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TMI BlogMaster Circular for ESG Rating Providers (“ERPs”)X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary systems and infrastructure in place for implementation of this circular. The Board of Directors of the ERP shall be responsible for ensuring compliance with these provisions. IV. This circular is issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 28H of CRA Regulations, to protect the interest of investors in securities, to promote the development of, and to regulate, the securities market. V. Applicability: The provisions of the Master Circular shall come into force with immediate effect from the date of notification of this Master Circular. For the purpose of this Circular, "listed entity" shall have the same meaning as provided in Regulation 2(1)(p) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. VI. Monitoring: Monitoring of provisions of this circular shall be done in terms of the yearly internal audit for ERPs, mandated under Regulation 28S of the CRA Regulations and this master circular issued thereunder. VII. This Circular is being issued with the approval of Competent Authority. VIII. This Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the proposed change in control of an ERP (hereinafter referred to as intermediary or applicant), the following is mandated: 2.2.1. An ERP shall make an application to SEBI for prior approval through the SEBI Intermediary Portal (https://siportal.sebi.gov.in). However, till operationalisation of SEBI Intermediary Portal for ERPs, an ERP may submit such application, in hard copy, addressed to "Chief General Manager, Department of Debt and Hybrid Securities, SEBI", as well as in soft copy, via email to [email protected]. 2.2.2. The abovementioned application by an ERP shall be accompanied by the following information/ declaration/ undertaking about itself, the acquirer(s) / the person(s) who shall have the control and the directors/ partners of the acquirer(s) / the person(s) who shall have the control: 2.2.2.1. Current and proposed shareholding pattern of the applicant 2.2.2.2. Whether any application was made in the past to SEBI seeking registration in any capacity but it was not granted? If yes, details thereof. 2.2.2.3. Whether any action has been initiated / taken under the Securities Contracts (Regulation) Act, 1956 (SCRA) / Securities and Exchange Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the intermediary shall be filed with SEBI prior to filing the application with NCLT. 2.3.2. Upon being satisfied with compliance of the applicable regulatory requirements, an in-principle approval will be granted by SEBI; 2.3.3. The validity of such in-principle approval shall be three months from the date issuance, within which the relevant application shall be made to NCLT. 2.3.4. Within 15 days from the date of order of NCLT, the intermediary shall submit an online application in terms of paragraph 2.2 of this circular along with the following documents to SEBI for final approval: 2.3.4.1. Copy of the NCLT Order approving the scheme; 2.3.4.2. Copy of the approved scheme; 2.3.4.3. Statement explaining modifications, if any, in the approved scheme vis- à-vis the draft scheme and the reasons for the same; and 2.3.4.4. Details of compliance with the conditions/ observations, if any, mentioned in the in-principle approval provided by SEBI. 3. Transfer of business by SEBI registered intermediaries to other legal entity 3.1. SEBI has been receiving registration applications pursuant to transfer of business (SEBI regulated business activity) from one legal e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1.4. facilitate an orderly migration of assignments as desired by clients to other ERP(s) holding a certificate of registration under CRA Regulations; 4.1.1.5. continue to comply with the provisions of the CRA Regulations and circulars issued thereunder, till the time the ERP holds the certificate of registration; 4.1.1.6. continue to co-operate with SEBI with regard to sharing of information when requested and payment of fees as required under CRA Regulations; 4.1.1.7. take such other action including providing any records or documents within the time period and in the manner, as may be required under the CRA Regulations or as may be directed by SEBI. 4.1.2. The ERP, on and from the date of acceptance of the Request, or when it is commencing the winding up process, shall: 4.1.2.1. return the certificate of registration so cancelled to SEBI; 4.1.2.2. not represent itself to be a holder of certificate for carrying out the activity for which such certificate had been granted; 4.1.2.3. suspend undertaking activity for which such certificate had been granted; 4.1.2.4. until it is wound up, continue to co-operate with SEBI on matters pertaining to the activities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies) Regulations, 2008 in the prescribed format placed as Annexure 2. 