CRISIL to Establish ESG Rating Providers Association

On August 12, 2024, CRISIL announced that the Board of Directors of its wholly-owned subsidiary, CRISIL ESG Ratings and Analytics Limited, has approved the creation and subscription to a private company.

CRISIL ESG Ratings and Analytics Limited is a step-down subsidiary of CRISIL Limited.

The proposed entity, which may be named the “Association of ESG Rating Providers” or any other name approved by the Ministry of Corporate Affairs, will be formed as a Section 8 company under the Companies Act 2013. This type of company is limited by guarantee and does not have a share capital, and it will function as an association for ESG Rating Providers (ERP) in India.

CRISIL ESG Ratings & Analytics Limited will guarantee the association’s assets for ₹25,000 in case it is wound up. The acquisition does not fall under related party transactions, and the promoter/promoter group or group companies are not interested in the acquired entity. The transaction is conducted at “arm’s length.” The entity will function as an association for SEBI-registered ESG Rating Providers.

Objective of Acquisition

The association is being formed primarily to promote the interests of ESG Rating Providers (ERPs), particularly in response to regulatory changes. It aims to serve as a unified voice for the ERP industry in discussions with regulatory bodies and other forums. Additionally, the association will work to increase awareness and understanding of ESG ratings within the market, providing a common platform for industry engagement with SEBI and other regulators.

Acquisition Details

Indicative Time Period for Completion: The proposed association is expected to be formed within the next 6 months, with possible extensions if necessary to complete the necessary steps mentioned above.

Nature of Consideration: No consideration is payable as the association will be a company limited by guarantee. The guaranteed amount of ₹25,000 will only be payable if the association is wound up.

Percentage of Shareholding/Control Acquired: The proposed association will not issue shares, as it is a company limited by guarantee. CRISIL ESG Ratings and Analytics Limited will be one of the first subscribers to the Memorandum of Association, holding 50% voting rights initially, subject to the admission of new members.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.