Sebi reverses licence cancellation of Brickworks Ratings, but tells it to comply with rules

Capital markets regulator Sebi has revoked its earlier order cancelling the licence of Brickwork Ratings, after the Securities Appellate Tribunal in June asked Sebi to “reconsider the quantum of penalty”. Sebi has allowed Brickworks to operate, but with several restrictions and subject to fulfilling compliance requirements.

In the new order dated September 13, Sebi has asked Brickwork Ratings not to onboard new clients or take fresh mandates from existing clients for six months. Sebi has also asked the company to broadbase its board to take the total number of board members to nine. “The new members who are inducted to the Board shall either be Independent Directors or Non-Executive Directors not related/connected to the founding management of the Noticee.” Sebi said in its order.

Sebi also asked the company to ensure that CRO (Chief Rating Officer) has adequate experience in credit rating and risk management, and shall also undergo in-depth training by an entity not related/connected to the company, to familiarise themselves with the regulatory framework. The company must also appoint an independent CEO within the next 3 months. Sangeeta Kulkarni has been the CEO of the company since its inception in 2005.

Sebi has given the company 5 months time to comply with the orders that have been given. Sebi also said they will complete the review within 6 months.