Upload
others
View
6
Download
0
Embed Size (px)
Citation preview
February 2015
THE PAKISTAN CREDIT RATING AGENCY LIMITED
CODE OF CONDUCT
EMPLOYEE CODE OF
CONDUCT
CONTENTS
Defined Terms 1
Statement of Integrity
A Guiding Set of Principles 8
Open Door Communication 8
Work Environment 9
Ethical Business Practices 9
Business Records
Gifts, Entertainment or Things of Value
Intellectual Property
Quality & Integrity 10
Confidentiality 11
Restrictions & Requirements
Authorized Access & Use
Trade Secrets & Proprietary Information
Employee Personal Data
Securities Investment & Trading 13
“Insider Trading” & “Tipping”
Securities Ownership & Participation in
a Rating Action
Conflicts of Interest 13
Rating Fee
Business Conference / Panel
Discussions & Speaking Engagements
Investor Calls / Inquiries
Firewalls
Disclosure
Significant Interest
Outside / Personal Activities
Business / Investment Opportunities
Code Administration 16
Regulatory Requirements / Best
Practices 16
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 1 of 20
February 2015 www.pacra.com
DEFINED TERMS
Affiliate
The term is synonymous to “associated companies” and “associated undertakings” as
defined in Pakistan’s Companies Ordinance (1984), Part 1, Clause 2 of 2:
“Any two or more companies or undertakings, or a company and an undertaking,
interconnected with each other in the following manner:
i If a person who is the owner or a partner or director of a company or undertaking, or
who, directly or indirectly, holds or controls shares carrying not less than twenty
percent of the voting power in such company or undertaking, is also the owner or
partner or director of another company or undertaking, or directly or indirectly, holds
or controls shares carrying not less than twenty percent of the voting power in that
company or undertaking , or
ii If the companies or undertakings are under common management or control or one is
the subsidiary of another”
Types of
Affiliate Description Status
Rating
Affiliate
An Affiliate primarily involved in
providing Rating products and
services
PACRA has no Rating Affiliate
Non-Rating
Affiliate
An Affiliate primarily involved in
providing Non-rating products
and services
PACRA has one Non-Rating
Affiliate by the name of PACRA
Analytics (Private) Limited – a
wholly owned subsidiary
Applicable Law
All statutory regulations / laws applicable upon PACRA or which PACRA has decided to
follow:
Regulator Law / Regulations
Securities &
Exchange
Commission of
Pakistan (SECP)
Credit Rating Companies Rules, July 26, 1995
Code of Conduct for Credit Rating Companies/Agencies,
January 13, 2014
The Companies Ordinance, 1984 (Ordinance Number XLVII
OF 1984)
Listed Companies (prohibition of insiders trading) Guidelines,
March 27, 2001
State Bank of
Pakistan (SBP)
Criteria for the recognition of External Credit Assessment
Institutions, July 04, 2005
Association of
Credit Rating
Agencies in Asia
(ACRAA)
Code of Conduct Fundamentals for Domestic Credit Rating
Agencies, April 2011
Business
Records
All formal Documents / Reports that require to be preserved (for a designated period of
time) as per PACRA current practice or Applicable Law (Clause 2.1-d & 2.1-e of SECP
Code of Conduct for Credit Rati-ng Companies / Agencies, January 13, 2014)
2.1-d: Keep the following records in support of each credit rating and review thereof:
i Summary of discussions with the issuer, its management, auditors and creditors which
have a bearing on the credit rating;
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 2 of 20
February 2015 www.pacra.com
ii Decisions of the rating committee, including voting details and notes of dissent, if
any, by any member of the rating committee; and
iii Where a quantitative model is a substantial component of the credit rating process, the
rationale for any material difference between the credit rating implied by the model
and the credit rating actually assigned.
2.1-e: Ensure that for all ratings whether active, withdrawn or matured, records shall be
maintained for a period of not less than five years and in case of instrument rating/grading,
the time period of five years shall be reckoned from the date of maturity of such
instrument
Client
PACRA entertains two kinds of Clients (including existing and potential)
i Rating Client: An entity / issuer, whose rating assignment is to be undertaken,
having signed a Rating Mandate with PACRA
ii Non-Rating Client: Any party having an assignment mandate with PACRA for
any Non-rating product or service
Codes of
Conduct
Sets of Standards (Do’s & Don’ts) governing day-to-day conduct. PACRA has the
following Codes of Conduct:
i PACRA Code of Conduct
ii Rating Committee (RC) Code of Conduct
iii Employee Code of Conduct
iv Board Code of Conduct
Communication
Cell
A separate function / cell established inside PACRA responsible for communication with
market participants and the public about any questions, concerns or complaints that
PACRA may receive. Communication Cell may resort to seeking counsel to resolve
queries
Company The Pakistan Credit Rating Agency Limited (PACRA)
Compliance
Communication
Confidential
Information
PACRA classifies information as Public or Confidential / non-public.
Public Information is information available in a legitimate manner (website
dissemination, subscription etc.). For instance, all information on PACRA’s website is
Public Information. Similarly, PACRA Detailed Report Package of a Public Rating is
considered Public Information because it is available to everyone, though PACRA may
charge for it.
