Vietnam: Under what circumstances does credit rating services have a conflict of interest?

According to the Decree No. 88/2014/NĐ-CP of Vietnam’s Government, cases of conflict of interest include:

1. A credit rating agency:

- Purchases and holds stocks, capital contributions and debt instruments of a rated organization in the course of performance of a credit rating contract;

- Provides credit rating services to its affiliated persons;

- Makes or receives investment capital contribution to/from a rated organization;

- Has an affiliated person holding over 5% of the paid-up charter capital of a rated organization or over 5% of the total balance of rated debt instruments.

2. An agency manager, analyst or credit rating council member:

- Purchases and holds stocks, capital contributions and debt instruments of a rated organization in the course of performance of a credit rating contract;

- Holds over 5% of the paid-up charter capital of an organization providing service of issuance consultancy, risk management, issuance underwriting or distribution agency for a rated organization;

- Participates in the negotiation on service charge of a credit rating contract;

- Signs an economic contract with a rated organization;

- Has a labor contract with a rated organization;

- Provides the service of issuance consultancy, risk management, issuance underwriting or distribution agency for a rated organization;

- Is an affiliated person of a rated organization or an organization providing the service of issuance consultancy, risk management, issuance underwriting or distribution agency for a rated organization;

- Has an affiliated person holding over 5% of the paid-up charter capital of a rated organization or over 5% of the total balance of rated debt instruments.

View more details at the Decree No. 88/2014/NĐ-CP of Vietnam’s Government, effective from November 15, 2014.

Thuy Tram

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