Credit Rating Services Act, 2012 (Act No. 24 of 2012)Board NoticesCredit Rating Agency RulesPart XI : Responsibilities to Investors and the Public18. Transparency and timeliness of credit rating disclosures |
| (1) | A credit rating agency must distribute its credit rating decisions in a timely manner. |
| (2) | A credit rating agency must publicly disclose its policies for distributing credit ratings, reports and updates. |
| (3) | A credit rating agency must disclose to the public, on a non-selective basis and free of charge, any credit rating regarding publicly issued securities, or public rated entities, as well as any subsequent decisions to discontinue such a credit rating, if the rating action is based in whole or in part on material non-public information. |
| (4) | A credit rating agency must publish sufficient information about its procedures, methodologies and assumptions (including financial statement adjustments that deviate materially from those contained in the rated entity's published financial statements and a description of the rating committee process, if applicable} so that outside parties can understand how a credit rating was arrived at by the agency. This information must include, but not be limited to, the meaning of each rating category, rating outlook and the definition of default or recovery and the time horizon the agency used when making a rating decision. |
| (5) | A credit rating agency must differentiate credit ratings of structured finance instruments from other ratings, through a different rating symbol and the credit rating agency must disclose how this differentiation functions. |
| (6) | A credit rating agency must clearly define a given rating scale and symbol and apply it in a consistent manner for all types of credit ratings to which that rating scale or symbol is assigned. |
| (7) | Where a credit rating agency discloses the data contemplated in section 13(2) of the Act, and the nature of the rating or other circumstances make a historical default rate inappropriate, statistically invalid, or otherwise likely to mislead the users of the rating, the agency must publicly explain this. |
| (8) | The information contemplated in section 13(2) of the Act that a credit rating agency must disclose, must include— |
| (a) | verifiable, quantifiable and historical information about the performance of its credit ratings, organised and structured, and, where possible, standardised in such a way to assist investors in drawing performance comparisons between different credit rating agencies; |
| (b) | an indication whether the default rates of these categories have changed over time: and |
| (c) | the credit ratings transition frequency. |
| (9) | A credit rating agency must disclose for each credit rating if the issuer participated in the rating process and whether the credit rating agency had access to the accounts, financial records and other relevant internal documents of the rated entity or its related third parties. |
| (10) | A credit rating agency must disclose its policies and procedures regarding unsolicited credit ratings. |
| (11) | When a credit rating agency issues an unsolicited credit rating, it must disclose that fact and indicate whether the rated entity participated in the rating process and whether the agency had access to the accounts, financial records and other relevant internal documents of the rated entity or its related third parties. |
| (12) | Material modifications of a credit rating agency's practices, procedures, processes, methodologies, models and key rating assumptions as contemplated in section 13(1)(a) of the Act must be disclosed prior to their going into effect. |