### a member state may take non - discriminatory measures for the conservation and management of fish stocks and to minimise the effect of fishing on the conservation of marine eco - systems within 12 nautical miles of its baselines provided that the union has not adopted measures addressing conservation and management specifically for that area . the member state measures shall be compatible with the objectives set out in articles 2 and 3 and no less stringent than those in existing union legislation . ### a member state may take non - discriminatory measures for the conservation and management of fish stocks and to minimise the effect of fishing on the conservation of marine eco - systems within 12 nautical miles of its baselines provided that the union has not adopted measures addressing conservation and management specifically for that area or specifically addressing the problem identified by the member state in question . the member state measures shall be compatible with the objectives set out in articles 2 and 3 and shall not conflict with and shall be coherent with those in existing union legislation .


### in a technical measures framework established pursuant to article 14 member states may be authorised to adopt measures , in accordance with that framework , which specify the technical measures applicable to vessels flying their flag in relation to stocks in their waters for which they have been allocated fishing opportunities . member states shall ensure that such technical measures : ### in a technical measures framework established pursuant to article 14 regional fisheries working groups may be authorised to adopt , following consultation of the relevant advisory council , measures within their sphere of competence in accordance with that framework which specify the technical measures applicable to vessels flying the flag of a member state in relation to stocks for which they have been allocated fishing opportunities . 2 . the regional fisheries working groups shall ensure that technical measures adopted pursuant to paragraph 1 :


### – ' end - user of scientific data ' means a body with a research or management interest in the scientific analysis of data in the fisheries sector ; ### – ‘ end - user of scientific data’ means a research body , or a management body with an interest in the scientific analysis of data in the fisheries sector ;


### implementation of the common fisheries policy should take into account interactions with other maritime affairs as addressed by the integrated maritime policy , recognizing that all matters related to europe’s oceans and seas are interlinked , including maritime spatial planning . coherence and integration should be ensured in the management of different sectoral policies within the baltic sea , north sea , celtic seas , bay of biscay and the iberian coast , mediterranean and black sea sea basins . ### implementation of the common fisheries policy should take into account interactions with other maritime affairs as addressed by the integrated maritime policy , recognizing that all matters related to europe’s oceans and seas are interlinked , including maritime spatial planning . coherence and integration should be ensured in the management of different sectoral policies within the baltic sea , north sea , celtic seas , bay of biscay and the iberian coast , mediterranean , black sea , antilles , french guiana and indian ocean sea basins .


### where conservation and management measures to be adopted by a member state are liable to affect fishing vessels of other member states , such measures shall be adopted only after consulting the commission , the relevant member states and relevant advisory councils on a draft of the measures accompanied by an explanatory memorandum . ### where conservation and management measures to be adopted by a member state are liable to affect fishing vessels of other member states , such measures shall be adopted only after consulting the commission , the relevant member states and relevant advisory councils on a draft of the measures accompanied by an explanatory memorandum , within a maximum period of one month .


### multiannual plans providing for conservation measures to maintain or restore fish stocks above levels capable of producing maximum sustainable yield shall be established as a priority . ### multiannual plans providing for management targets to maintain fish stocks at or restore them to levels capable of producing maximum sustainable yield shall be established as a priority .


### member states shall adopt national fisheries scientific data collection , research and innovation programs . they shall coordinate their fisheries data collection , research and innovation activities with other member states and union research and innovation frameworks . ### member states shall adopt national fisheries scientific data collection , research and innovation programmes . they shall coordinate , in close cooperation with the commission , their fisheries data collection , research and innovation activities with other member states and union research and innovation frameworks


### – ‘ ecosystem - based approach to fisheries management’ means an approach ensuring that benefits from living aquatic resources are high while the direct and indirect impacts of fishing operations on marine ecosystems are low and not detrimental to the future functioning , diversity and integrity of those ecosystems ; ### – ‘ ecosystem - based approach to fisheries management’ means ecosystem and natural habitats management carried out in order to meet human requirements to use natural resources , whilst maintaining the biological richness and ecological processes necessary to sustain the composition , structure and function of the habitats or ecosystems concerned ;


### serious infringements by operators of the rules of the common fisheries policy shall result in temporary or permanent bans on access to the union financial assistance and / or the application of financial reductions . such measures shall be proportionate to the nature , extent , duration and repetition of serious infringements . ### serious infringements by operators of the rules of the common fisheries policy shall result in temporary or permanent bans on access to the union financial assistance and / or the application of financial reductions . such measures , implemented by the member state , shall be proportionate to the nature , extent , duration and repetition of serious infringement .


