Can a member of the credit rating council be an executive of a credit rating agency in Vietnam?
Can a member of the credit rating council be an executive of a credit rating agency in Vietnam?
According to the provisions of Clause 1, Article 30 of Decree No. 88/2014/ND-CP on credit rating councils in Vietnam as follows:
Credit rating councils in Vietnam
1. For each credit rating contract, a credit rating agency shall form a credit rating council, select and decide on the number of council numbers based on the scope and characteristics of such contract. The minimum number of council members is three (3). The selection of members of a credit rating council for each credit rating contract must adhere to the following principles:
a/ At least one (1) member of the credit rating council is an employee of the credit rating agency;
b/ At least one (1) member of the credit rating council possesses one of the following certificates: Auditor certificate granted by the Ministry of Finance, an internationally recognized certificate for securities investment analysis, accounting or audit;
c/ These members fully meet the criteria and conditions prescribed in Article 20 of this Decree;
d/ These members do not participate in the management of the credit rating agency;
dd/ These members are not analysts for the same credit rating contract;
e/ These members do not fall into the cases of conflict of interest specified in Clause 2, Article 38 of this Decree when participating in the credit rating contract. In the course of performance of the contract, if there is a conflict of interest of credit rating council members, the credit rating agency shall terminate the participation of such members in the credit rating contract. The agency may replace these members or add new members when necessary.
Thus, according to the above regulations, the person who runs the credit rating agency is not allowed to participate in the credit rating council.
Can a member of the credit rating council be an executive of a credit rating agency in Vietnam?
What are the tasks of credit rating council members?
According to the provisions of Clauses 2 and 3, Article 30 of Decree No. 88/2014/ND-CP, the tasks and responsibilities of the credit rating council members include:
- Tasks of credit rating council members:
+ To decide on credit rating results or change credit rating grades under the voting mechanism prescribed in the operation regulation of the credit rating council;
+ In the course of performance of the contract, the credit rating council shall report to the manager of the agency on cases of conflict of interest of analysts and council members as specified in Clause 2, Article 38 of Decree No. 88/2014/ND-CP.
- Responsibilities of credit rating council members:
+ To attend meetings of the credit rating council to evaluate, discuss and vote credit rating grades, update credit rating grades and report on credit rating results;
+ In the course of performance of credit rating contracts, if falling into the cases of interest conflict specified in Clause 2, Article 38 of Decree No. 88/2014/ND-CP, to report to the credit rating council and request the termination of their participation in these contracts;
+ To observe the code of conduct prescribed in Article 34 of Decree No. 88/2014/ND-CP.
Can an analyst be an executive of a credit rating agency?
According to the provisions at point b, clause 1, Article 29 of Decree No. 88/2014/ND-CP on analysts in credit rating agencies as follows:
Analysts
1. For each credit rating contract, a credit rating agency shall select, assign tasks to and decide on the number of analysts based on the scope and characteristics of such contract. An analyst participating in each credit rating contract must meet the following basic requirements:
a/ Meeting all the criteria and conditions prescribed in Article 21 of this Decree;
b/ Not participating in the management of the credit rating agency;
c/ Not being concurrently a member of the credit rating council for such credit rating contract;
d/ Not falling into the cases of conflict of interest specified in Clause 2, Article 38 of this Decree when participating in such credit rating contract. In the course of performance of the contract, if there is a conflict of interest of the analyst specified in Clause 2, Article 38 of this Decree, the credit rating agency shall terminate the participation of the analyst in the credit rating contract. The agency may replace the analyst or add new analysts when necessary.
Thus, according to the above regulations, analysts are not allowed to manage credit rating agencies.
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