The following translation is intended solely for the convenience of the reader. This translation has no legal
status and although every effort has been made to ensure its accuracy, the ISA does not assume any
responsibility
whatsoever as to its accuracy and is not bound by its contents. Only the original Hebrew text is
d
binding and reader is advised to consult the authoritative Hebrew text in all matters which may affect them.
Regulations to Regulate the Activity of Credit Rating Companies – 5775-2014
By virtue of my authority under sections 3(b), 4(3), 45(c), 48, 51, 52, and 54(c) of the Law to
Regulate the Activity of Credit Rating Companies 5774-20141 (hereafter, “the Law”), on the
recommendation of the ISA and with the approval of the Knesset Finance Committee, I hereby
enact the following regulations:
Chapter A: Interpretation
Definitions
1. In these Regulations —
“Compliance Officer” – as defined in Section 10 of the Law;
“Credit rating website” – the website operated by a credit rating company pursuant to these
Regulations;
“Interested party”– as "interested party" in a corporation is defined in the Securities Law;
“Substitute director” – as defined in Section 237 of the Companies Law;
“Rating committee” – as defined in Section 14 of the Law;
“Subsidiary” – as defined in the Securities Law;
“Affiliate” – as defined in the Regulations of Periodic and Immediate Reports;
“Foreign company,” “address,” and ”Registrar of Companies” – as defined in the Companies
Law;
“Document” – an electronic message as defined in the Electronic Signature Law 5761-2001,2
including a digital scan as defined in Section 3a of the Regulations of Testimony (Copies and
photocopies) 5730-1969.3
“Conflict of interest” – as defined in Chapter E of the Law;
“Updating the rating” – as defined in Section 15 of the Law;
“Regulations of Periodic and Immediate Reports” – Securities Regulations (Periodic and
Immediate Reports) 5730-1970;4
“Regulations of Electronic Reporting” – Securities Regulations (Electronic Signature and
Reporting) 5763-2003.5
Chapter B: Registration Application
Documents required to register a rating company
1
Sefer Hahukim (Book of Laws) 5774, p. 418.
Sefer Hahukim (Book of Laws) 5761, p. 210: 5770, p. 558.
3
Kovetz Hatakanot (Collection of Regulations) 5730, p. 316; 5765, p. 794.
4
Kovetz Hatakanot (Collection of Regulations) 5730, p. 2037; 5774, p. 929
5
Kovetz Hatakanot (Collection of Regulations) 5763, p. 665; 5773, p. 192.
2
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
2. (a) A company that elects to register pursuant to Section 3 of the Law (hereinafter, “the
Applicant”) shall submit to the ISA, for the purpose of its registration, an application that
contains or to which are attached the following details and certifications:
(1) The Applicant’s full name and number in the Registrar of Companies; An Applicant that
is registered as a foreign company shall include the Applicants’ place of incorporation
and identifying number in the place of incorporation;
(2) Certificates concerning the Applicant’s fulfillment of the requirements of registration
under Section 4 of the Law;
(3) Copies of the Applicant’s documents of incorporation, which include the Applicant’s
certificate of incorporation, memorandum, if any, and articles of association that are in
effect on the date the application is submitted; For an Applicant that is registered as a
foreign company, documents that attest to such status should also be included;
(4) The Applicant’s office of record in Israel including its address for the service of court
documents;
(5) The following details for each director and substitute director, if any:
a. Name;
b. ID number;
c. Date of birth;
d. Address for the service of court documents;
e. Citizenship;
f. Position in the board of directors and membership in any and all board
committees ;
g. Whether the director is an external director, as defined in the Companies Law,
whether she has financial expertise as defined in Section 240(a1) of the
Companies Law, and whether the rating company considers her a director who
has financial expertise for the purpose of satisfying the minimal condition stated
in Section 8(b) of the Law;
h. If the director is an employee of the rating company, of an affiliate of the rating
company, or an interested party of the rating company —the position or
positions that the director serves in these;
i. The date on which the director commenced her service as a director of the
rating company;
j. The director’s education and occupations in the preceding five years, including a
list of the corporations in which she served as a director. Details of education
shall include the professions or fields in which an education was acquired, the
institution at which the education was acquired, and the academic degree or
professional certification attained;
k. The director’s business relationships in the preceding five years, in Israel or
overseas; In addition, the names of other corporations in which the director
served as a senior officer in the preceding five years;
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
l.
