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CREDIT RATING COMPANIES

The Credit Rating Companies Rules, 1995 provide the following;

Eligibility for registration
A company proposing to commence business as a credit rating company shall be eligible for registration under the Credit Rating Companies Rules, 1995 if it fulfils or complies with the following conditions or requirements, namely:-

(a) that such company is incorporated as a limited company under the Companies Ordinance, 1984 (XLVII of 1984);

(b) that such company has entered into a joint venture or technical collaboration arrangement with an internationally recognised credit rating institution for a period of not less than five years;

(c) that no director, officer or employee of such company has been convicted of fraud or breach of trust or has been adjudicated as insolvent;

(d) that the promoters of such company are, in the opinion of the Authority, persons of means and integrity and have special knowledge of matters which the company may have to deal with as a credit rating company; and

(e) that the chief executive of the company is not chief executive of any other company or holding similar position in any other company.

Registration
Any company which is eligible for registration under rule 3 of the Credit Rating Companies Rules, 1995 as a credit rating company may make an application in Form I to the SECP for registration. This application shall, besides the other documents referred to in Form-I, be accompanied by a fee of one hundred thousand rupees as registration fee.

The SECP may, if it is satisfied after such enquiry and after obtaining such further information as it may consider necessary that the applicant is eligible for registration and that it would be in the interest of the capital market so to do may grant a certificate of registration to such company in Form II.

Renewal of registration
The certificate of registration of a company shall be valid for one year and shall be renewable on payment of a fee of ten thousand rupees through an application made on Form III.

The SECP shall, after making such enquiry and after obtaining such further information as it may consider necessary, renew the registration of such company for one year in Form IV within thirty days of the receipt of the application or further information, as the case may be.

Cancellation of registration
Where the SECP is of the opinion that a credit rating company has contravened any provision, or has otherwise failed to comply with any requirement of the Ordinance or of any rule or direction made or given thereunder, the SECP may, if it considers necessary in the public interest so to do, by order in writing, cancel the registration of the credit rating company. However, no such order shall be made except after giving the credit rating company an opportunity of being heard.