4.1.5.4. In all cases of transfer of business or client accounts to another registered intermediary, the clients shall not be subjected to any additional cost. 4.1.5.5. ERP shall maintain its records, documents, information obtained from its clients during the course of ESG rating from its clients, for at least three years after surrender of registration. 4.1.5.6. In its application to SEBI, the ERP shall also provide an undertaking that it shall continue to maintain confidentiality of the data obtained by it from its existing clients for the purpose of ESG rating, unless asked to share such information by operation of law. 4.1.6. In case of surrender of certificate of registration, the ESG ratings assigned by the ERP whose certificate of registration is being surrendered, shall be valid till such time the client withdraws the assignment and/or migrates to another ERP, or the date of acceptance of surrender by SEBI, whichever is earlier. 4.1.7. In case of suspension of certificate of registration, the ESG ratings assigned by the ERP, whose certificate of registration is suspended, shall not be valid dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an ERP incorporates transition assessment in its ESG ratings or Core ESG ratings, then the ERP shall not be required to separately offer Combined Score or a Core Combined Score (Para 5.2.3 and Para 5.2.6 above) respectively. 5.4.3. However, in the above cases, such ERP must disclose the said facts in ESG rating rationales and ESG rating methodologies. 5.5. The above six ESG rating products shall: 5.5.1. suitably incorporate the environmental, social and governance aspects that are contextual to the Indian market. An indicative list of India-specific ESG parameters is placed at Annexure 3. 5.5.2. be assigned such that they allow comparison with companies in other sectors, i.e., such rating products must contain sector-agnostic ESG ratings. 5.5.3. adhere to guidelines specific to the rating product as detailed below in this circular. 5.6. Transition or Parivaratan Score 5.6.1. It is observed that various Indian companies may be rated on their current emission levels as they begin to align their strategies with India's commitment of emissions intensity reduction to Net Zero by 2070, despite substantial reduction year on year. 5.6.2. Evaluating Indian corporates on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two scores. An ERP shall be free to combine the two scores in a way that is consistent with its publicly-disclosed rating methodology. 5.7.4. Core ESG rating, Core Transition or Parivartan Score, and Core Combined Score shall be offered by an ERP pursuant to availability of 'Business Responsibility and Sustainability Report (BRSR) Core' for the rated entity. 6. Rating Scale 6.1. In the interest of clarity to market participants, it is mandated that ESG ratings shall be provided on a scale of 0 - 100, where 100 represents the maximum score. 6.2. For existing outstanding ESG ratings, the ERPs shall disclose new rating symbols and definitions on their websites and update their rating lists on their websites; 6.3. For various ESG rating products (ESG rating, core ESG rating, transition or Parivartan score, other ESG rating products), ERPs shall ensure use of suitable nomenclature (use of prefixes or suffixes, etc.) that enables the end user(s) to differentiate ESG rating products from each other. 7. Other Activities by ESG Rating Providers 7.1. CRA Regulations allow ERPs to undertake or offer ESG rating of any product or issuer, as may be required by another financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.5. Confidentiality policy 9.1.6. Policy on outsourcing of activities 9.1.7. FAQs on ratings 9.1.8. Disclosure on managing conflict of interest 9.2. Any change in the rating process or policies shall be disclosed on the ERP's website, while also providing a reference/ hyperlink to the original provision/ process/ policy, to enable the investors to discern the changes made to the same. 9.3. An ERP shall keep the records in support of each ESG rating and review/ surveillance thereof, as applicable, including but not limited to the following: 9.3.1. The important factors underlying the ESG rating and sensitivity of such ESG rating to changes in these factors; 9.3.2. Summary of discussions and copies of correspondences with the issuer, its management, auditors and bankers which have a bearing on the ESG rating, as applicable; 9.3.3. If a quantitative model is a substantial component of the ESG rating process, the rationale for any material difference between the ESG rating implied by the model and the ESG rating actually assigned; 9.4. The above records should be maintained as follows and be made available to auditors and regulatory bodies when sought by them: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerally follow either a subscription-based business model or an issuer-pays business model. In either of the case, there is an ESG rating rationale or a report containing ESG rating of an entity, along with a detailed rationale behind the assigned ESG rating. 