Whether, according to the best of the knowledge of the credit rating company
and its directors, the director is a family member of another interested party of
the rating company, including the details;
(6) For a director or substitute director who is a corporation (hereafter, “Director
Corporation”), the following information shall be stated, in addition to the information
listed in paragraph (5):
a. Name of the controlling shareholder of the Director Corporation;
b. Place of incorporation of the Director Corporation and its identifying number in
the place of incorporation;
c. Whether the Director Corporation is an affiliate of the rating company, including
details of relevant facts;
d. Whether the Director Corporation’s controlling shareholder is a family member
of an interested party of the rating company, including details of kinship;
e. Names of the interested parties of the Director Corporation who are interested
parties of the rating company;
f. Name of the individual serving on behalf of the Director Corporation, including
all the information listed in paragraph (5) pertaining to such individual;
(7) A declaration by the external directors, pursuant to Section 239(e) of the Companies
Law;
(8) For each senior officer of the Applicant whose information was not presented pursuant
to paragraphs (5) or (6), the following information shall be noted:
a. Name;
b. ID number;
c. Date of birth;
d. Date of commencement of service;
e. Her position in the Applicant, in an affiliate or an interested party of the
Applicant; If the senior officer is an independent authorized signatory as defined
in Section 37(d) of the Securities Law, in the Applicant, this fact should be noted;
f. Whether the senior officer is an interested party of the Applicant or a family
member of another senior officer or interested party of the Applicant;
g. The senior officer's education and professional experience in the preceding five
years; details of the senior officer’s education shall include the professions or
fields in which education was acquired, the institution at which education was
acquired, and the academic degree or professional certification acquired;
h. The senior officer’s business relationships in the preceding five years, in Israel
or overseas; In addition, the names of other corporations in which the senior
officer served as a senior officer in the preceding five years;
(9) The name and details of the Applicant’s contact person and Compliance Officer;
(10) A description of the structure of ownership and the controlling shareholders of the
Applicant, including its subsidiaries; If the Applicant has no controlling shareholder,
information shall include a list of interested parties of the Applicant;
(11) A detailed organizational chart of the Applicant;
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(12) The Applicant’s code of ethics, if any was determined;
(13) A description of the rating committees’ appointment procedure;
(14) A description of the processes and assessment methodologies that the Applicant will
use in its rating activity; including documents and detailed information on the rating
approval process, including the functions and powers of the rating committee;
(15) A description of the types of conflicts of interest that are permitted in the rating
company’s activity;
(16) The URL of the Applicant’s website and a description of the contents that will appear
on the website pursuant to Regulation 19;
(17) Additional services that the Applicant intends to provide, subject to ISA approval
under Section 17 of the Law, and the manner in which said activity will be adapted to
the provisions concerning the prevention of conflicts of interest;
(18) Details relating to any event listed in Section 7(c) of the Law;
(19) Details and contents of procedures determined by the rating company pursuant to
the Law or to these Regulations; If the Applicant determined additional procedures
relating to rating, such procedures shall also be attached to the Application;
(20) Board of directors work procedures;
(21) The terms, scope, and conditions of the liability insurance as approved by the board
of directors pursuant to Regulation 6, including the name of the insurer, the insurance
term, and the co-payment amount;
(b) The Application shall be signed as described in Regulation 10(a).
Language of the application
3. The Application and the attached documents shall be submitted in Hebrew; The ISA may
permit submission of the Application and the attached documents, either all or in part, in
English, if the ISA believes that submission of the Application and the attached documents in
Hebrew may impose an unjustifiable burden on the Applicant, taking into consideration the
interests of the public of investors.
