Rating agencies

Rating grades, obtaining which is mandatory under the law, can only be determined by authorized rating agencies and/or international rating agencies (collectively, rating agencies). International rating agencies are subject to mandatory recognition by the National Securities and Stock Market Commission.

An entity acquires the right to assign credit rating grades from the date of issuance of its Certificate of inclusion in the State Register of Authorized Rating Agencies.

An entity is included in the State Register of Authorized Rating Agencies based on the results of a competitive selection process.

The procedure for conducting a competition to determine authorized rating agencies, the procedure for maintaining and the content of the State Register of Authorized Rating Agencies, the procedure for removing an authorized rating agency from the State Register of Authorized Rating Agencies, the procedure for issuing a duplicate certificate of inclusion in the State Register of Authorized Rating Agencies are determined by a regulatory legal act of the National Securities and Stock Market Commission.

Eligible to take part in the competition are applicants who confirmed their intention to participate in the competition in writing, submitted the relevant documents, and meet the following criteria:

are residents;

provide professional services and are directly involved in determining rating grades (rating assessment) or provide information and analytical services related to credit rating activities;

use the National rating scale, as required by law, when determining a rating grade;

have their own websites on the Internet that are freely accessible to users;

have at least one year of experience in the specified field of activity and a list of determined and published credit ratings for resident economic entities;

have a paid-in authorized capital of at least 2,500 minimum wages, at least 50 percent of which is paid in cash;

have no related parties who are associated with financial services market participants and do not determine their credit ratings;

have a rating committee in their organizational structure;

have well-developed rating procedures and methodologies that ensure that ratings are based on a comprehensive review of information relevant to rating analysis;

have established written internal procedures that identify and eliminate or resolve any existing or potential conflicts of interest that could influence the opinions and analysis of the rating agency or its employees who have influence over determining rating grades;

have established procedures and mechanisms to protect confidential information provided by issuers under contract.

Rating ratings, which are required by law to be obtained, have the right to determine exclusively authorized rating agencies and / or international rating agencies. International rating agencies must be recognized by the National Securities and Stock Market Commission.

The following issuers require rating assessment:

• enterprises in the authorized capital of which there is a state share;
• enterprises of strategic importance to the economy and security of the state;
• enterprises that occupy a monopoly (dominant) position.

The determination of the rating, unless otherwise provided by law, requires all types of debt and mortgage-backed securities that are not distributed among the founders or among a predetermined range of persons and may be distributed through public placement, purchased and traded on the stock exchange, with the exception of government securities and securities issued by the State Mortgage Institution.

If an assigned rating is not satisfied with the rating entity and it has reason to believe that during the rating procedure significant factors influencing the rating assessment were not taken into account, the rating entity has the right to submit within 5 working days after receiving rating rating a substantiated application and documents to the appropriate authorized body of the authorized rating agency.

After reviewing the application and documents, the relevant authorized body of the authorized rating agency within 5 working days after receipt of the documents for appeal takes a decision on the assignment or updating of the rating assessment which is not subject to further appeal in the authorized rating agency, however it may be appealed in accordance with the procedure established by the legislation.

Authorized rating agencies submit (send) annual information to the central office of the Commission by March 1 of the year following the reporting year. Irregular Information is sent to the Central Office of the Commission within ten working days of the date of the action.

The submission of information by authorized rating agencies to the Commission’s central office is carried out in the form of electronic documents. The information is compiled in accordance with the description of sections and schemas of XML files identified by a separate normative-technical document.

Annual Information consists of the following sections:

• cover sheet
• basic information about the authorized rating agency with indication of information on related persons of the authorized rating agency and their relation to the participants of the financial services markets, as well as regarding their credit rating (in an arbitrary form);
• information on ownership of securities (shares, units)
• information about the list of issuers for which the rating was made;
• information about the list of securities for which the rating is made;

The annual information is attached to the financial statements in accordance with the legislation of Ukraine.

Irregular information from the rating agency is:

• information on changes in the list of issuers for which the rating has been made.
• information on changes in the list of securities for which the rating has been made.

More information on disclosure by rating agencies can be found at the link.