Confidential Information is any data or information, tangible or intangible, material
(sensitive) or not, that is either:
i Not available without the explicit consent of the owner of such information
ii Capable of: (a) Having an effect on the market for a Security, and (b) Affecting
the investment decision of an investor
iii Made available to PACRA with the implicit or explicit understanding / agreement
that it would remain confidential; and / or
iv Proprietary to PACRA so that PACRA is the originator of such information
Confidentiality
Agreement A formal, written agreement between one, who discloses information that it considers
confidential and the other, who receives such information, knowing fully well that the
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 3 of 20
February 2015 www.pacra.com
information is confidential, binding the latter to an oath of confidentiality
Conflict of
Interest (COI)
Conflict of interest (COI): A situation wherein an individual / organization, upholding a
position of trust and fiduciary responsibility, encounters a competing personal /
professional interest that has the potential to make it difficult for such individual /
organization to fulfill its position of trust / fiduciary responsibility objectively and
impartially:
i Potential COI: A COI that exists due to inherent aspects in a business model
despite institution of prudent systems and controls to manage such COI
ii Actual COI: A COI that comes into existence as a result of a failure in systems
and controls instituted to manage a potential COI
Discrimination
Preference for one employee over another on the basis of race, color, gender, age, religion,
national origin, marital status, disability, or any other characteristic
[The above mentioned characteristics are protected by international laws of equality and
non-discrimination (Universal Declaration of Human Rights, 1948; Article 2)]
Employees
Full-time or part-time individuals working for PACRA for a work-duration of minimum
90-days. All Employees are classified as per their Line of Business:
Types of
Employees Line of Business
Internal RC
Members
See Defined Term “Rating Committee (RC), RC Members”
later in this Section
Rating Analysts
Employees assigned to a Rating Team under any designation / job
title whose function is to:
a) assign ratings;
b) assist / arrange materials being considered for rating opinion;
c) supervise Employees included in (a) and / or (b)
Criteria
Employees
Employees responsible for formulating Criteria / Methodology,
Policies, Codes of Conduct, and transition and default studies
Business
Development
Employees
Employees responsible for business lead generation, negotiation,
marketing, and sales functions
Support
Employees
Employees responsible for performing support functions such as
administration, accounting and finance, information technology,
compliance
Analytical
Employees Employees responsible for performing non-rating business
Family Member
The term “Family Member” shall include only those family members who are dependent
of the analyst (SECP Code of Conduct for Credit Rating Companies / Agencies, issued
January 13, 2014; Clause 3.1-a-xv) – Via SECP Letter No: SMD / CIW / CR / 03 / 2009 dated
February 10, 2015
Harassment
Harassment encompasses any action (psychological, verbal, physical) directed from one
employee towards another (the “recipient”), whereby:
Submission to such action is either explicitly or implicitly made a term or
condition of the recipient’s employment;
Submission to or rejection to submit is used as the basis for employment decisions
(promotion / demolition / performance evaluation) affecting the recipient; or
Such action has the purpose or effect of unreasonably interfering with the
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 4 of 20
February 2015 www.pacra.com
recipient’s work performance or creating an intimidating, hostile, or offensive
work environment
Insider “A person who is a director, chief executive, managing agent, chief accountant, secretary
or auditor of a listed company or the beneficial owner holding directly or indirectly not
less than 10% of the shares of a listed company; or a person who, is or was connected with
the company or is deemed to have been connected with the company, and who is
reasonably expected to have access, by virtue of such connection, to unpublished price
sensitive information….” – Clause 2-g of SECP Listed Companies (Prohibition of insiders
trading) Guidelines – March 27, 2001
Insider Trading Trading a Security while in possession of Confidential Information
IOSCO Code of
Conduct
The International Organization of Securities Commissions (IOSCO) is an association of
organizations (securities commissions / key regulators) that regulate the world’s securities
markets. Having members from over 100 different countries, the organization’s role is to
assist its members to promote high standards of regulation and best practices. IOSCO
Code of Conduct is the gold standard to be followed by credit rating agencies around the
world
The controlling version of IOSCO Code of Conduct Fundamentals for Credit Rating
Agencies (May 2008) is maintained on PACRA’s website: www.pacra.com
Issuer Any entity by which a security has been / being issued
Line of Business
Areas of activity / functionality at or in PACRA: (i) Ratings, (ii) Criteria, (iii) Business
Development, (iv) Support (Administration, Accounts and Finance, Information
Technology, Compliance), (v) Non-rating business
Own/
Ownership
All methods by which a Covered Person may possess an interest in a Security including
direct and beneficial ownership:
“Beneficial Ownership of Securities of any person shall be deemed to include the
securities beneficially owned, held or controlled by him or his spouse or by any of his
dependent lineal ascendants or descendants” Clause 224 (3)-a of the Companies
Ordinance 1984 - Trading by directors, officers and principal shareholders
PACRA Policies PACRA’s official, documented statement on its business, conduct and processes
PACRA
Products and
Services
PACRA has two main businesses; (i) a Rating Business, and (ii) a Non rating Business
furnishing the following products and services respectively:
i Rating products and services: These are derived out of the rating process and
offered with respect to Ratings
ii Non-Rating / Analytics / Ancillary products and services: Constitutes all those
products and services that are not Rating products and services
PACRA Values
PACRA’s value system can be defined in a single word – Integrity defined as the
foundation underpinning all its acts.
PACRA Values are:
Honesty, Timeliness, Transparency, Teamwork, Knowledge
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 5 of 20
February 2015 www.pacra.com
Policy
Committee (PC)
Committee to deliberate upon matters pertaining to interpretation of PACRA Policies,
Codes of Conduct and Applicable Law. Apart from the permanent members, the
Committee may invite other Employees to participate, whenever deemed necessary:
PC Constitution
Members Designation
Managing Director Chairman
Chief Operating Officer Member
Compliance Officer Secretary
Primary
Analytical
Responsibility
Primary Analytical Responsibility constitutes all those Clients that are assigned in one’s
portfolio. It is determined based upon an Employee’s designated role:
Designated Role Primary Analytical Responsibility
i Rating Analyst Rating Analyst’s own Rating Portfolio
ii Analytical Employee Analytical Employee’s own Analytical Portfolio
iii Team Leader Rating Portfolio of all Employees under supervision
Ratee The entity / issuer whose rating is assigned
Rating also
termed Rating
Opinion
Rating reflects an opinion assigned by PACRA that is:
i Placed on a Rating Scale
ii Assigned as per an established Methodology
Currently, PACRA offers various types of Ratings, namely, Entity Ratings, Instrument
Ratings, Structured Finance Ratings, Insurer Financial Strength (IFS) Rating, Project
Grading, Fund Stability Rating, Star Ranking (Fund Performance) Ranking, Capital
Protection Rating, Asset Manager Rating and Security Agency Grading. In future,
PACRA may add other types of Ratings to its products and services menu
Rating
Committee
(RC), RC
Members
Rating Committee: PACRA Rating Committee (RC) is a forum whereby the rating
proposed by the Rating Team undergoes deliberation culminating in a decision as to what
the final rating would be. RC is core to the finalization of rating opinion. Rating
decisions are taken exclusively by the RC and not by any individual and are completely
independent of any influence.
