The report has been made public for comments and the Sebi board would clear the report after incorporating the same, which are to reach the regulator by October 26.

The committee has recommended that a clause should be incorporated in the listing agreement with stock exchanges mandating companies to co-operate with rating agencies in giving correct and adequate information.Issuers should be required to incorporate an undertaking in the offer document promising necessary co-operation with the rating agency in providing true and adequate information.

According to a statement issued by Sebi, only those ratings of securities will be regulated by Sebi which are used orproposed to be used by the issuers to comply with or fulfil a requirement prescribed by Sebi in any of its regulations or guidelines.

The regulations will cover the rating of securities only and not cover the rating of fixed deposits, LPG dealers, corporates, foreign exchange, countries etc as they do not fall under the regulatory purview of Sebi.A credit rating agency could be promoted by a public financial institution, a scheduled bank, a foreign bank operating in India, a foreign credit rating agency recognised in the country of its incorporation, having atleast five years experience in rating or any other company having a continuous minimum networth of Rs 100 crore for five years prior to filing its application to Sebi.

The promoters would be required to collectively hold atleast 26 per cent of the paid-up capital of an agency for a minimum period of five years.There should be no minimum networth or infrastructure prescribed for a credit rating agency.

If a company's securities are rated by anassociate, then another rating should be compulsorily obtained and disclosure of both ratings should be prescribed.

Uniform rating symbols across rating agencies should not be insisted upon.Sebi's inspection of a rating agency should not normally judge the appropriateness of analysis by a rating agency for arriving at a rating decision. Inspections for judging appropriateness should be very sparingly undertaken in cases of serious complaint and such inspections should be carried out only by a panel constituted by Sebi consisting of majority of independent experts with relevant experience.

Standardisation of methodology across rating agencies should not be insisted upon. Composition of the rating committee should be left to the discretion of a rating agency.

The rating agencies should not be disallowed from investing in the securities issued by their clients. They should be required to frame their own norms for investments in such securities.

Deterioration of the financial condition of a credit ratingagency should not be a reason for the cancellation of certificate of registration.