### member states should manage and make available to end - users of scientific - data the collected data , on the basis of a multi - annual union program . member states should also cooperate with each other to coordinate data collection activities . where relevant , member states should also cooperate with third countries within the same sea basin regarding data collection . ### member states should manage and make available to end - users of scientific - data the collected data , on the basis of a multi - annual union program . member states should also cooperate with each other to coordinate data collection activities . where relevant , member states should also cooperate with third countries within the same sea basin regarding data collection . both sides should comply with international provisions and conventions , in particular the un convention on the law of the sea .


### implementation of the common fisheries policy should take into account interactions with other maritime affairs as addressed by the integrated maritime policy24 , recognizing that all matters related to europe ' s oceans and seas are interlinked , including maritime spatial planning . coherence and integration should be ensured in the management of different sectoral policies within the baltic sea , north sea , celtic seas , bay of biscay and the iberian coast , mediterranean and black sea sea basins . ### implementation of the common fisheries policy should take into account interactions with other maritime affairs and generally be consistent with other union policies , recognizing that all matters related to europe ' s oceans and seas are interlinked , including maritime spatial planning . coherence and integration should be ensured in the management of different sectoral policies within the baltic sea , north sea , celtic seas , bay of biscay and the iberian coast , mediterranean and black sea sea basins .


### fisheries targets were laid down in the decision by the conference of the parties to the convention on biological diversity on the strategic plan for biodiversity 2011 – 2020 , the common fisheries policy should ensure coherence with the biodiversity targets adopted by the european council , and the targets of commission communication ' our life insurance , our natural capital : an eu biodiversity strategy to 2020 ' , in particular to achieve maximum sustainable yield by 2015 . ### fisheries targets were laid down in the decision by the conference of the parties to the convention on biological diversity on the strategic plan for biodiversity 2011–2020 , and the common fisheries policy should ensure coherence with the biodiversity targets adopted by the european council and the targets of commission communication ‘ our life insurance , our natural capital : an eu biodiversity strategy to 2020’ , in particular to achieve maximum sustainable yield .


### with a view to promoting sustainability and contributing to food security , growth and employment , non - binding union strategic guidelines on common priorities and targets for the development of aquaculture activities shall be established by the commission by 2013 . such strategic guidelines shall take account of the relative starting positions and different circumstances throughout the union , shall form the basis for multiannual national strategic plans and shall aim at : ### with a view to promoting sustainability and contributing to food security , growth and employment , non - binding union strategic guidelines on common priorities and targets for the development of aquaculture activities shall be established by the commission by 2013 . such strategic guidelines shall take account of the relative starting positions and different circumstances throughout the union and shall form the basis for multiannual national strategic plans . the commission shall likewise ensure that the various national plans are coordinated and implemented and that information is exchanged , and shall aim at :


### in a multiannual plan established pursuant to articles 9 , 10 and 11 member states may be authorised to adopt measures , in accordance with that multiannual plan , which specify the conservation measures applicable to vessels flying their flag in relation to stocks in union waters for which they have been allocated fishing opportunities . ### in a multiannual plan established pursuant to articles 9 , 10 and 11 , member states which have a direct interest in the fishery concerned shall participate , in close cooperation with the competent advisory councils , in drafting conservation measures suited to the specificities of each fishery which accord with that multiannual plan .


### the delegation of power referred to in articles 12 , 15 , 20 and , 24 and , 35 , 36 , 37 , 47 , 52 , 54 may be revoked at any time by the european parliament or by the council . a decision of revocation shall put an end to the delegation of the powers specified in that decision . it shall take effect the day following the publication of the decision in the official journal of the european union or at a later date specified therein . it shall not affect the validity of any delegated acts already in force . ### the delegation of power referred to in articles 36 , 37 and 47 may be revoked at any time by the european parliament or by the council . a decision of revocation shall put an end to the delegation of the powers specified in that decision . it shall take effect the day following the publication of the decision in the official journal of the european union or at a later date specified therein . it shall not affect the validity of any delegated acts already in force .


