Page 249 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes

Notes For the purposes of this sub-regulation the expression 'independent director' means
a director who, apart from receiving remuneration as a director, does not have any other
material pecuniary relationship or transactions with the company, its promoters, its
management or its subsidiaries, which in the judgment of the board of the company, may
affect the independence of the judgment of such director.

Securities Already Rated

Nothing applies to securities whose rating has been already done by a credit rating agency
before the commencement of these regulations, and such securities may, subject to the provisions
of the other Units of these regulations, continue to be rated, without the need to comply with the
restrictions imposed by the regulations contained in this unit.

17.1.13 Procedure for Inspection and Investigation

The Board may appoint one or more persons as inspecting officers, to undertake inspection or
investigation of the books of account, records and documents of the credit rating agencies.
The purposes referred to in sub-regulation may be the following, namely:
1. to ascertain whether the books of account, records and documents are being maintained
properly;
2. to ascertain whether the provisions of the Act and these regulations are being complied
with;

3. to investigate into complaints received from investors, clients or any other person on any
matter having a bearing on activities of the credit rating agency;
4. in the interest of the securities market or in the interest of investors.

The inspections ordered by the Board do not ordinarily go into an examination of the
appropriateness of the assigned ratings on the merits. Inspections to judge the appropriateness
of the ratings may be ordered by the Board, only in case of complaints which are serious in
nature. Inspections are carried out either by the officers of the Board or independent experts,
with relevant experience or combination of both.
Notice before Inspection or Investigation

Before ordering an inspection or investigation, the Board gives no less than ten days written
notice to the credit rating agency for that purpose. Nevertheless, where the Board is satisfied
that in the interest of the investors, no such notice is given, it, by an order in writing, directs that
the inspection or investigation of the affairs of the credit rating agency be taken up without such
notice.
During the course of an inspection or investigation, the credit rating agency against whom the
inspection or is being carried out is bound to discharge all its obligations.

Task Find out what are the obligations of credit rating agency on inspection or
investigation by the Board and list them.

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