of common independent director) on its Board, and that the common independent director did not participate in the rating process or in the meeting of its board of directors, when the rating of such associate was discussed. Explanation. For the purposes of this regulation, (a) independent director means a director who, apart from receiving remuneration as a director, does not have any other material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in the judgment of the board of the company, may affect the independence of the judgment of such director. (b) associate , in relation to a promoter, includes a body corporate in which the promoter holds ten per cent. or more, of the share capital; (c) promoter means a person who holds ten percent or more, of the shares of the ESG rating provider. ] *************** NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/136 dated 03-07-2023