Policy for Unsolicited Ratings

Policy for Unsolicited Ratings

The purpose of this policy is to provide greater transparency to capital market participants with respect to published credit ratings that are initiated by Beacon Ratings, and not by entities and issuers of financial instruments.

As a publisher of credit rating opinions, licensed, regulated and supervised credit rating agency, Beacon Ratings reserves the right to issue unsolicited credit ratings, pursuant to the Securities Industry (Credit Rating Agencies) Guidelines 2021, Part Two, Article 5(16).

For credit rating to be designated as unsolicited, the rating must satisfy the following conditions:

(a) It must be initiated by Beacon Ratings and not requested by target entity or issuer.

(b) It must be at the request of parties other than the target entity or issuer.

(b) It must be the first credit rating for the target entity or issuer.

Beacon Ratings would undertake unsolicited ratings when it believes, among other things:

(a) The rating is warranted to provide important benchmarking in a particular sector for the benefit of market participants.

(b) The rating would provide an informational benefit to market participants.

(c) It is a business strategy to provide ratings for a certain type of entities, for certain sectors or for entities undergoing certain corporate or business events.

(d) The rating is analytically relevant for other analysis that Beacon Ratings provides to the market.

Beacon Ratings’ decision to publish an unsolicited rating will be based on the following:

(a) There is sufficient and adequate information and documentation available to assess, assign, maintain the ratings.The term sufficient and adequate information and documentation refers to all financial and essential non-financial information in the public domain.

(b) The assessment and publication of such ratings is useful to the capital market.

Beacon Ratings will undertake unsolicited rating using publicly available information without a direct request from entities. However, for entities to come under the scope of an unsolicited rating, the primary criterion is whether the information publicly available is of a level sufficient to serve as a base for a reliable rating. For an unsolicited rating to be undertaken it is necessary that data legally disclosed to the public be complete and contain all critical data needed to provide rating.

For Beacon Ratings’ criteria, the term sufficient and adequate information and documentation refers to all financial and essential non-financial information in the public domain.

The following procedures are followed in initiating unsolicited rating:

(a) Senior management of the relevant entity will be notified in writing that its entity and/or debt instrument has come under rating and the rating process has started.

(b) Entity receiving the notification may voluntarily submit supplemental non-public information and documentation as well as request for a meeting with Beacon Ratings.

(c) Upon confirmation that the notification letter has been received by entity’s management:

(1) If within two (2) days, Beacon Ratings does not receive written notification from the entity that additional non-public information and documentations will be forthcoming, the unsolicited rating process will still continue and rating report will be published on the Beacon Ratings’ website, and be released to relevant agencies including Securities and Exchange Commission, Ghana Stock Exchange and the media.

(2) If within two (2) days, Beacon Ratings received written notification from the entity promising to provide additional information and documentations within seven (7) days, then the publication of the unsolicited rating report will be suspended until such information is received and assessed together with the publicly available information.

(3) Upon receipt of a written request from the entity for extension, the seven (7) days period may be extended to fourteen (14) days, and in special and necessary circumstances, up to thirty (30) days.

(4) Beacon Ratings will determine whether the supplementary information and documentation will significantly affect the rating and whether the rating process should restart.

(5) If within the stated initial seven (7) days Beacon Ratings does not receive the additional information and documentation, the unsolicited rating process will still continue and rating report will be published as stated.

(d) Following completion of additional information and documentation period and re-assessment, Beacon Ratings will publish the rating report within the framework of public disclosure.

(e) Unsolicited rating works will continue for a period of three (3) successive financial years. Annual surveillance will be conducted, looking out for circumstances or conditions that will cause change in the initial rating. Annual rating will thus be published accordingly.

(f) Beacon Ratings will disclose in the rating report any fee or similar benefit received or expected to be received from third-parties.

(g) The rating report will include a statement that, assigned rating is unsolicited, that the rating occurred without the request of the entity.

(h) A statement similar to the following will be added to the unsolicited rating report: “This rating, based on information in the public domain, has been made by Beacon Ratings either with or without participation by the entity’s management.

(i) The ratingreport will also include a statement whether or not the rated entity or related third party participated in the rating process and whether Beacon Ratings had access to any relevant internal documents of the entity.

(j) Although the publicly available information and documentation used is believed to be reliable, Beacon Ratings cannot guarantee its accuracy, adequacy and completeness

A suffix, “p” is added to the rating symbol to identify it as such, and a ‘‘p’’ rating is always publicly disclosed. Unsolicited rating is not modified by a plus (+) or a minus (-) which indicate relative standing in rating category. Outlook is also not assigned to unsolicited rating.

Conversion of unsolicited rating to solicited rating

At any point in the unsolicited rating process, at the voluntary request of the entity, Beacon Ratings may convert the rating to a solicited rating, in which case, the entity will be required to sign a Rating Service Agreement.

Unsolicited ratings for which Beacon Ratings receives a subsequent solicitation will no longer be deemed unsolicited. Solicited ratings for which Beacon Ratings receives termination of request to maintain rating will either be withdrawn or turned into unsolicited ratings.

Solicitation may be evidenced by a request, letter of engagement or service agreement, payment of fees or confirmation by the rated entity. Participation by an entity in the rating process alone does not render a rating solicited.