11.2. It is essential that the ESG rating rationale be articulated in detail to enable a stakeholder to assess the reasons behind an assigned ESG rating. This is further necessitated by the oft-occurring divergence in ESG ratings across providers. 11.3. Therefore, in order to provide for greater transparency in the ESG rating process, it is proposed that the ESG rating rationale/ ESG report may contain the following minimum disclosures: 11.3.1. Current ESG rating/score 11.3.2. Change in rating/score from the previous evaluation (direction) 11.3.3. Last review date 11.3.4. Summary of key drivers both qualitative (including controversies and their impact) and quantitative factors considered for arriving at the overall ESG rating 11.3.5. Pillar wise E, S and G scores - key drivers (including industry comparison of material parameters) both quantitative and qualitative being considered for carrying out such assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons for non- cooperation, etc. if applicable." 12.1.1.7. The client (issuer) agrees to provide the information sought by the ERP immediately, but not later than 7 days from the date of seeking such information by the ERP. 12.1.2. ERPs following an issuer-pays business model shall refrain from giving Indicative Ratings without having a written agreement in place. In case such Indicative Ratings are provided by the ERP, it shall be considered as aiding and abetting the Issuer in suppression of material information by the ERP which would be in contravention of Clause 12 of Code of Conduct of ERPs and may result in violation of the provisions of section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 by the ERP. 12.2. Issuer-Not-Cooperating: 12.2.1. Regulation 28M provides that if the rated issuer or the issuer whose securities are rated by the ERP refuses to co-operate with the ERP regarding review of the ESG rating, despite being under a contractual obligation to do so, the ERP shall review the ESG rating on the basis of the best available informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2.7. In case an issuer, having not co-operated with an ERP in the past, approaches another ERP, following an issuer-pays business model, for ESG rating, the new ERP shall, in its Rating Rationale, disclose the aspect of non- co-operation. 12.2.8. No ERP, following an issuer-pays business model, shall assign any new ratings to an issuer, if the issuer is categorized as non-cooperative with all the ERPs for a continuous period of preceding 12 months, until the issuer resumes cooperation or the rating is withdrawn. 13. Withdrawal of ratings 13.1. Regulation 28M of CRA regulations prescribe, inter-alia, that an ERP shall not withdraw an ESG rating except in cases where the rated issuer, or the issuer whose security is rated, is wound up or merged or amalgamated with another company, or except in cases as may be specified by SEBI from time to time. Further, subject to CRA Regulations, ERP shall withdraw an ESG rating as per its documented policies which shall also be disclosed on its website. In this regard, an ERP shall adhere to the provisions of this circular in withdrawal of any ESG rating. 13.2. Rating Rationale for Withdrawal of Rating of a rated entity/ security: At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding negotiations of fees with the issuer who is being rated or whose securities are being rated, 17.2.2. that the employees' involved in the ESG rating process and their dependents do not have ownership of the shares of the issuer. 17.2.3. prompt review of the ESG ratings of the entities/securities as and when any of its employees joins the respective issuer. 17.3. Guidelines for dealing with Conflict of Interest for investment/ trading by ERPs, Access Persons and other employees 17.3.1. These Guidelines shall be applicable in case of investment / trading by ERPs and Access Persons connected to ERPs and in case of disclosures to all employees of ERPs. 17.3.2. Explanation: "Access Persons" means officials of ERP appointed as Chief Executive or by any other designation (such as CEO/MD/President or by whatever name called who are performing functions similar to those of the Chief Executive), the employees of ERP doing the function of analyst, or compliance, or heads of the departments or divisions or any other employee as decided by ERP. 17.3.3. These guidelines shall cover transactions for purchase or sale of securities either individually or jointly or in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in the rating process shall not have ownership of the securities of the issuer. 