RC Members: PACRA RC is structured to include both Internal (in-house) and External
RC Members:
Internal RC Member: A PACRA Employee who has been formally designated
in the position. He may have other responsibilities / functions in PACRA.
External RC Member: A person who has been nominated in this role by
PACRA. External RC member should not have any direct or indirect association
with PACRA or any of its directors and shareholders.
Rating Mandate An agreement enumerating the terms and conditions driving the rating relationship
between PACRA and the Ratee
Rating Report
Rating Report comprises two components:
(i) Report Package: A public document on PACRA’s website containing a rating
rationale, analyses, financials and regulatory and supplementary disclosures
(ii) Detailed Report Package: A public document (furnished primarily to the Client)
containing a long-form, explanatory version of the Report Package. Anyone,
other than the Client, may obtain it either through purchase from PACRA or
through the Client itself
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 6 of 20
February 2015 www.pacra.com
Rating Scale
A Scale comprising numeral / alphabet letter grades indicating position in a series or order
(from highest / best to lowest / worst). Each position on a Rating Scale corresponds to a
definition of such position.
Secondment
Transfer of human resource from any Line of PACRA Business to work on a specific
assignment (Rating or Non-rating Business) for any designated period of time OR until the
Assignment is completed or vice versa. This also covers transfer of human resource to /
from PACRA to PACRA Analytics (Pvt.) Limited (the Affiliate) or vice versa
Securities Stocks, bonds, commodities, foreign exchange currencies, indices and their derivatives
(futures contracts, options, etc.)
Selective
Disclosure
Intentional or unintentional release of Confidential Information to a select individual /
group
From PACRA’s point of view: Selective disclosure constitutes divulging the
rating opinion to anyone other than the Client before Public Dissemination. The
release of such information to the Client doesn’t constitute selective disclosure
From Client’s point of view: Selective disclosure constitutes divulging the rating
opinion to anyone else before Public Dissemination by PACRA
Senior
Management
Personnel
Herein, Managing Director (Mr. Adnan Afaq) and Chief Operating Officer (Mr. Shahzad
Saleem)
Service
Grievance
Complaint made by an Employee / group of Employees (in which he / she / they are the
affectees) pertaining to perceived: (i) violations of the employment contract and / or
PACRA Human Resource policy, (ii) Discrimination and Harassment in the workplace
Significant
Interest
Any interest in another company that would influence the Employee to make a decision
based on that company’s or the Employee’s own interests rather than PACRA’s is
considered “significant.” An interest can be financial, such as owning stock, or personal,
such as a family or other close relationship with a company / its owner
The Code Employee Code of Conduct
The Compliance
Officer
Individual appointed by PACRA and notified to the Securities and Exchange Commission
of Pakistan as the Compliance Officer
Team & Rating
Team
Team: A typical PACRA Team in any Line of Business comprises a Team Leader and
team members reporting into the Team Leader
Rating Team: The make-up of a typical Rating Team designated to complete a single
rating assignment comprises a Lead Analyst, a support analyst (may or may not be present
in all Rating Teams) with one Team Leader. The Rating Team may be reinforced by
additional members, if deemed necessary, subject to the complexity of the rating
Team Leader Employee responsible for supervising the work of other Employees (team members)
Tipping
Tipping occurs when a Person, possessing Confidential Information, and fully aware of
the fiduciary / regulatory responsibility to safeguard misuse of such information, causes
another to trade upon such Confidential Information. Tipping is deemed to have taken
place simply by the act of conveying Confidential Information irrespective of whether or
not a Trade actually occurred using Confidential Information thus conveyed
Trade, Trading Any transaction:
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 7 of 20
February 2015 www.pacra.com
By which a person acquires or divests from a position in a Security, and
The Securities underlying such transaction are held for a period of less than three (3)
months
Vendor Any entity (individual or corporate) contracted to provide goods and services to PACRA
for a negotiated price
Ilnap:*;vln Conp. *r l*l.,li-:i jil'r'The Pakistan Credit Raling 4 Limited
Statemcnt oi lntegrify
FACAA is ccxmitted to providing quali{r pr*dricls ;rndservices. Il so doing, it is dedicated to a set of cr'rre FACF-AValnes, ail d{riveclfi'om integriq!'. PACRA define,r int*gril3'a=the fcrLurcla;irxr uncletpinning all its acts. As PA{*E€'s s',rst*'r::*dsir+Lr;=!e 1s d*penc1*ri ,;:r the confidener- *l' iis Ci1*nts, it is
ess*nliai io saieg*ard its inErgrity.
FPt il::st take every precauiiol to avoid Conflicts of luterest andLrse care and professional juclginent to maintain trath tliesul:stalce aiirl appeaiatce rf indeper:r1en*e mrl objectivity,pai'::*ularl,y with rerpe*l ir-: tl:e Cor:frrJ=::tial lnfcnnation thst isaceessibi= 1s s5 ir-lii*** :he i*u:i** r.Gulss of fulfiliing r:ur j*bduii+s,
.#ach r'ne of us :r--:r:s: riiligently elmply with Applic*ble Law;Codes cf Ccnil;el ,q-:rrl PACLA Folicies. At the saine time, notonly ar* we enlnisted to be responsible for our orvn actions but:.:lEa ibr fostering a cultnre in *4rich compliance i.vith ApplicableLarv. Codes ol Conduct and PACRA Falicies is piv*tal ti-'
business-speeifi c activirie:.