### member states shall ensure that conservation measures adopted pursuant to paragraph 1 : ### the regional fisheries working groups shall ensure that conservation measures adopted pursuant to paragraph 1 :


### member states shall coordinate their data collection activities with other member states in the same region , and make every effort to coordinate their actions with third countries having sovereignty or jurisdiction over waters in the same region . ### member states , in close cooperation with the commission , shall coordinate their data collection activities with other member states in the same region , and make every effort to coordinate their actions with third countries having sovereignty or jurisdiction over waters in the same region .


### to achieve the basic objective of the common fisheries policy , namely to provide long - term sustainable environmental , economic and social conditions for the fishing and aquaculture sectors , and to contribute to the availability of food supplies , it is necessary and appropriate to lay down rules on the conservation and exploitation of marine biological resources . ### to achieve the basic objective of the common fisheries policy , namely to provide long - term sustainable environmental , economic and social conditions for the fishing and aquaculture sectors , and to contribute to the availability of food supplies , it is necessary and appropriate to lay down rules on the conservation and exploitation of marine biological resources , taking into account the profitability of vessels and the need to ensure a decent life for fishermen .


### union financial assistance should be made conditional upon compliance by member states and operators with the common fisheries policy . thus such financial assistance should be interrupted , suspended or corrected in cases of non - compliance with the rules of common fisheries policy by member states and serious infringements of those rules by operators . ### union financial assistance should be made conditional upon compliance by member states and operators , including vessel owners , with the common fisheries policy . thus such financial assistance should be interrupted , suspended or corrected in cases of non - compliance with the rules of the common fisheries policy by member states and serious infringements of those rules by operators .


### the community financial contribution and the cash contribution of the participating states to bonus - 169 shall be pooled and administered centrally by the bonus eeig . ### as a general rule , the community financial contribution and the cash contribution of the participating states to bonus shall be pooled and administered centrally by the bonus eeig . however , in justified cases , a participating state may devote its cash contribution exclusively to domestic research .


### provided that the results of the evaluation and the ex - ante audit of bonus eeig are positive , the commission and the bonus eeig shall conclude the implementation agreement . ### provided that the conditions as referred to in article 3 . 3 are in place and the ex - ante audit of the bonus eeig is positive , the commission and the bonus eeig shall conclude the implementation agreement .


### ' article 6 report on payments to governments member states shall require issuers active in the extractive or logging of primary forest industries , as defined in [ … ] to prepare , in accordance with chapter 9 of directive 2011 / . . . / eu of the european parliament and of the council , a report on payments made to governments on an annual basis . the report shall be made public at the latest six months after the end of each financial year and shall remain publicly available for at least five years . payments to governments shall be reported at consolidated level . ### ' article 6 country by country reporting member states shall require issuers to prepare , in accordance with chapter 9 of directive 2011 / . . / eu of the european parliament and of the council , a report on activities in each country in which they operate , including of payments exceeding eur 30 000 in total made to governments , on an annual basis where those issuers meet or exceed two of the following criteria : balance sheet total : eur 100 000 000 ; b ) net turnover : eur 100 000 000 ; c ) employment on balance sheet date of 500 people or more . for issuers active in the extractive or logging of primary forest industries , the report shall include the reporting of all projects specified in [ article 38 of the accounting directive ] , where a project means a contract , licence , lease or other legal agreement under which an issuer operates , and from which its specific revenue liabilities arise . the report shall be subject to statutory audit . the report shall be made public at the latest six months after the end of each financial year and shall remain publicly available for at least five years . the report shall be prepared at consolidated level . for all issuers , disclosures should include turnover of the constituent entities of the undertaking that might give rise to payments and , on a per - country basis , quantities produced , purchases and sales , profit before tax , actual tax payments , effective tax rates , deferred taxation liabilities for the country at the start and close of each accounting period , total number of people employed and their aggregate remuneration and expenditure on fixed asset investment during the course of the reporting period .


