The managing director and chief executive officers of credit rating agencies shall not be members of their rating committee, the Securities Exchange Board of India on Monday said while putting in place norms for enhanced governance and accountability.
Rating committees of rating agencies shall report to a chief ratings officer, SEBI said in a circular.
Regarding composition of board of directors of a rating agencies, SEBI said one-third of the board shall comprise independent directors if it is chaired by a non-executive director.
In case the board is chaired by an executive director, half of the board shall comprise independent directors.
The board of a rating agencies shall constitute Ratings Sub Committee and Nomination and Remuneration Committee and the latter shall be chaired by an independent director, the regulator said.
The chief ratings officer has been asked to directly report to the ratings sub-committee of the board of the rating agencies.
Additionally, SEBI has asked the rating agencies to meet the audit committee of the rated entity at least once in a year to discuss issues including related-party transactions, internal financial control and other material disclosures made by the management which have a bearing on rating of the listed non-convertible debentures.
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