18. Guidelines on listed securities/instruments/products falling under the purview of other financial sector regulator/s or authority/ies' Certain instruments/products/securities are regulated by other financial sector regulator/s or authority/ies and could be listed or unlisted. The issuers of such instruments/products/securities and any person connected therewith (such as ERPs) shall abide by the rules/regulations/directions/guidelines applicable to or governing such instruments/products/securities as prescribed by such financial sector regulator or authority whether such instruments/products/securities be listed or unlisted. Further, if such instruments/products/securities are listed on a Recognised Stock Exchange or provided to/availed by regulated entities or intermediaries within the Indian Securities Market, the rules/ regulations/ directions/ guidelines specified by SEBI from time to time shall be applicable. Chapter III : Reporting and Disclosures 19. Periodic Disclosures 19.1. An ERP shall make all the disclosures stipulated below on their websites. In case of listed entities/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is enclosed as Annexure 9. For the said purpose, the following terms shall have the meaning as under: a. Static Pool: ESG Ratings outstanding for each category at the beginning of any financial year. However, it shall exclude ratings that have been withdrawn or ratings of non-cooperative issuers, if applicable, during the financial year. b. Transition Rate: The number of movements/ transitions from each rating category to another, as at the end of the financial year, as a percentage of the total number of ratings in the static pool. c. Averaging: All averaging across static pools for transition rate computations must be based on the weighted average method where the weights are the number of issuers in each static period. 19.3.2.5. ERPs shall also disclose two additional and separate rating transition matrices (limited to ESG ratings of entities or securities that are listed, or proposed to be listed, on a recognized stock exchange) using the following definition of static pool: a. Static Pool: Ratings outstanding for each category at the beginning of any financial year. It shall exclude ratings that have been withdrawn or ratings of non-cooperative issuers, if applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. 20.6. Compliance with recommendations of the International Organization of Securities Commissions (IOSCO): 20.6.1. An ERP shall disclose the compliance status of: 20.6.1.1. Recommendations for ESG ratings products providers specified in IOSCO report FR09/21 dated November 2021. 20.6.1.2. Good practices for ESG rating providers specified in IOSCO call for action dated November 2022. 20.6.2. In case of any non-compliance with any provision of the above, the ERP shall disclose rationale for divergence from the IOSCO recommendations and good practices. 21. Guidelines on manner of disclosures by ERPs on its website: 21.1. In order to facilitate enhanced transparency and usability of disclosures made by ERPs on their websites, the following is directed: 21.1.1. Disclosures required by ERPs on their websites under various SEBI circulars should be provided in excel / machine readable format. 21.1.2. An archive of all disclosures should be maintained by ERPs on their website, for at least 10 years. This also includes rating rationales by ERPs. 21.1.3. ERPs may add footnotes in the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of five years, with a cooling-off period of two years. 23.3. Scope of the Internal Audit: The internal audit shall examine compliance of the ERP with CRA Regulations and this circular. Such examination shall include but not be limited to following checks: 23.3.1. Whether the ERP maintains the minimum net worth requirement under CRA Regulations. 23.3.2. Status of targets / projections submitted by the ERP to SEBI during its application for registration. 23.3.3. ERP and its employees, who are associated directly or indirectly with the rating business, have complied with the regulations and code of conduct. 23.3.4. ERP has defined processes for operations that have been followed during the rating exercise. 23.3.5. Policy in respect of non-cooperation by the issuer, if applicable, including procedures to be followed for the same, have been complied with. 23.3.6. Review of ratings has been carried out as per the review policy of the ERP. 23.3.7. Verify the rating disclosures made by the ERPs on their website. 23.3.8. Comment on the conflict of interest, if any. 23.3.9. The audit shall also cover adherence to the prescribed methodology for calculation of transition r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - " 24.4. The file shall contain the following details: Name Address Category Registration No. Designated email ID Name of compliance officer 25. Information regarding Grievance Redressal Mechanism: 25.1. For information of all investors who deal/ invest/ transact in the market, the information as provided below shall be prominently displayed in the offices of the ERPs: Dear Investor, In case of any grievance / complaint against the ESG rating provider: Please contact Compliance Officer of the ESG rating provider (Name and Address) / email-id ([email protected]) and Phone No. - 91-XXXXXXXXXX. You may also approach CEO / Partner / Proprietor (Name) / email-id ([email protected]) and Phone No. - 91-XXXXXXXXXX. If not satisfied with the response of the ERP you can lodge your grievances with SEBI at http://scores.gov.in or you may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575. 