### financial instruments that , on maturity , give the holder , under a formal agreement , either the unconditional right to acquire or the discretion as to his right to acquire , shares to which voting rights are attached , already issued , of an issuer whose shares are admitted to trading on a regulated market ; ### financial instruments that give the holder , under a formal agreement , either the unconditional right to acquire or the discretion as to his right to acquire , shares to which voting rights are attached , already issued , of an issuer whose shares are admitted to trading on a regulated market ;


### in case of a natural person , administrative pecuniary sanctions of up to eur 5 000 000 ; ### in case of a natural person , administrative pecuniary sanctions of up to eur 1 000 000 ;


### the european securities and markets authority , established by regulation no 1095 / 2010 of the european parliament and of the council , shall issue guidelines , including standard forms or templates , to specify the information to be included in the management report . ### the european securities and markets authority , established by regulation no 1095 / 2010 of the european parliament and of the council , shall issue guidelines , including standard forms or templates , to specify the information to be included in the management report . these guidelines shall be proportionate and take into account the relative size of the issuers in order to submit small and medium - sized issuers to a simpler regime .


### member states shall ensure that the competent authorities publish any sanction or measure imposed for breach of the national provisions adopted in the implementation of this directive without undue delay , including information on the type and nature of the breach and the identity of persons responsible for it , unless such publication would seriously jeopardise the stability of financial markets . where publication would cause a disproportionate damage to the parties involved , competent authorities shall publish the sanctions on an anonymous basis . ### member states shall provide that the competent authorities may publish any sanction or measure imposed for breach of the national provisions adopted in the implementation of this directive without undue delay , including information on the type and nature of the breach , unless such publication would cause disproportionate damage to the parties involved or seriously jeopardise the stability of financial markets or ongoing official investigations .


### for the purposes of point of the first subparagraph , in the member states where the euro is not the official currency , the corresponding value to eur 5 000 000 in the national currency shall be calculated taking into account the official exchange rate on [ the date of entry into force of this directive – insert date ] . ### for the purposes of point of the first subparagraph , in the member states where the euro is not the official currency , the corresponding value to eur 1 000 000 in the national currency shall be calculated taking into account the official exchange rate on [ the date of entry into force of this directive – insert date ] .


### esma shall issue guidelines , including standard forms or templates , to specify the information to be included in the interim management report . ### esma shall issue guidelines , including standard forms or templates , to specify the information to be included in the interim management report . these guidelines shall be proportionate and take into account the relative size of the issuers in order to submit small and medium - sized issuers to a simpler regime .


### the home member state may make an issuer subject to requirements more stringent than those laid down in this directive , except requiring issuers to publish periodic information other than annual financial reports referred to in article 4 and half - yearly financial reports referred to in article 5 . ### the home member state may make an issuer subject to requirements more stringent than those laid down in this directive , except requiring small and medium - sized issuers to publish periodic information other than annual financial reports referred to in article 4 and half - yearly financial reports referred to in article 5 .


### the power to suspend the exercise of voting rights attached to shares admitted to trading on a regulated market if the competent authority finds that the provisions of this directive , concerning notification of major holdings have been infringed by the holder of shares or other financial instruments , or a person or entity referred to in articles 10 or 13 ; ### in case of most serious and non - negligent breaches the power to suspend the exercise of voting rights attached to shares admitted to trading on a regulated market if the competent authority finds that the provisions of this directive , concerning notification of major holdings have been infringed by the holder of shares or other financial instruments , or a person or entity referred to in articles 10 or 13 , insofar as those voting rights exceed the notification thresholds ;


### if traditional foods from third countries are included in the list of traditional foods from third countries , they should be allowed to be placed on the market within the union , under conditions that correspond to those for which the history of safe food use has been demonstrated . as regards the safety assessment and management of traditional food from third countries , their history of safe food use in their country of origin should be taken into account . the history of safe food use should not include non - food uses or uses not related to normal diets . ### as regards the safety assessment and management of traditional food from third countries , the eu rules in force should be taken into account .


