Securities and Exchange Commission of Pakistan (hereinafter referred to as the “Commission”) established under the Securities and Exchange Ordinance, 1969 (XVII of 1969) is the apex registration and monitoring body for credit rating companies. To regulate the Credit Rating Companies the Federal Government has framed the Credit Rating Companies Rules, 1995 (hereinafter referred to as the “Rules, 1995) which deals with the registration licensing and other requirements which have to be followed by Credit Rating Companies. As per Rules, 1995, Credit Rating Companies should be registered with the Commission and for such registration, Credit rating Company should be incorporated as a limited company under the Companies Ordinance, 1984.
Eligibility for Registration & License in Pakistan
- In the first instance a Credit Rating Company should be registered with Securities & Exchange Commission of Pakistan as a limited company under Companies Ordinance, 1984. To know about limited company registration procedure with SECP please refer to our article “Company Registration Procedure”.
- Such Credit Rating company has entered into a joint venture or technical collaboration arrangement with an internationally recognized credit rating institution for a period of not less than five years.
- No director, officer or employee of such company has been convicted of fraud or breach of trust or has been adjudicated as insolvent.
- 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.
- The chief executive of the company is not chief executive of any other company or holding similar position in any other company.
Registration Procedure of Credit Rating Company in Pakistan
- A company, fulfilling the conditions stated above, may make an application for registration in Form 1 to the Commission. Application should be accompanied by a fee of one hundred thousand rupees as registration fee and other documents as referred in Form 1.
- The Commission may grant a certificate of registration to such company in Form II , if it is satisfied after such inquiry and after obtaining such further information as it may consider necessary,- (i) that the applicant is eligible for registration; and (ii) that it would be in the interest of the capital market so to do.
Renewal of Registration
The certificate of registration of a company shall be valid for one year and shall be renewable through an application made via Form III on payment of a non-refundable fee of two hundred and fifty thousand rupees. The application should be made 3 months prior to the expiry of registration.
The Commission shall, after making such inquiry 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 Commission 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 there under, the Commission may, if it considers necessary in the public interest so to do, by order in writing, cancel the registration of the credit rating company. Provided that no such order shall be made except after giving the credit rating company an opportunity of being heard.