Fi*a=e nste th a: cornplialce with Applicable Lar.v, Corle= .:iCc,r;di:ct and I'ACRA Polieies is a *i:iriiition of err-:p!*yrjlerit atFACFS and lailing to cornply ina-v i*ad to initiaiir-''ir of a
il i -s+ip linal y process irrc 1 nding tenn iirati*r r.
^j..; I sec ii. e;sc,=il*ni corporate and finareiai perforniar;e* is an
oulrotle *l- hig!: staldards of govemance arrd compliar,ee. Asrve ii':i-:ns on becon:ing ihe pre-eminei:t rating ag-;1e-l in our:egion. lve mlist reeog+iz* rlat onlJ' one kirrd o1'perlor::rance
"vil1 lead :o sr:eers=. ar:d that is performance \.",,iij: ?I{?EGRITv.
A*i=reri AraeManirging Direc
il i:t ; * r {--a:1;:: :-. ilT?"*-*'" i ?:i il: iti . i: il a"i-i
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 8 of 20
February 2015 www.pacra.com
Capitalized terms have the meaning set forth in “Defined Terms”
1 A GUIDING SET OF
PRINCIPLES
1.1 Objective: PACRA Employee Code of Conduct is designed to help
bring Employees’ conduct in their day-to-day professional and business activities
in conformance with PACRA Values, Policies and Applicable Law.
1.2 Applicability: The Code is applicable on all Employees and External
RC Members.
1.3 PACRA’s functioning, designed for optimal utilization of its human
resources, routinely requires Employees to assume a role in more than one Line of
Business. As such, Employees need to ensure that they remain compliant,
wholly and simultaneously, with all Code provisions relevant to the Lines of
Business in which they are discharging responsibility at any given point in time.
1.4 All key external communications (other than Rating Services-related and
other routine communications) need to be pre-approved by the Managing Director
(MD) before being sent outside PACRA. An example of such communication is
PACRA Employees’ views / opinions expressed in print media / business seminar
/ panel discussion.
1.5 The Code is a statement of policies for individual and business conduct
and does not, in any way, constitute an employment contract or an assurance of
continued employment. In the event that any provision of this Code conflicts with
any provision in an Employee’s individual written employment contract, the
provisions in the latter will prevail.
1.6 The Code should be read together with all relevant PACRA Policies and
Applicable Law in order to achieve comprehensive understanding. Employees
and External RC Members are responsible for reviewing and understanding the
Code, the Policies and the Applicable Law to the extent related to them and their
Lines of Business.
1.7 At times, the Code and PACRA Policies may be stringent than the
Applicable Law. In all such cases, the stringent requirement will be applicable.
2 OPEN DOOR
COMMUNICATION
2.1 PACRA supports and maintains open door communications to report any
violations of Applicable Law, Codes of Conduct and PACRA Policies:
i Employees are encouraged to raise concerns and report instances of
violation immediately after assuring themselves of the authenticity of
such in the light of their understanding of Applicable Law, Codes of
Conduct and PACRA Policies
ii Team Leaders shall be available to discuss such concerns and investigate
instances in an environment free from distractions, and
iii Employees may directly contact the Senior Management either orally or
through e-mail
Retaliation against any Employee for reporting in good faith any such
concern and / or instance of violation is strictly forbidden and will not be
tolerated
2.2 PACRA strives to maintain an environment conducive to addressing any
issue that might be counterproductive to Employee performance and job
satisfaction. One such area is redressal of Service Grievance. PACRA
encourages its Employees to express, discuss and share any Service Grievance
that might be weighing on their minds:
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 9 of 20
February 2015 www.pacra.com
i In the first instance, each Team Leader is available to discuss Service
Grievances and facilitate resolution within the Team
ii In case, the Employee is unable to find satisfaction through discussion
with Team Leader, the Employee has recourse to a designated authority
PACRA has designated the MD as the Authority to redress a Service
Grievance
3 WORK
ENVIRONMENT
Zero tolerance for
Discrimination and
Harassment, at any
hierarchical level –
Inside & Outside
PACRA
3.1 PACRA’s goal is to nurture an environment conducive to encouraging
Employees to use the full range of their talents, skills and abilities.
3.2 The Code provisions for work environment are applicable: (i) Inside
PACRA (including inappropriate use of Company resources such as electronic
mail, messenger and the Internet to create harassment), and (ii) Outside PACRA -
PACRA-arranged events (professional and recreational both) and all external
official activities (Client site visit etc.)
i No Employee shall engage in discriminatory conduct against another
Employee
ii No Employee shall employ Harassment as a means to an end
iii In case an Employee informs PACRA that he / she has been subject to
Discrimination and / or Harassment during the course of discharging his /
her duties in the workplace by a non-employee (Client, Vendor), PACRA
will take appropriate corrective action and preventive steps in order to
remedy the situation
4 ETHICAL BUSINESS
PRACTICES
Business Records
Gifts & Entertainment
Intellectual Property
4.1 BUSINESS RECORDS:
Employees shall:
i Make reasonable efforts to safeguard Business Records and maintain
them in their designated location and format in order to ensure
preservation, speedy retrieval and prevent breach of confidentiality
ii Not create / destroy or participate in the creation / destruction of any
records that are intended to misrepresent and / or mislead anyone or
conceal anything from their rightful recipient
4.2 GIFTS, ENTERTAINMENT OR OTHER THINGS OF VALUE:
4.2.1 Employee or Family Member (either individually or as part of a group)
shall not:
i Accept any gift from any Client:
(a) In the form of cash / cash equivalent
(b) Regardless of its value, where there is any reason to believe that it is
being offered in an attempt to influence the Employee’s work
judgment, and /or
(c) Extravagant or lavish in nature, exceeding local social / business
customs
ii Accept gifts from any Client, if it is valued greater than $100. Gifts
valued upto $100 may be accepted provided permission of such is
obtained from the Team Leader
iii Receive personal benefits (such as loans or guarantees of personal
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 10 of 20
February 2015 www.pacra.com
obligations) as a result of their position, until and unless such have been
duly authorized and approved by the MD
4.2.2 Employee or Family Member (either individually or as part of a group)
may:
i Accept any travel or lodging facility related to a valid activity necessary
to conduct PACRA’s rating process such as a management meeting, site
visit etc.