### it should also be clarified that a food is to be considered as novel when a production technology which was not previously used for food production in the union is applied to that food . in particular , emerging technologies in breeding and food production processes which have an impact on food , and thus might have an impact on food safety , should be covered by this regulation . novel food should therefore include foods derived from animals produced by non - traditional breeding techniques and from their offspring , foods derived from plants produced by non - traditional breeding techniques , foods produced by new production processes which might have an impact on food , and foods containing or consisting of engineered nanomaterials . foods derived from new plant varieties or animal breeds produced by traditional breeding techniques should not be considered as novel foods . furthermore , it should be clarified that foods from third countries which are novel in the union can be considered as traditional only when they are derived from primary production as defined in regulation no 178 / 2002 , whether they are processed or unprocessed . however , foods thus obtained should neither include foods produced from animals or plants to which a non - traditional breeding technique was applied or foods produced from the offspring of such animals , nor foods to which a new production process is applied . ### it should also be clarified that a food is to be considered as novel when a production technology which was not previously used for the production of foods to be marketed and consumed in the union is applied to that food . in particular , emerging technologies in breeding and food production processes which have an impact on food , and thus might have an impact on food safety , should be covered by this regulation . novel food should therefore include foods derived from animals produced by non - traditional breeding techniques and from their offspring , foods derived from plants produced by non - traditional breeding techniques , foods produced by new production processes which might have an impact on food , and foods containing or consisting of engineered nanomaterials . foods derived from new plant varieties or animal breeds produced by traditional breeding techniques should not be considered as novel foods . furthermore , it should be clarified that foods from third countries which are novel in the union can be considered as traditional only when they are derived from primary production as defined in regulation no 178 / 2002 , whether they are processed or unprocessed . however , foods thus obtained should neither include foods produced from animals or plants to which a non - traditional breeding technique was applied or foods produced from the offspring of such animals , nor foods to which a new production process is applied .


### if traditional foods from third countries are included in the list of traditional foods from third countries , they should be allowed to be placed on the market within the union , under conditions that correspond to those for which the history of safe food use has been demonstrated . as regards the safety assessment and management of traditional food from third countries , their history of safe food use in their country of origin should be taken into account . the history of safe food use should not include non - food uses or uses not related to normal diets . ### as regards the safety assessment and management of traditional food from third countries , their history of safe use in the third country of origin should be taken into account . the history of safe food use should not include non - food uses or uses not related to normal diets . if member states and / or the authority have not presented any reasoned safety objections , based on scientific evidence , for example information on adverse health effects , it will be permissible to place the food on the market within the union after notification of the intention to do so , provided that there are no ethical objections .


### noise assessments should build on existing information available and ensure that such information is reliable and accessible to competent authorities and stakeholders . competent authorities should put in place the necessary monitoring and enforcement tools . ### in accordance with directive 2002 / 49 / ec , noise assessments should be based on objective and measurable criteria common to all the member states . this information must be reliable , obtained in a transparent manner , comparable and accessible to all stakeholders . assessments should include monitoring of the latest technological developments and exchanges of the latest findings concerning the procedures to be employed . competent authorities should put in place the necessary monitoring and enforcement tools . noise assessments should be carried out or supervised by outside agencies independent of the airport operator .


### the competent authorities shall assess the cost - effectiveness of the new measures , as referred to in paragraph 3 in accordance with annex ii . a minor technical amendment to an existing measure without substantive implications on capacity or operations is not considered as a new operating restriction . ### the competent authorities shall assess the cost - effectiveness of the new measures in the context of the noise action plans provided for in directive 2002 / 49 / ec . a minor technical amendment to an existing measure without substantive implications on capacity or operations is not considered as a new operating restriction .


### ‘ balanced approach’ means the method under which the range of available measures , namely reduction of aircraft noise at source , land - use planning and management , noise abatement operational procedures and operating restrictions , is considered in a consistent way with the view to addressing the noise problem in the most cost - effective way on an airport by airport basis . ### ‘ balanced approach’ means the method under which the range of available measures , namely reduction of aircraft noise at source , land - use planning and management , noise abatement operational procedures and operating restrictions , is considered in a consistent way with the view to addressing the noise problem on an airport by airport basis in a way which takes account of both the health and the economic aspects .


