The market regulator, Securities and Exchange Board of India (SEBI), revoked its earlier wind-up order against Brickwork Ratings (BWR) and passed several directions to the rating major.
In a fresh order on Wednesday, SEBI restrained BWR from onboarding new clients for six months and asked it to increase the number of board members to nine from five at present. The members of the founding management are barred from being part of any rating committees or from getting involved in the rating process.
BWR has to appoint an independent professional CEO and an independent director not connected to the founding management as Chairperson of the board.
All the people undertaking rating functions have to be adequately trained by an entity not connected to BWR. Similarly, the chief ratings officer will undergo in-depth training to familiarise himself with the regulatory framework.
“The Noticee shall ensure compliance with the directions contained in this order within a period of five months from the date of this order. SEBI shall conduct a review after the period of five months to examine compliance with the directions issued in this order,” the regulator said.
SEBI’s order follows the Securities Appellate Tribunal’s directive to relook at its earlier order cancelling the licence of BWR as a credit rating agency.
In a submission to the regulator last month, BWR said it had suffered substantial monetary losses for the period October 6, 2022, to July 31, 2023, as a result of the earlier SEBI order.
Over the last few months, BWR has implemented various measures to strengthen its rating and compliance processes, including an overhaul of internal systems, automation of processes, and training of rating teams.