ii Exercise discretion in accepting invitation to Client-sponsored
entertainment (for instance, musical concert etc.)
iii Accept meeting supplies such as notepads, pencils and food and beverage
during a business meeting
iv Extend tokens (greeting cards) to existing Clients
4.2.3 Business Development & Analytical Employees may:
i Extend reasonable gifts of a souvenir nature (for instance, PACRA
engraved pen) and tokens to Clients
4.3 INTELLECTUAL PROPERTY:
PACRA maintains and respects intellectual property rights for its own and third-
party work. Employees shall:
i Forfeit all rights to PACRA for the work performed by them such that
PACRA owns all copyrights and know-how associated with such work
and reserves the right to display, edit, maintain, destroy and sell it in any
manner it deems appropriate
ii Whenever referencing / using third-party copyrighted material in their
work, acknowledge the use of such material by giving due credit, and, if
required, obtain the consent, in writing, of the original owner
5 QUALITY &
INTEGRITY
5.1 Employees shall:
i Comply with all Applicable Law governing their activities in each
jurisdiction in which they operate
ii Deal fairly and honestly with Clients, subscribers, investors, other market
participants, Vendors and any other party with whom an existing or
potential business relationship is present
iii Maintain no proprietary interest in and entertain no reasonable
expectation of privacy while using any computer equipment or Company-
provided internet access, including electronic mail, instant messaging or
similar technologies
iv Not handle or save any personal data on Company computer storage
devices, if intending to avoid inspection
v Safeguard their passwords including not sharing them with other
Employees, for access to all intranet, computer and e-mail systems
vi Not attempt to disable or evade the operation of information protecting
Company-installed security features such as network access protocols,
virus protection, downloading and software / hardware addition / deletion
restrictions
vii Safeguard the laptops, smartphones or any other technology resource
provided to them by the Company taking steps to prevent such
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 11 of 20
February 2015 www.pacra.com
technology resources from being lost, stolen or accessed by an
unauthorized person
viii Not use PACRA’s money, materials, supplies or other resources,
including computers, to advance their personal interests
ix Use Company resources, including time, equipment, materials, resources
and information, solely for discharging their job responsibility
x Return all Company property and resources in their possession to
PACRA at the time of leaving employment
5.2 Business Development Employees shall:
i Not get involved in unfair competitive practices such as soliciting the
clients of any competitor on implicit or explicit assurance of higher rating
or any other undue benefit
5.3 Rating Analysts and RC Members shall:
i Use methodologies established by PACRA in assessing an entity /
issuer’s creditworthiness and apply a given methodology in a careful,
uniform and consistent manner, as determined by PACRA
ii Take steps to avoid issuing any credit analyses or reports that contain
misrepresentations or are otherwise misleading as to the general
creditworthiness of an issuer or obligation
5.4 Rating Analysts shall:
i Not either implicitly or explicitly, orally or in writing, give any assurance
or guarantee of a particular rating prior to a rating assignment. This does
not preclude them from developing prospective assessments / scenarios
used in structured finance and similar transactions
ii Refrain from making proposals or recommendations regarding the design
of structured finance products that PACRA rates
6 CONFIDENTIALITY 6.1 Restrictions & Requirements
6.1.1 Employees shall:
i Not use Confidential Information for any purpose other than to discharge
their responsibilities towards their jobs
ii Take measures to prevent the transfer and misuse of Confidential
Information by others
iii Exercise due care and diligence not to mention / discuss Confidential
Information in places where they can be overheard, such as taxis,
elevators or restaurants, or with Family Members or business or social
acquaintance
iv Not selectively disclose Confidential Information, when interacting with
investors, subscribers or any third-party
v Not refer to Confidential Information in any published report /
publication, until and unless prior consent to such disclosure has been
solicited from the Client. In the absence of such consent, Confidential
Information shall only be used to draw broad inferences in analysis
vi If requested to disclose Confidential Information by the Government of
Pakistan, state department / agency or a judicial authority (court,
lawyers), immediately forward such request to PACRA MD
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 12 of 20
February 2015 www.pacra.com
6.2 Authorized Access and Use:
6.2.1 Rating Analysts:
i May share Confidential Information pertaining to an individual Client
with other Rating Analysts when sharing of such information is deemed
necessary in order to formulate a sector study and / or to reach a rating
opinion for the other Client
ii May discuss the publically available analysis supporting a rating (Report
Package, Press Release) on investor calls
iii Shall bring all requests for information (even if, such request pertains to
non-confidential information) either from inside PACRA and / or outside
(from an Affiliate, a Client or any third-party) to the attention of the
Team Leader before acquiescing to it
iv Shall not e-mail any PACRA document(s) to Clients or any third-party
without copying the same to the Team Leader
v Shall place all PACRA documents exclusively in their designated place in
eFolders and Client Files and not leave their soft and hard copies in
undesignated places
vi Shall not access a fellow analyst efolder / Client file without prior notice
and only after explicitly stating the purpose / scope of such access
6.2.2 Rating Analysts & other Employees
i May share Confidential Information only to the extent necessary for the
latter to discharge their support / administrative responsibilities, achieve
compliance with regulatory reporting purposes and / or implement
PACRA Policies
6.2.3 Rating Analysts & Analytical Employees:
i Rating Analysts may share Confidential Information pertaining to an
individual Client with Analytical Employees in cases where an explicit,
written consent has been furnished by the Client of its own free will
allowing the sharing of such information for a clearly stated purpose /
assignment
ii Analytical Employees shall not disclose to Rating Analysts any
information on the name of any Non-Rating Business including the fee
paid for delivering such product or service
iii Rating Analysts shall not be Employees of a Non-Rating Affiliate and
vice versa. However, Rating Analysts and Analytical Employees may be
engaged by the Non-Rating Affiliate or Rating Company / Affiliate
respectively under Secondment
iv Rating Analysts and Analytical Employees shall not participate in any
assignment for Clients; they have worked upon within the last twelve (12)
months, while on Secondment as described in (iii) above
v Rating Analysts and Analytical Employees may collaborate on research
projects and/or product development provided the Confidential
Information exchanged is not specific to a particular Client
vi Rating Analysts and Analytical Employees may jointly sponsor business
events and conferences and appear on discussion panels and seminars
together
6.3 Trade Secrets and Proprietary Information:
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 13 of 20
February 2015 www.pacra.com
i Employees shall safeguard the confidentiality of PACRA’s trade secrets
and proprietary information (proprietary models / programs, product
designs, business plans) during the tenor of their employment at PACRA
and perpetually thereafter
ii Employees may disclose such information in the ordinary course of their
authorized business activities to parties (such as Vendors, consultants,
advisors, trainers etc.) with whom PACRA has entered into appropriate
Confidentiality Agreements
6.4 Employee Personal Data:
i Employees collecting, using, transferring and disclosing Employee
personal data for the purpose of discharging their job responsibilities shall
exercise caution to safeguard and maintain the confidentiality of such
information
7 SECURITIES
INVESTMENT &
TRADING
7.1 Prohibition on “Insider Trading” & “Tipping”
7.1.1 Employees and Family Members are prohibited from:
i Engaging in any Trade or causing / recommending another to Trade while
in possession of Confidential Information. This prohibition applies to
any:
Confidential Information concerning any Security, regardless of
whether or not it is rated by PACRA
Circumstance (occurring within or without PACRA) in which the
Employee or Family Member comes into possession of Confidential
Information
ii Engaging in any Trade or causing / recommending another to Trade while
in possession of Confidential Information relating to any Security that is
proprietary to PACRA
7.2 Securities Ownership & participation in a Rating Action
7.2.1 Rating Analysts shall be barred from:
i Participating in or otherwise influencing the determination of rating of
any particular Security if the Rating Analyst or Family Member:
Owns securities or derivatives of the rated entity, other than holdings
in diversified collective investment schemes
Owns securities or derivatives of any entity related to a rated entity,
the Ownership of which may cause or may be perceived as causing a
Conflict of Interest, other than holdings in diversified collective
investment schemes
8 CONFLICTS OF
INTEREST
8.1 Rating Fee:
i Although it is generally not possible to prevent entity / issuers and their
agents from raising issues concerning fees and billings with Rating
Analysts, in such cases, Rating Analysts shall refer these inquiries to
Accounts and Finance
ii If fee discussions occur at any meetings, discussions or other interactions
where Rating Analysts are present, they shall excuse themselves from the
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 14 of 20
February 2015 www.pacra.com
discussion
8.2 Business Conferences, Panel Discussions & Speaking Engagements:
i Rating Analysts may attend business conferences, seminars and panel
discussions hosted by industry forums / associations and entities / issuers
(Clients and potential Clients) that are widely attended by a broad range
of market participants
ii Rating Analysts may invite industry representatives, existing Clients and
potential Clients and their employees to be PACRA’s guest at appropriate
events (for instance, a conference, seminar held to create public
awareness for ratings)
iii Rating Analysts may express their views / opinions (based on their
knowledge and expertise gained from their position at PACRA) in print
and electronic media after soliciting approval from the MD (See 1.4
above)
iv Team Leaders may participate in panel discussions regarding sectors that
PACRA covers and other relevant topics (on which PACRA maintains a
view in public domain) hosted by industry forums / associations provided
such activity isn’t utilized as an opportunity to solicit business
8.3 Investor Calls / Inquiries:
i Rating Analysts are encouraged to be responsive to investor inquiries and
should proactively interact with investors on analytical topics
ii Team Leaders may attend one-on-one investor meetings provided such
activity isn’t utilized as an opportunity to solicit business
8.4 Firewalls:
8.4.1 Business Development & Accounts & Finance:
i For budgeting and planning purposes, Accounts & Finance may share and
discuss information concerning individual fees and billings, transactions,
sector and rating class-level revenue information and considerations on
market share with Business Development Employees
8.4.2 Business Development and Ratings:
i If a meeting is intended to cover only ratings-related analytical topics
such as annual rating reviews and surveillance, special reports, criteria or
rating methodologies, Business Development Employees (though not
required to be present) may attend, where appropriate, to gather first-
hand information for discharging their job responsibility (for instance,
new developments such as an expansion of rating universe and PACRA’s
impact in the market)
ii Team Leaders may attend meetings, discussions and interactions arranged
solely to secure new / future business, but only for the purpose of
discussing analytical views and risk considerations
8.4.3 Rating Analysts:
i Shall not recommend the purchase of any PACRA product or service
ii Shall not suggest or imply that the purchase of any particular PACRA
product or service will have a favorable effect on a Rating
iii Shall refer any inquiry about the Rating and / or Non-rating products and
services to an appropriate Analytical Employee or Business Development
Employee
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 15 of 20
February 2015 www.pacra.com
8.4.4 Analytical Employees:
i Shall not recommend to their respective clients the purchase of Rating
products and services as part of their engagement with such clients
ii Shall refer any inquiry about the Rating products and services to Business
Development Employees
8.5 Disclosure:
8.5.1 Rating Analysts and RC Members shall:
i Disclose any conflict of interest, including those of their Family Members
to Team Leaders and MD respectively
8.6 Significant interest:
8.6.1 Employees:
i Shall not acquire or maintain a Significant Interest in any entity / issuer,
decisions on behalf of which may compete with decisions that the
Employees make on behalf of PACRA as part of their job
ii Shall not take a part-time or second job without express written
permission of MD
iii Shall not be hired to work as a consultant or other independent contractor
for PACRA where payment is made outside normal payroll routines
iv Shall base purchasing decisions (equipment, insurance, office supplies
etc.) on the basis of quality, price and service, irrespective of the fact that
a potential Vendor is also a Client
8.6.2 Rating Analysts:
i Shall not participate in or otherwise influence the determination of the
rating of any Client, if they:
a Have had a recent employment or other significant business
relationship (shareholder, director), during the last one year, with the
Client
b Have a Family Member currently working for the Client
c Have, or had (within the last one year), any other relationship with
the Client or any related entity / issuer
ii Shall promptly disclose to the Team Leader if, at any time, they become
involved in any personal relationship that creates the potential for any
real or apparent Conflict of Interest (including, for example, any personal
relationship with an employee of a rated entity / issuer within his/her area
of Primary Analytical Responsibility)
iii Shall not join, within one year of leaving PACRA, any entity within the
Primary Analytical Responsibility
8.7 Outside / Personal Activities:
i Employees may participate in any legal and ethical outside / personal
activity of their choice - including participation in the political process or
a social organization, expressing their personal views and opinions on
any subject in media - on their own time
ii Such activities may be pursued by above without violating the Code as
long as care is exercised not to imply that Employees are acting on behalf
of PACRA. Thus:
Employees are not permitted to allow their PACRA affiliation to
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 16 of 20
February 2015 www.pacra.com
be noted in any outside organization’s promotional materials /
brochures or activities
8.8 Business / Investment Opportunities:
i Employees, upon learning of a business / investment opportunity (that , in
their opinion, may be of interest to PACRA) through the use of PACRA
resources (their position at PACRA, conversation with existing Clients
and potential Clients, Vendors, business associates) shall consider it their
duty to inform PACRA and refrain from capitalizing upon such
opportunity for their personal gain till the time they are reasonably certain
that PACRA is no longer considering such opportunity
9 CODE
ADMINISTRATION
9.1 Certification: All Employees affirm their adoption, adherence and
compliance to PACRA Employee Code of Conduct at the time of their entry to
PACRA and annually thereafter:
9.2 Interpretation: The Policy Committee is responsible for interpreting and
applying the Code to specific situations when questions arise.
9.3 Investigations of Suspected Violations: All reported violations will be
promptly investigated and treated confidentially to the extent reasonably possible.
9.4 Disciplinary Policy: Compliance with all Codes of Conduct and PACRA
Policies, including this Code, is a condition of employment and failing to comply
will lead to initiation of a disciplinary process including termination. Compliance
with the Codes of Conduct and PACRA Policies shall be monitored on periodic
basis.
Employees shall cooperate fully to provide truthful, accurate
information and to respond to requests for certifications
The controlling version of the Employee Code of Conduct and PACRA
Policies are available on the website:
www.pacra.com
10 REGULATORY
REQUIREMENTS
& BEST
PRACTICES
10.1 PACRA’s compliance to SECP’s regulatory requirements, the Applicable
Law and IOSCO Code of Conduct in terms of Employee Code of Conduct is as
follows:
PACRA’s Compliance for Employee Code of Conduct
SECP’s Code of Conduct for Credit Rating Companies (CRCs)
SECP Regulation Code Clause
2.1-(b): ensure that analysts follow the defined rating
criteria, methodologies and procedures carefully,
uniformly and in a consistent manner as consistent
application of rating criteria, methodologies and
procedures is essential for comparing;
2.3.2-(a): CRA shall:
frame and implement whistle-blower policy encouraging
all employees to intimate the compliance officer any
unethical practice or misconduct relating to the credit
Clause 5.3-(i)
Section 2: Open Door
Communication and
PACRA Whistleblower
Policy
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 17 of 20
February 2015 www.pacra.com
rating, by another employee of the CRA that came to his
knowledge;
2.3.3-(a): CRA shall:
maintain principle of integrity in seeking rating business;
3.1-(a): CRA shall ensure that:
vii: it shall not provide consultancy/advisory services or
other services to any of its clients or to any of its clients’
associated companies and associated undertakings that is
being rated or has been rated by it during the preceding
three years unless it has adequate mechanism in place
ensuring that provision of such services does not lead to a
conflict of interest situation with its rating activities;
xii: an analyst having any interest in a credit rating or any
of his family members has any such interest, shall not be
involved in such rating process;
xiv: the analysts and members of the rating committees
including the external members have disclosed all the
conflict of interest, including those of their family
members, if any, to the officer designated by the CRA for
the purpose; and
xv: the analysts or any of its family members shall not
buy or sell or engage in any transaction in any security
which falls in the analyst’s area of primary analytical
responsibility. This clause shall, however, not applicable
on investment in securities through collective investment
schemes.
Clause 5.2-(i)
Clauses 6.2.3,
Clauses 8.4.3 and 8.4.4
Clauses 8.6.2
Clause 8.5.1
Clauses 7.2.1
Annexure V-(1):
The CRA must have a Code of Conduct for its employees,
hereinafter referred to as the Employees’ Code of Conduct
Employee Code of
Conduct developed &
disclosed on website
IOSCO Code of Conduct for Credit Rating Agencies (IOSCO)
IOSCO Provision Code Clause
1.3: In assessing an issuer’s creditworthiness, analysts
involved in the preparation or review of any rating action
should use methodologies established by the CRA.
Analysts should apply a given methodology in a
consistent manner, as determined by the CRA.
1.6: A CRA and its analysts should take steps to avoid
issuing any credit analyses or reports that contain
misrepresentations or are otherwise misleading as to the
general creditworthiness of an issuer or obligation.