Authority to demand additional documents and information
4. The chairperson of the ISA or any ISA employee authorized by the ISA chairperson for this
purpose in writing, may demand additional details and documents as necessary to review
the application for registration.
Publication of the information included in the Application
5. (a) Following the registration of the Applicant, the Applicant will publish the application for
registration and its attachments in an immediate report, as defined in Regulation 13(b),
excluding the information stated in Regulation 2(a)(5)(b) through (e) and (k), and (8)(b), (c),
and (h).
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(b) The ISA may exempt the Applicant from publically publishing a detail of the application for
registration, as stated in sub-regulation (a), if it believes, taking into consideration the interests
of the public of investors, that protection of the Applicant’s interests justifies the non-disclosure
of the information.
Chapter C: Insurance and Fees
Insurance
6. An Applicant shall insure its liability pursuant to Chapter I of the Law; The scope of the
insurance and its conditions shall be sufficient, in the opinion of the Applicant’s board of
directors, to cover its said liability, taking into account the characteristics of its activity.
Registration fee
7. An Applicant shall pay a fee to the ISA in the amount of NIS 30,000 for its registration
(hereafter, “Registration Fee”).
Chapter D: Reports to be Submitted to the ISA and the Public
Article A: General
General provisions
8. (a) A rating company shall file reports according to the provisions of these regulations. The
reports shall be drafted in a simple and clear manner.
(b) The reports shall include the details listed in these regulations, in their order of
appearance; There is no obligation to note the absence of any specific detail unless these
regulations explicitly determine otherwise.
(c) In addition to the provisions in these regulations, reports shall be filed on all other details
that may have a significant impact on the rating company’s ongoing activity or have
significance for understanding the ratings that the rating company issues.
(d) The chairperson of the ISA or any ISA employee authorized by the ISA chairperson for
this purpose in writing, may make the following demands of a rating company at any time:
(1) To submit a report of any event or matter in the rating company, if he believes that
information concerning said event or matter may have a significant impact on the rating
process or may be significant for understanding the ratings issued by the rating
company;
(2) To submit a report amending a report or notification filed under these regulations,
within a period of time determined in the demand, if they believe that the filed report
or notification does not comply with the requirements of these regulations, or that the
details disclosed under sub-regulation (a) requires so.
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(e) The information required by these Regulations may be included in a report by way of
reference, according to Regulation 5a of the Securities Regulations (Periodic and Immediate
Reports) 5730-1970.6
Drafting and filing the reports
9. (a) The reports shall be filed with the ISA and the public according to the Regulations of
Electronic Reporting.
(b) The reports shall be prepared in a simple, clear, and convenient to read manner, and the
pages shall be numbered.
Signing the reports
10. (a) The reports aforementioned in Regulations 11 and 13, with the exception of rating
reports, shall be signed on behalf of the rating company by its authorized signatory in the
company’s name, provided that the contents of the reports were approved by one of the
following:
(1) The chairperson of the board of directors;
(2) The general manager;
(3) The position holder of any of the above positions in the company, even if her job title
is otherwise.
(b) The report shall include the signing date; The name of the signatory and the signatory’s
position in the company shall be noted alongside each signature.
Article B: The Annual Report- Filing Date and Information
Filing Date of the Report
11. (a) A rating company shall file a periodic report to the ISA and to the public every year
(hereafter, “the Annual Report”), within three months of the end of the fiscal year.
(b) The signing date of the report, pursuant to Regulation 10, shall not precede the date on
which the report is filed with the ISA by more than three days.
(c) Said reports shall be accessible on the rating company’s website for a period of no less
than five years from their publication date.
Details of the Annual Report
12. The Annual Report shall be divided into four sections in the following order:
(1) The required information according to Regulation 2, current as of the date of the report,
including any significant changes that occurred in the reporting period; The provisions of
Regulations 3 and 5 shall apply to this matter;
6
Kovetz Hatakanot (Collection of Regulations) 5730, p. 2037; 5770, p. 756.
