SEBI notifies insertion of New Chapter of ESG Rating Providers in SEBI (Credit Rating Agencies) Regulations [Read Notification]

The Stock Exchange Board of India (SEBI) has notified the insertion of new chapter ESG Rating Providers in the SEBI (Credit Rating Agencies) Regulation, 1999 through vide notification no. No. SEBI/LAD-NRO/GN/2023/136 published on 4th July 2023.

The new rules may be called the Securities and Exchange Board of India (Credit Rating Agencies) (Amendment) Regulations, 2023 and came into force on the day the notification was published in the official gazette i.e., on 4th July 2023.

In the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999,, after Chapter IV and before Chapter V, the Chapter IVA was inserted. The chapter covers the ‘ESG Rating Providers’.

The provisions of these regulations, except chapters II, III, and IV, shall be applicable to ESG rating providers. However, it was provided that any reference to a “credit rating agency” under chapters I, V, VI and VII shall also be construed as a reference to an “ESG rating provider”, as may be applicable.

Provided further that the provisions of this Chapter shall only be applicable to ESG rating providers covered in the Fourth Schedule.

The new chapter contains the definition, registration of ESG rating providers, application for grant of the certificates, eligibility criteria, Grant of certificate as an ESG rating provider, Conditions of certificate also includes Procedure where certificate is not granted, Code of Conduct, Rating process and monitoring of ESG rating, Procedure for review of ESG rating, Disclosure of ESG rating definitions, Appointment of Compliance Officer, Steps on auditor’s report..etc.

According to new Regulation 28C, a person acting as an ESG Rating provider on the date of the regulation came into force may continue to do so for 6 months or other period as may be provided by the board. However, the existing ESG provider has to get the certificate from the board within the time period. No person shall act as an ESG rating provider without the certificate.

The provision is applicable to the ESG providers mentioned in the 4th schedule as follows under:

4TH SCHEDULE

S. no.	Location of ESG Rating Provider	Asset class in securities market	Location of ESG Rating User	Applicability of regulations
1	India	Indian	India	Yes
2	India	Indian	Outside India	No
3	India	Global	India	Yes
4	Outside India	Indian	India	Yes
5	Outside India	Indian	Outside India	No
6	Outside India	Global	India	No

To Read the full text of the Notification CLICK HERE

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates