In response to the growing significance of sustainability and ESG (Environmental, Social, and Governance) considerations in the financial ecosystem, the Securities and Exchange Board of India (SEBI) has taken concrete steps to regulate ESG Rating Providers (ERPs). This regulation ensures transparency, accountability, and quality assurance in the ESG rating industry, which has direct implications for investor confidence and capital allocation.
Online Registration through SEBI Intermediary Portal
To streamline the process, SEBI has integrated ERP registration into its Intermediary Portal (https://siportal.sebi.gov.in). This portal facilitates:
Submission of registration and surrender applications
Requests for change in name, address, or details
Uploading of periodical reports
Tracking and communication related to application status
However, until the ERP module is fully operational on the portal, applicants must send their applications in hard copy to the Chief General Manager, Department of Debt and Hybrid Securities, SEBI, and in soft copy via email to erp@sebi.gov.in. Notably, fees and charges are subject to 18% GST, and all documents like undertakings and declarations are also required in physical form.
SEBI’s Approval for Change in Control of ERPs
As per Regulation 28H(c) of CRA Regulations, all registered ERPs must seek prior approval from SEBI in the event of a change in control. Here are the key components of the process:
Application Submission: Through the Intermediary Portal (or via hard and soft copy until operational).
Required Documents: Current and proposed shareholding structure, history of past applications, regulatory actions (if any), pending complaints or litigations, confirmation of fee payments, and a comprehensive declaration-cum-undertaking.
Declarations Must Cover: No board changes before SEBI approval, mandatory communication with clients before implementing the change, and adherence to SEBI’s ‘fit and proper person’ norms.
SEBI’s prior approval is valid for six months, within which the ERP must apply for fresh registration post-change in control. If the ERP deals with products regulated by another authority, a No Objection Certificate (NOC) from the concerned body is also required.
Special Cases Involving NCLT-Approved Schemes
If the change in control is part of a scheme of arrangement requiring NCLT approval, the following must be observed:
Apply to SEBI before approaching NCLT.
SEBI will issue in-principle approval (valid for three months).
Within 15 days of the NCLT order, the ERP must submit a final application to SEBI along with all supporting documents, including the NCLT order, approved scheme, and explanations for any deviations.
Transfer of Business Between Legal Entities
In situations where a SEBI-registered ERP transfers its regulated business to another legal entity:
The transferee must obtain fresh SEBI registration if not already registered in the same capacity.
New registration numbers are issued in both regulatory and non-regulatory transfers.
In the event of a change in control, fresh registration and SEBI’s prior approval are mandatory.
If the transferor ceases to exist, its registration must be surrendered. In partial transfers, the original registration may continue.
Conclusion
SEBI’s framework for registering and monitoring ERPs underscores its commitment to building a robust and credible ESG rating landscape in India. By digitizing the registration process and enforcing rigorous disclosure norms for changes in control or business structure, SEBI ensures that ERPs operate with the same standards of transparency, integrity, and investor protection that it mandates across the broader financial market. These measures not only enhance governance but also strengthen investor trust in ESG metrics, which are becoming increasingly central to responsible investing.