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(2) Details on the rating company’s activity in the reporting period, which shall include the
following details:
(a) The number of times the rating company’s board of directors convened in the
reporting period, and the attendees of those meetings;
(b) Any rating issued by the rating company in the reporting period; any updated rating,
the publication of which is required as stated above; and the total number of financial
instruments rated by the rating company as at the Determining Date, as defined in
Regulation 26;
(c) The manner in which assessment methodologies and key assumptions were
implemented in the rating activity, including statistical or mathematical assumptions, if
any were used in the rating activity, and any significant changes in these elements;
(d) A summary of the frequency of changes made to issued rating and of the insolvency
or failure rate, as defined by the rating company. Said summary shall be presented for
all the ratings in aggregate, by rating symbol, and by sector, if appropriate, and shall
include the development of these figures over time, and an appropriate presentation of
the ratio between issued rating and insolvency or failure rate; The ISA may instruct on
the disclosure that is deemed an appropriate presentation of the above;
(e) Reporting according to Section 17(c)(1) of the Law;
(f) The following information shall be stated regarding each lead analyst and secondary
analyst, if any:
(i) First name and surname;
(ii) Education;
(iii) Professional experience;
(g) The number of rating committees that operated and the number of ratings or
updated ratings that the committees published;
(h) Information on applications filed by the company according to Regulations 19(c)(3)
and 29, and the ISA decisions on said applications;
(3) Information on the rating company’s clients which shall include the following details:
(a) A list of the ten clients that were the source of the highest income in the reporting
period;
(b) A list of the identity of each client that was the source of more than 5% of the rating
company’s total income in the reporting year, and the percentage of income accounted
for by each client. For this purpose, “a client” also means several clients controlled by a
single person;
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(c) Details of the rating company’s income from ancillary services, according to Section
17(a) of the Law or from other services according to Section 17(b) of the Law, in the
reporting period, by activity and by the percentage of income accounted for by each;
(4) A summary of details relating to preliminary ratings issued by the rating company in the
reporting period. The ISA may instruct the rating company on the manner of presentation of the
information required by this paragraph, including by segmentations, the presentation of the
development of the figures over time, or presentation in tabular form. For this purpose,
“preliminary rating”- a projection that the rating company conveyed to an existing or potential
client, concerning the rating symbol that the company will determine for the client or its
financial instrument, including any sign, mark, or projection concerning said rating, conveyed in
any manner whatsoever;
(5) The following details shall be submitted to the ISA and not published for the public:
(a) Information according to paragraph 2(b) regarding ratings, as stated in Regulation
14(b);
(b) Information according to paragraph (3).
Article C: Event Reports – Date of Filing and Details
Reporting on events
13. (a) A rating company shall submit reports to the ISA and the public on the events listed in
sub-regulations (g) and (h).
(b) The filing date of a report on any event listed in sub-regulation (g) (hereafter, an “Immediate
Report”) is no later than the end of the first business day after the date on which the rating
company first learned of the event; An immediate report on an event listed in sub-regulation (h)
(hereafter, an “Other Event Report”) shall be published as soon as possible and no later than
seven business days after the date on which the rating company first learned of the said event.
(c) The report shall include the date and time that the event occurred and the date and time at
which the rating company first learned of its occurrence.
(d) In this Regulation, “first learned of an event”- one of the following first learned of the
occurrence of the event:
(i) In matters related to the rating process – any participant in the rating process as
defined by the Law, regarding a rating process in which the participant participates;
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(ii) In other matters – the chairperson of the board of directors of the rating company,
its general manager, its chief business manager, or any position holder of said positions
in the rating company even if her title is otherwise.
(e) In any case, the report shall be filed not after the information contained therein, either in
entirety or in part, has been published publically by the rating company or by a senior officer of
the rating company.
(f) A rating company is required to file a report on any matter or event concerning the rating
company at the special demand of the chairperson of the ISA or any employee authorized by the
chairperson of the ISA in writing for this purpose, within the date stated in the demand, but in
any case not earlier than the date determined in sub-regulation (b); Such a demand shall be
made only if the ISA or the individual so authorized believes that the information in such a
report is important for the reasonable investor.
(g) Events that require filing an Immediate Report:
(1) A decision by the rating company to discontinue a rating and the reasons for its
decision;
(2) A material change in the information published according to Chapter E of these
Regulations, after the rating company concluded that said change affects a rating that it
issued; such examination shall be made within a reasonable period;
(3) A material error in applying an assessment methodology, which the rating company
believes may have implications on the rating;
(4) Details concerning any report published according to paragraph (3), which shall
include the anticipated implications of the error and its correction, including the need to
re-examine the rating that was issued; A report according to this paragraph shall be
published within a reasonable period after the publication of a report according to
paragraph (3).
(h) Events that require filing an Other Event Report:
(1) Modification to the assessment methodology or to the key assumptions used in a
specific rating process; Reports in such matters shall be filed at least 30 days before the
change comes into effect and shall include an explanation of the reasons for the change
and its anticipated implications; If the rating company believes that an immediate
modification in an assessment methodology or key assumption is required, the company
may submit a report with the application of said modification as soon as possible and no
later than the date on which said modification comes into effect.
(2) If the rating company received public comments concerning the modification stated
in paragraph (1), the rating company shall publish the essence of the material comments
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
and its responses to them; A report according to this paragraph shall be published
within a reasonable period after the publication of the report published according to
paragraph (1).
(3) Any material modification to the information required by Regulation 2 that is not
listed in this Regulation; If the modification concerns the rating company’s assessment
methodologies or procedures, the revised assessment methodologies or procedures
shall be attached in entirety.
(4) A material modification to the information required by Regulation 12(2)(e) and (f).
(j) Reports according to this Article shall include information concerning the impact of the
events listed in sub-regulations (g) and (h) on other ratings that the rating company issues.
Chapter E: Publication of ratings, assessment methodologies, and due disclosure
Requirement to publish ratings
14. (a) A rating company shall publish each rating that it issues.
(b) Notwithstanding the provisions of sub-regulation (a), a rating company may refrain from
publishing the following ratings:
(1) a rating made for the internal use of the person who ordered the rating and not
intended for public publication;
(2) a rating of a corporation whose securities were not offered to the public according to
a prospectus as defined in Chapter C of the Securities Law, and the corporation is not a
corporation that is offering its securities to the public for the first time, and a rating of
the financial instruments of such corporations.
Prior to publishing the rating
15. The rating company will allow the rated corporation to convey comments concerning factual
errors in the rating and the existence of inside information, as defined in Section 52a of the
Securities Law, in the rating report, a reasonable period prior to its publication.
Manner of publication
16. (a) Rating publication, as stated in Regulation 14(a), shall be made in the form of a rating
report published in a report to the ISA and to the public and on the rating company’s
website.
(b) Rating report publication as stated in sub-regulation (a) shall be made in an Immediate
Report, as defined in Regulation 13(b).
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
Information accompanying the rating report
17. (a) Details concerning the following issues shall be included in the rating report or in a
report accompanying the rating report (hereafter, “the Accompanying Report”):
(1) General information:
(a) The identity of the lead analyst and the identity of the secondary analyst, if
appointed;
(b) The date on which the rating was first published and the date of the most
recent update to the rating;
(c) Whether the rating was performed at the initiative of the rated company, the
rating company, or any other party;
(d) In the event that the rating company rated a financial instrument that it has
not previously rated, a disclosure shall be provided as regards to that matter;
(2) Information used in the rating process:
(a) Material details on the following matters:
(i) The key assumptions on which the rating was based, including an
explanation of said key assumptions, variables, limitations, and
uncertainty entailed in the assessment methodologies used;
(ii) Extreme scenarios, if any were used in the rating process;
(iii) Information concerning the credit rating which is based on a cash
flow analysis that served as the basis for the rating, if such an analysis
was performed;
(iv) option for modifying the rating.
