by S BIRRUNTHA /graphic by TMR

RAM Holdings Bhd is confident that its credit rating operations at its wholly owned subsidiary, RAM Rating Services Bhd (RAM Ratings), will not be impacted and shall remain independent, regardless of the outcome of the vote.

The bond-rating firm was referring to an article by MalaysiaNow on June 3, titled “Storm Brewing in Malaysian Debt Capital Market as New Entity Set to Take Control of RAM Rating Agency”.

RAM CEO and ED Chris WK Lee said the firm would like to allay any fear or concerns that may be caused by the opinions expressed in the article, which he believes were unsubstantiated and formed without adequate knowledge of the credit rating industry and RAM’s operational structure.

According to him, both RAM and RAM Ratings are strictly regulated by the Securities Commission Malaysia (SC) and are bound by and unceasingly adheres to the ethics of good governance, transparency and integrity set out in the SC’s Guidelines on the Registration of Credit Rating Agencies (Guidelines) and the Capital Markets and Services Act 2007. 

He said the firm’s governance structure and its operational set-up are designed to allay the sort of concerns highlighted in the MalaysiaNow article.

Lee added that RAM’s AGM, which is to be held on June 9, will see its shareholders voting on the proposed amendment to clause 12.1 of RAM’s Constitution.

He said it is worth noting that the proposed amendment is consistent with the wordings in paragraph 2.3 of the Guidelines and this will require 75% of shareholders’ approval.

“Given our 30-year track record, we believe bond market participants can attest to RAM Ratings’ independence and integrity in performing its mandate. 

“We reiterate our commitment to the principles of good ethics, transparency and integrity that will remain core values of RAM Ratings’ operations, now and in the future,” he said in a statement today.

Regardless of past, present and future shareholding changes, Lee said the integrity and independence of the credit rating agency (CRA) have and will continue to be the bedrock of RAM Ratings’ operations — established to serve in the best interest of all bond market participants. 

He said regulated under the Guidelines, these key safeguard measures undertaken in its day-to-day operations attest to these five principles.

The first principle includes any change in shareholding structure which results in a party controlling 20% or more shares will require the approval of the SC. The SC would not grant approval to any party to exceed this limit if it deems this to be detrimental to the best interest of the CRA and the bond market.

Secondly, the entire board of RAM and RAM Ratings comprises independent directors, with the exception of the ED. 

All directors including its chief executive, deputy chief executive and members of the rating committee are subject to the approval of the SC. 

Furthermore, the tenures of directors and rating committee members are also subject to a maximum limit.

Thirdly, except for governance oversight, the board does not participate in the operations of the CRA, which is the domain of its CEO and management staff.

The fourth principle is all rating actions by RAM Ratings are decided and assigned by an independent rating committee. 

The chairman and majority of the members that constitute the rating committee are external individuals with relevant expertise who do not participate in the operations of the CRA.

Lastly, the SC reviews the registration of a CRA on a regular basis and conducts its periodic examination on the compliance record of both RAM and RAM Ratings. Both entities have continued to fulfil the requirements of the CRA registration.

Last week, MalaysiaNow reported on the concerns about the independence and credibility of RAM following the SC’s green light for its acquisition by CTOS Digital Bhd, which was given the approval to acquire a more than 51% stake in RAM.

The article also revealed that CTOS Digital, which is linked to Creador, a multi-billion private equity firm owned by Brahmal Vasudevan, was given approval by the SC to acquire more than 51% stakes in RAM, the company established by Bank Negara Malaysia in 1990 to support the local debt capital market.