Regulation 5 - Eligibility criteria - Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999

Eligibility criteria 5. The Board shall not consider an application for the grant of a certificate under regulation 3, unless the applicant satisfies the following conditions, namely: (a) the applicant is set up and registered as a company under the 3 [ Companies Act, 2013 (18 of 2013) ] ; (b) the applicant has, in its Memorandum of Association, specified rating activity as one of its main objects; (c) 1 [the applicant has a minimum net worth of rupees twenty five crore;] (d) the applicant has adequate infrastructure, to enable it to provide rating services in accordance with the provisions of the Act and these regulations; (e) the applicant and the promoters of the applicant, referred to in regulation 4 have professional competence, financial soundness and general reputation of fairness and integrity in business transactions, to the satisfaction of the Board; (f) neither the applicant, nor its promoter, nor any director of the applicant or its promoter, is involved in any legal proceeding connected with the securities market, which may have an adverse impact on the interests of the investors; (g) neither the applicant, nor its promoters, nor any director, of its promoter has at any time in the past been convicted of any offence involving moral turpitude or any economic offence; (h) the applicant has, in its employment, persons having adequate professional and other relevant experience to the satisfaction of the Board; (i) neither the applicant, nor any person directly or indirectly connected with the applicant has in the past been (i) refused by the Board a certificate under these regulations or (ii) subjected to any proceedings for a contravention of the Act or of any rules or regulations made under the Act. Explanation.─ For the purpose of this clause, the expression directly or indirectly connected person means any person who is an associate, subsidiary, inter-connected or group company of the applicant or a company under the same management as the applicant. (j) the applicant, in all other respects, is a fit and proper person for the grant of a certificate; (k) grant of certificate to the applicant is in the interest of investors and the securities market; 2 [(l) the promoter of the credit rating agency, in terms of regulation 4, has a minimum shareholding of 26% in the credit rating agency.] ********* 1 Substituted by the SEBI (Credit Rating Agencies)(Amendment) Regulations, 2018, w.e.f. 30-05-2018. Prior to its substitution, it read as under: the applicant has a minimum net worth of rupees five crores. Provided that a credit rating agency existing at the commencement of these regulations, with a net worth of less than rupees five crores, shall be deemed to have satisfied this condition, if it increases its net worth to the said minimum within a period of three years of such commencement. 2 Inserted by the SEBI (Credit Rating Agencies)(Amendment) Regulations, 2018, w.e.f. 30-05-2018. 3. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/29 dated 03-08-2021 before it was read as Companies Act, 1956