(b) Such information as stated in sub-paragraph (a) shall be presented in a
simple and clear manner and shall include a disclosure regarding the source of
the information possessed by the rating company and its quality;
(c) If the rating company took measures to confirm the information that the
rated corporation conveyed to it, said measures shall be detailed.
(3) Assessment methodology:
(a) The assessment methodology used in producing the rating should be stated;
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(b) An explanation of the meaning of any rating category used by the rating
company, a definition of the term insolvency, default, uncollected debts, as
defined by the rating companies, and any risk warning, including sensitivity
analyses of the relevant assumptions, if any were performed for the purpose of
the rating, such as mathematical or statistical assumptions, and worst- case
scenarios and best-case scenarios, if any were performed;
(c) An explanation of other important aspects of the rating, including additional
assessment methodologies that were used, if any, all according to the rating
company’s procedures;
(b) All information given according to this Regulation shall be presented in a simple and clear
manner, and include references to additional information on the rating company’s website, if
any elaboration exists.
(c) Notwithstanding the provisions of sub-regulation (b), if the scope of information required by
this regulation is broad relative to the length of the published rating report, the rating company
may include a prominent reference, which includes a link for direct access to the page on the
rating company’s website on which said information may be found.
Citing the ISA
18. A rating company will make no use of the name of the ISA in its reports or other publications
in a manner that implies that the ISA supports or approves any rating or any action taken by
the rating company with respect to a rating.
Chapter F: Rating Company's Website
Rating Company's Website
19. (a) A rating company shall operate a website in Hebrew and in additional languages, if it so
desires, which will be accessible by the public at no cost. However, the rating company may
restrict access to sections of the website if it renders services for a fee through such
sections.
(b) Among other things, the website shall present all the information that the rating company is
legally required to bring to the public’s knowledge.
(c) In addition to the provisions of sub-regulation (a), the rating company shall publish the
following on the homepage of its website:
(1) A warning concerning the limitations of the rating and the risks of reliance on the
rating;
(2) Links to the following information:
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(a) Details of the main permitted conflicts of interests in the rating company’s
activity;
(b) A general description of the manner in which the rating company sets its
fees for its activity;
(c) A description of the rating company’s structure of ownership and controlling
shareholders;
(d) An organizational chart of the rating company;
(e) The meaning of each rating symbol that the rating company uses;
(f) A description of the procedures and assessment methodologies according to
Regulation 2(a)(14);
(g) Reporting according Regulation 12(2)(d);
(h) Policy on publishing ratings and other reports;
(i) Procedures determined by the rating company according to Regulation 25.
(3) The rating company may publish certain information under this Regulation in the
English language if it has received permission to do so from the ISA; The ISA may permit
such publication in English if it believes that publication of such information in Hebrew
may impose an unjustifiable burden on the rating company, taking into consideration
the interests of the investor public.
Chapter G: Record and Documentation of the Rating Procedure and Document Retention
Documentation and retention of documents
20. (a) A rating company shall document the following matters with respect to any rating
process that it conducted:
(1) The identity of the lead analyst and the secondary analyst, if appointed;
(2) The identity of the person who ordered the rating;
(3) Payments received for rating, from any source. Documentation according to this
paragraph shall distinguish between the various sources of payment, and the following
information shall be presented for each payment source:
(i) Name and address;
(ii) List of ratings in respect of which the source paid;
(4) The assessment methodology used by the rating company to determine the rating;
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(b) A rating company shall retain the following information and documents:
(1) Reports, internal documents and work papers that were used for the rating or
affected the rating;
(2) Internal and external correspondence received or sent by the rating company and its
employees, concerning the rating.