1.11: A CRA and its employees should comply with all
applicable laws and regulations governing its activities in
each jurisdiction in which it operates.
1.12: A CRA and its employees should deal fairly and
honestly with issuers, investors, other market participants,
and the public.
1.13: A CRA’s analysts should be held to high standards
of integrity, and a CRA should not employ individuals
Clause 5.3-(i)
Clause 5.3-(ii)
Clause 5.1-(i)
Clause 5.1-(ii)
* Section 5: Quality &
Integrity
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 18 of 20
February 2015 www.pacra.com
with demonstrably compromised integrity.
1.14: A CRA and its employees should not, either
implicitly or explicitly, give any assurance or guarantee of
a particular rating prior to a rating assessment. This does
not preclude a CRA from developing prospective
assessments used in structured finance and similar
transactions.
1.14-1: A CRA should prohibit its analysts from making
proposals or recommendations regarding the design of
structured finance products that a CRA rates.
1.16: Upon becoming aware that another employee or
entity under common control with the CRA is or has
engaged in conduct that is illegal, unethical or contrary to
the CRA’s code of conduct, a CRA employee should
report such information immediately to the individual in
charge of compliance or an officer of the CRA, as
appropriate, so proper action may be taken. A CRA’s
employees are not necessarily expected to be experts in
the law. Nonetheless, its employees are expected to report
the activities that a reasonable person would question.
Any CRA officer who receives such a report from a CRA
employee is obligated to take appropriate action, as
determined by the laws and regulations of the jurisdiction
and the rules and guidelines set forth by the CRA. CRA
management should prohibit retaliation by other CRA
staff or by the CRA itself against any employees who, in
good faith, make such reports.
2.2: A CRA and its analysts should use care and
professional judgment to maintain both the substance and
appearance of independence and objectivity.
2.5: A CRA should separate, operationally and legally, its
credit rating business and CRA analysts from any other
businesses of the CRA, including consulting businesses,
that may present a conflict of interest.
2.9: A CRA and its employees should not engage in any
securities or derivatives trading presenting conflicts of
interest with the CRA’s rating activities.
2.12: A CRA should not have employees who are directly
involved in the rating process initiate, or participate in,
discussions regarding fees or payments with any entity
they rate.
2.13: No CRA employee should participate in or
otherwise influence the determination of the CRA’s rating
of any particular entity or obligation if the employee:
a: Owns securities or derivatives of the rated entity, other
than holdings in diversified collective investment
schemes;
b: Owns securities or derivatives of any entity related to a
rated entity, the ownership of which may cause or may be
perceived as causing a conflict of interest, other than
holdings in diversified collective investment schemes;
c: Has had a recent employment or other significant
business relationship with the rated entity that may cause
* Statement of Integrity
Clause 5.4-(i)
Clause 5.4-(ii)
Section 2: Open door
Communication and
PACRA Whistleblower
Policy
Clauses 4.2
Clauses 8.4.3 and 8.4.4
Clauses 7.2
Clauses 8.1
Clauses 7.2 and 8.6.2
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 19 of 20
February 2015 www.pacra.com
or may be perceived as causing a conflict of interest;
d: Has an immediate relation (i.e., a spouse, partner,
parent, child, or sibling) who currently works for the rated
entity; or
e: Has, or had, any other relationship with the rated entity
or any related entity thereof that may cause or may be
perceived as causing a conflict of interest.
2.14: A CRA’s analysts and anyone involved in the rating
process (or their spouse, partner or minor children) should
not buy or sell or engage in any transaction in any security
or derivative based on a security issued, guaranteed, or
otherwise supported by any entity within such analyst’s
area of primary analytical responsibility, other than
holdings in diversified collective investment schemes.
2.15: CRA employees should be prohibited from
soliciting money, gifts or favors from anyone with whom
the CRA does business and should be prohibited from
accepting gifts offered in the form of cash or any gifts
exceeding a minimal monetary value.
2.16: Any CRA analyst who becomes involved in any
personal relationship that creates the potential for any real
or apparent conflict of interest (including, for example,
any personal relationship with an employee of a rated
entity or agent of such entity within his or her area of
analytic responsibility), should be required to disclose
such relationship to the appropriate manager or officer of
the CRA, as determined by the CRA’s compliance
policies.
3.13: CRA employees should take all reasonable measures
to protect all property and records belonging to or in
possession of the CRA from fraud, theft or misuse.
3.14: CRA employees should be prohibited from engaging
in transactions in securities when they possess confidential
information concerning the issuer of such security.
3.15: In preservation of confidential information, CRA
employees should familiarize themselves with the internal
securities trading policies maintained by their employer,
and periodically certify their compliance as required by
such policies.
3.16: CRA employees should not selectively disclose any
non-public information about rating opinions or possible
future rating actions of the CRA, except to the issuer or its
designated agents.
3.17: CRA employees should not share confidential
information entrusted to the CRA with employees of any
affiliated entities that are not CRAs. CRA employees
should not share confidential information within the CRA
except on an “as needed” basis.
3.18: CRA employees should not use or share confidential
information for the purpose of trading securities, or for
any other purpose except the conduct of the CRA’s
business.
Clauses 7.2
Clauses 4.2.1-(i)
Clause 8.6.2-(ii)
Clauses 5.1-(v) to (x)
Clauses 7.1
Section 7: Securities
Investment & Trading
Clause 6.1.1-(iv)
Clauses 6.2
Clause 6.1.1-(i)
The Pakistan Credit Rating Agency Limited
EMPLOYEE CODE OF CONDUCT
CODE OF CONDUCT Page 20 of 20
February 2015 www.pacra.com
ISSUED BY:
THE PAKISTAN CREDIT RATING AGENCY LIMITED
Awami Complex, FB-1, Usman Block, New Garden Town
Lahore
Phone: +92 42 3586 9504 - 6
Fax: +92 42 3583 0425