26. Guidelines on Outsourcing of Activities by ERPs 26.1. Outsourcing may be defined as the use of one or more than one third party - either within or outside the group - by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time conflict with their duty to their clients and client's interest always takes primacy in their advice, investment decisions and transactions; 27.5.5. make appropriate disclosure to the clients of possible source or potential areas of conflict of interest which would impair their ability to render fair, objective and unbiased services; 27.5.6. endeavor to reduce opportunities for conflict through prescriptive measures such as through information barriers to block or hinder the flow of information from one department/ unit to another, etc.; 27.5.7. place appropriate restrictions on transactions in securities while handling a mandate of issuer or client in respect of such issuer/security so as to avoid any conflict; 27.5.8. not deal in securities while in possession of material non - published information 27.5.9. not to communicate the material non-published information while dealing in securities on behalf of others 27.5.10. not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities; 27.5.11. not have an incentive structure that encourages sale of products not suiting the risk profile of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, officials/employees or resources, if any, between the ERP and the non-ERP entity, including specification on whether such arrangement is temporary. 29.1.1.2. Measures taken by ERP to ensure the independence of its ESG rating process in view of the above arrangement with the non-ERP entity. 29.1.1.3. Guidance to employees on sharing of information or resources, if any, between the ERP and the non-ERP entity in order to mitigate any potential or actual conflict of interest. 29.1.2. An ERP shall disclose on its website, details of any common director or Chief Executive Officer or Managing Director between the ERP and the non-ERP entity. Such disclosure shall be updated by the ERP on the first working day of each month. The disclosure should include a reference to the date it was last updated by the ERP, along with a reference or hyperlink to archives of previous such disclosures. 29.1.3. The websites of SEBI-registered ERPs and their non-ERP entities shall be separate. An ERP's website may contain hyperlinks to the separate websites of the non-ERP entities. Annexures Annexure 1 Declaration-Cum-Undertaking for change in control We M/s. (Name of the ERP/the acquirer/pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 6. SEBI Act during last one year against us. 6. It is hereby declared that we and each of our promoters, directors, principal officer, compliance officer and key managerial persons are not associated with vanishing companies. 7. We hereby undertake that there will not be any change in the Board of Directors of incumbent, till the time prior approval is granted. 8. We hereby undertake that pursuant to grant of prior approval by SEBI, the incumbent shall inform all the existing investors/ clients about the proposed change prior to effecting the same, in order to enable them to take informed decision regarding their continuance or otherwise with the new management. The said information is true to our knowledge. (stamped and signed by the Authorised Signatories) Annexure 2 Letter of Representation for ESG Rating Provider Securities and Exchange Board of India Ma'am / Dear Sir, Sub: Surrender of Certificate of Registration as ESG Rating Provider, Registration No. . 1. We hereby surrender our certificate of registration as ESG Rating Provider. 2. We enclose the original certificate of registration (or indemnity in case the certificate is lost or stolen) for cancellati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Control Boards? Environment Land Use and Biodiversity Does the company have operations in or around ecologically sensitive areas (such as national parks, wildlife sanctuaries, biosphere reserves, wetlands, biodiversity hotspots, forests, coastal regulation zones etc.)? Environment and Social CSR Amount spent in CSR as a percentage of regulatory requirement on a look-through basis i.e. where CSR activities are undertaken by trusts / foundations, whether the funds have been actually utilized by these entities Social Inclusive development Job creation in smaller towns Social Inclusive development Percentage of input material (inputs to total inputs by value) sourced from suppliers: - (i) Directly sourced from MSMEs/ small producers, (ii) Directly from within India Social Diversity Disclosure of wages and salary by gender (%) Social Diversity Job creation and availability of infrastructure conducive for differently abled Governance Compliance Does the company have a RegTech / Systems solution for monitoring and evidencing compliance Governance Governance Percentage of "against" votes