Documenting the extent of compliance of the rating company with the provisions of the law
21. (a) The rating company shall document—
(1) Procedures that it determined in order to comply with the requirements of the Law
and the Regulations promulgated under it.
(2) Reports concerning a compliance program and control of compliance;
(3) Complaints regarding the rating company’s activity, and how they were handled;
(4) Documents and information that constitute the basis of the rating company’s reports
that are filed with the ISA.
(b) The rating company shall retain the following information and documents:
(1) internal control plan, internal control reports, documents concerning the manner in
which a repeat control is performed, and all the documents required to perform control
of the rating company’s activity;
(2) the rating company’s marketing materials.
Period of time of retention of documentation
22. (a) The rating company shall retain the documentation according to this Chapter (hereafter,
“the Documentation”) for at least seven years, or until the elapse of one year from the
maturity date of the rated instrument, or until a final judgment is rendered in a legal action
to which the rating company is party and the information in this matter is included in the
Documentation, the later of these dates. The ISA may, at the rating company’s request,
permit retention of information or any part thereof for a shorter period, if the ISA believes
that this has no adverse effect on the investor public.
(b) The provisions of this Regulation shall also apply in the case of a company whose registration
has been cancelled.
Manner of retention of documentation
23. (a) Documentation that includes a document shall be retained as an original document or a
certified copy of the original, and as an electronic document; Documentation that includes
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
an electronic message shall be signed by an electronic signature as defined by the Electronic
Signature Law 5771-2001. 7
(b) Documentation such as stated in sub-regulation (a) shall be retained in a manner that grants
access to the chairperson of the ISA or an ISA employee authorized by the ISA chairperson for
this purpose in writing.
Information security and confidentiality
24. (a) A rating company shall take steps to ensure that the participants in a rating process
operate in the following manner:
(1) Take all reasonable measures to protect information, documents, and property in
the rating company’s possession from inappropriate use;
(2) Do not disclose any information concerning a rating process, with the exception of
disclosure to the rated corporation or a related party to it, and with the exception of any
disclosure required by law;
(3) Do not disclose information that is not known to the public, and do not make use of
information for the purpose of trading in financial instruments, or for any other
purpose, with the exception of disclosure for the purpose of performing rating activities;
(4) Do not disclose information concerning a pending rating activity prior to the
publication of the rating to the public, with the exception of disclosure for the purpose
of performing rating activities.
(b) Notwithstanding the provisions of sub-regulation (a), there is no impediment to the
disclosure of general information that is not related to a specific rating process.
(c) A rating company shall define procedures for assimilating and enforcing a policy of restricting
the use of information that is not known to the public, and shall demand of the participants in
rating processes to confirm, from time to time, that they understand the requirements of the
policy.
Chapter H: Miscellaneous Provisions
Defining procedures
25. A rating company shall define procedures to ensure its compliance with its statutory
obligations, including with respect to the following matters:
(1) Internal control;
(2) Risk management, including, among other things, procedures concerning procedures of
rating of financial instruments that are rated for the first time;
7
Sefer Hahukim (Book of Laws) 5761, p. 210; 5770, p. 558.
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
(3) Information systems;
(4) Rating-related decision making;
(5) Work procedures of a rating committee.
(6) Addressing conflicts of interest that arise from its activity; Procedures according to this
sub-regulation shall include, among other things, provisions in respect of the matters listed
in Sections 16(d)(2), 17(c)(2) and (18)(d) of the Law;
(7) The manner in which complaints, including anonymous complaints from employees or
rating consumers, are received and handled;
(8) Activities of the Compliance Officer, appointed according to Section 10 of the Law,
including:
(a) The Compliance Officer’s Qualification;
(b) The Compliance Officer’s authorities;
(c) Measures to ensure the Compliance Officer's independent judgment;
(d) Resources allocated to the Compliance Officer’s activities;
(e) The Compliance Officer’s Salary;
(f) Modes of reporting of the Compliance Officer.
