Training on sovereign risk credit analysis, October 24

Rotation policy

1. General provisions

1.1. This Rotation policy (hereinafter – Policy) was developed in order to establish requirements to rotation of ACRA’s Rating Analysts.

1.2. The present Policy was developed in accordance with requirements of clause 6 of Article 10 of the Federal Law No. 222-FZ, dated July 13, 2015, "On Activity of Credit Rating Agencies in the Russian Federation, on Amending Article 76.1 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and Recognizing Null and Void Certain Provisions of Legislative Acts of the Russian Federation".

1.3. The present Policy shall be posted on ACRA’s website after it is approved by the Board of Directors.

2. List of terms and definitions

2.1. ACRA – Analytical Credit Rating Agency (Joint-Stock Company).

2.2. Analytical Unit – a set of ACRA’s business units, performing such functions as analysis of Rated Entities’ creditworthiness in accordance with the adopted Methodology, as well as preparation and implementation of Rating Actions.

2.3. Lead Rating Analyst – a Rating Analyst whose main responsibilities include interaction with a Rated Entity on a specific Credit Rating, preparation of documents and proposals for the Rating Committee with regard to such a Credit Rating.

2.4. Compliance Director – an ACRA’s employee performing the functions of a comptroller (head of the Compliance and Internal Control Service).

2.5. Credit Rating – an ACRA opinion on the Rated Entity’s ability to meet its financial obligations (creditworthiness) and/or on the credit risk of its specific financial obligations or financial instruments, which is expressed through a rating category.

2.6. Rating Analyst – an employee of ACRA’s Analytical Unit performing analytical functions required for Rating Actions.

2.7. Rated Entity – a legal or a public-law entity which ability to meet its assumed financial obligations (creditworthiness, financial accountability and financial sustainability) is explicitly or implicitly evaluated in an ACRA’s Credit Rating.

2.8. Rating Actions – any of the listed events performed with regard to a Credit Rating of a Rated Entity: assignment, affirmation, review, approval and withdrawal, as well as assignment or revision of a Credit Rating forecast.

3. Requirements to rotation of Rating Analysts

3.1. ACRA shall ensure a procedure of rotation (replacement of Lead Rating Analysts who participate in preparation of a Credit Rating or Credit Rating forecast with regard to one Rated Entity).

3.2. Lead Rating Analysts are not allowed to participate in Rating Actions, related to one and the same Rated Entity, for more than four consecutive years  and for more than five consecutive years in relation to sovereign credit ratings.

3.3. Lead Rating Analysts who terminated their participation in Rating Actions, related to one Rated Entity, due to rotation are not allowed to participate in Rating Actions related to this Rated Entity for two years following the rotation.

3.4. Compliance Director maintains control over rotation of Lead Rating Analysts.

4. Final provisions

4.1. ACRA shall undertake all required measures to prevent violation of requirements of this Policy by ACRA’s employees.

4.2. Failure to comply with requirements of this Policy can result in disciplinary action against an employee, up to and including termination of employment.

4.3. Any deviations from this Policy should be documented in writing and agreed upon by the Compliance Director and the Board of Directors pursuant to the procedure established by ACRA’s internal documents. Any deviations from this Policy resulting in a breach of requirements contained in government regulations of the Russian Federation and requirements of the Bank of Russia are not permitted.

4.4. This Policy shall come into force after 7 business days from the moment of its approval by the ACRA’s Board of Directors and shall be valid until approval of an updated or substituting document.

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