amongst non-promoter shareholders on appointment of independent di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsion Fund Regulatory and Development Authority Annexure 5 Format for Yearly ESG Rating Summary Sheet S. No. Parameter No. of ratings 1. New Ratings 2. Upgrades 3. Downgrades 4. Change in Ratings assigned post request of review/appeal by Issuer in surveillance cases a. Ratings wherein request of review/appeal by the Issuer b. Rating that have undergone revision post request of review/appeal by Issuer 5. Ratings Withdrawn 6. Rating Distribution for outstanding ratings as on 31st March a 100-90 b 89-80 c 79-70 d 69-60 e 59-50 f 49-40 g 39-30 h 29-20 i 19-10 j 9-0 Annexure 6 Details of new ESG ratings assigned during year New Ratings assigned between Apr - Mar S. No Name of the Issuer Sector Securities Type, if applicable Listing Status (Listed/ Proposed to be listed) Whether the issuer requested for a review/ appeal of rating? Whether review/appeal of the rating was granted by ERP. Rating assigned prior to request for review/ appeal by the issuer Final Rating Assign ed Annexure 7 Movement* of Each ESG rating Upgrades New Ratings assigned between Apr - Mar S. No Name of the Issuer Sector Security Type, if applicable Listin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outsourcing multiple activities to the same entity, etc. 1.2 The Board shall mandate a regular review of outsourcing policy for such activities in the wake of changing business environment. It shall also have overall responsibility for ensuring that all ongoing outsourcing decisions taken by the ERP and the activities undertaken by the third-party, are in keeping with its outsourcing policy. 2. The ERP shall establish a comprehensive outsourcing risk management programme to address the outsourced activities and the relationship with the third party. 2.1 The ERP shall make an assessment of outsourcing risk which depends on several factors, including the scope and materiality of the outsourced activity, etc. The factors that could help in considering materiality in a risk management programme include- a) The impact of failure of a third party to adequately perform the activity on the financial, reputational and operational performance of the ERP and on the investors / clients; b) Ability of the ERP to cope up with the work, in case of non- performance or failure by a third party by having suitable back-up arrangements; c) Regulatory status of the third party, including it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those of the registered ERP. The ERP itself and Regulator or the persons authorized by it shall have the right to access the same at any point of time. 3.4 Outsourcing arrangements shall not impair the ability of SEBI/SRO or auditors to exercise its regulatory responsibilities such as supervision/inspection of the ERP. 4. The ERP shall conduct appropriate due diligence in selecting the third party and in monitoring of its performance. 4.1 It is important that the ERP exercises due care, skill, and diligence in the selection of the third party to ensure that the third party has the ability and capacity to undertake the provision of the service effectively. 4.2 The due diligence undertaken by an ERP shall include assessment of: a) third party's resources and capabilities, including financial soundness, to perform the outsourcing work within the timelines fixed; b) compatibility of the practices and systems of the third party with the ERP's requirements and objectives; c) market feedback of the prospective third party's business reputation and track record of their services rendered in the past; d) level of concentration of the outsourced arrangements with a single thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract; j) provides for termination of the contract, termination rights, transfer of information and exit strategies; k) addresses additional issues arising from country risks and potential obstacles in exercising oversight and management of the arrangements when ERP outsources its activities to foreign third party. For example, the contract shall include choice-of- law provisions and agreement covenants and jurisdictional covenants that provide for adjudication of disputes between the parties under the laws of a specific jurisdiction; l) neither prevents nor impedes the ERP from meeting its respective regulatory obligations, nor the regulator from exercising its regulatory powers; and m) provides for the ERP and /or the regulator or the persons authorized by it to have the ability to inspect, access all books, records and information relevant to the outsourced activity with the third party. 6. The ERP and its third parties shall establish and maintain contingency plans, including a plan for disaster recovery and periodic testing of backup facilities. 6.1 Specific contingency plans shall be separately developed for each outsourcing arrangement, as is done in individual bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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