(9) Retention of documents and information security, including the manner in which
information and documents are retained, including information and documents saved in
computer systems or communications equipment, both in respect of hard copies of
documents and documents of any other kind, taking into consideration the duty of
confidentiality towards the company’s clients and the possibility of information back-up,
retrieval of the information in entirety, and location of the document if necessary;
(10) Ensuring the existence of information or document, their protection from damage
caused by persons or nature, ensuring the ability to access them, read them, and locate
them if necessary, all for the period during which it must retain them as stated in Regulation
22;
(11) Prevention of the disclosure and use of information that is not known to the public;
(12) The existence of appropriate systems, resources, and procedures to ensure continuity
of the rating activity.
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
Annual fees
26. (a) A rating company shall pay the ISA a fixed annual fee of NIS 200,000 to the ISA no later
than August 1 of every year, and a variable fee of NIS 600 for each rated financial instrument
as at the Determining Date, and in the event that only a corporation was rated as an entity,
the rating company shall pay said amount in respect of rating the rated entity; If a financial
instrument or entity was rated by more than one rating company in a single year, an amount
of NIS 300 shall be paid in respect thereof. Notwithstanding the above, a rating company
shall not pay the variable fee in respect of the first 300 financial instruments that it rates in
that year.
(b) For the fiscal year in which it registered, the rating company shall pay the proportionate
amount of the annual fee according to sub-regulation (a), equal to the amount of the annual fee
divided by 365 days and multiplied by the number of days from the registration date to the end
of the said fiscal year.
(c) If the rating company’s registration date is after August 1, the fee for that fiscal year shall be
paid by January 31 of the consecutive fiscal year.
(d) The provisions of Regulation 2(i) and (j) of the Securities Regulations (Annual Fees) 574919898 shall apply to any annual fee unpaid on time, and to any excess payment for an annual fee
for that year, the provisions of Regulation 2(k) to said regulations shall apply.
(e) In this Regulation –
“Registration date” – the date on which the rating company was registered according to Chapter
B of the Law;
“Determining Date” – December 31 of the year preceding the payment date.
Updating the fees
27. (a) The registration fee according to Regulation 7 and the annual fee according to
Regulation 26(a) shall be revised on January 1 of each year (hereafter, “the Revision Date”),
according to the rate of change of the new CPI compared to the base CPI. An amount so
revised shall be rounded up to the closest amount that is a multiple of NIS 5.
(b) The chairperson of the ISA shall publish the amounts noted in Regulations 7 and 26(a) as
revised according to this Regulation, in a notice, in Reshumot and on the ISA website.
(c) In this Regulation:
“the new CPI” – the most recently published CPI prior to the Revision Date;
“the base CPI” – the most recently published CPI prior to the application of the Regulations, or
the most recently published CPI prior to the preceding Revision Date, the later of the two dates;
8
Kovetz Hatakanot (Collection of Regulations) 5748, p. 782; 5766, p. 1152.
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014
Collection
28. The Tax Ordinance (Collection) shall apply to the collection of fees, linkage differences, and
fines according to these Regulations, as if they were taxes as defined in the said Ordinance.
Exemptions
29. The ISA may exempt a rating company from the provisions of Section 10 of the Law, either in
entirety or in part, if it finds that the rating company has a compliance function, that it
meets the conditions of the foreign laws that are directly or indirectly applicable to it in this
matter, and that such exemption does not adversely affect the investor public.
Application
30. These Regulations apply from April 1, 2015 (Nissan 12, 5775).
Transition provisions
31. An Applicant that received approval from the Commissioner of Capital Market, Insurance,
and Savings at the Ministry of Finance to become a rating company before the Law and the
regulations promulgated under it come into effect, shall also include in its application for
registration according to Regulation 2 the information required under Regulation 12
concerning its existing activity.
12 Kislev 5775 (December 4, 2014)
Yair Lapid
Minister of Finance
Kovetz Hatakanot (Collection of Regulations) 7465, Tevet 8, 5775, December 30, 2014