### evaluate the likely cost - effectiveness of the available measures ; ### evaluate the likely effectiveness of the available measures in the light of the environmental objective set ;


### to enable selection of the most cost - effective noise mitigation measures in accordance with the balanced approach so as to achieve the sustainable development of the airport and air traffic management network capacity from a gate - to - gate perspective . ### to enable selection of the most effective noise mitigation measures , taking account of both the health and the economic aspects , in accordance with the balanced approach so as to achieve the sustainable development of the airport and air traffic management network capacity from a gate - to - gate perspective .


### member states shall respect the principles of sound financial management , transparency and non - discrimination and ensure the visibility of union action when they manage union funds . to this end , member states shall fulfil the control and audit obligations and assume the resulting responsibilities laid down in this regulation . complementary provisions may be laid down in sector - specific rules . ### where the commission implements the budget by shared management , implementation tasks shall be delegated to member states .


### bodies accredited pursuant to paragraph 3 of this article shall : set up and ensure the functioning of an effective and efficient internal control system ; use an annual accounting system providing accurate , complete and reliable information in a timely manner ; be subject to an independent external audit , performed in accordance with internationally accepted auditing standards by an audit service functionally independent of the accredited body ; ensure , in conformity with article 31 , annual ex post publication of recipients of union funds ; ensure a protection of personal data which satisfies the principles laid down in directive 95 / 46 / ec . ### in order to ensure that the funds are used in accordance with the applicable rules , the commission shall : monitor the manner in which member states fulfil their responsibilities , in particular by carrying out audits during the programme implementation ; apply procedures for a timely financial clearance of the accounts of the accredited bodies , establishing whether the accounts are complete , accurate and true ; exclude from union financing expenditure for which disbursements have been made in breach of union law . sector - specific rules shall govern the conditions under which payments to member states may be suspended by the commission or interrupted by the authorising officer by delegation . the commission may decide to lift all or part of the interruption or suspension on payments after a member state has presented its observations . the decision to lift the interruption or suspension shall be annexed to the annual activity report of the competent authorising officer by delegation .


### member states shall prevent , detect and correct irregularities and fraud when executing tasks related to the implementation of the budget . to this end they shall carry out ex ante and ex post controls including , where appropriate , on the spot checks , to ensure that the actions financed from the budget are effectively carried out and implemented correctly , recover funds unduly paid and bring legal proceedings as necessary . member states shall impose effective , dissuasive and proportionate penalties on recipients as provided for in sector - specific rules and in national legislation . ### without prejudice to complementary provisions included in relevant sector - specific regulations , and in order to ensure in shared management that the funds are used in accordance with the applicable rules and principles , the member states shall take all the legislative , regulatory and administrative or other measures necessary for protecting the union ' s financial interests . to this effect they shall in particular : satisfy themselves that actions financed from the budget are actually carried out and ensure that they are implemented correctly ; prevent , detect and correct irregularities and fraud ; recover funds wrongly paid or incorrectly used or funds lost as a result of irregularities or errors ; the commission shall appraise the systems set up in the member states on application by a member state or on its own risk assessment or in application of sector specific rules .


### the legislative authority shall , in accordance with the procedure laid down in article 322 of the tfeu , decide on a level of tolerable risk of error at an appropriate aggregation of the budget . that decision shall be taken into account during the annual discharge procedure , in accordance with article 157 . ### the legislative authority shall decide on a level of tolerable risk of error at an appropriate aggregation of the budget . that decision shall be taken into account during the annual discharge procedure , in accordance with article 157 .


### the accrediting authority shall be responsible for supervising the body and for taking all necessary measures to remedy any deficiency in its operation , including the suspension and withdrawal of the accreditation . ### the accrediting authority shall be responsible for monitoring compliance of the accredited bodies with the accreditation criteria , on the basis of available audits and control results . the accrediting authority shall take all necessary measures to remedy any deficiency in the implementation of the tasks entrusted to the bodies it has accredited , including the suspension and withdrawal of the accreditation . the accredited bodies in the member states shall : conduct checks and put in place an effective and efficient internal control system ; provide the commission by 1 march of the following financial year with : their annual accounts drawn up for the expenditure made in the execution of the tasks entrusted and presented to the commission for reimbursement including the sums disbursed to the beneficiaries for which recovery procedures are underway ; a summary of the results of available audits and checks carried out , including an analysis of systemic or recurrent weaknesses as well as corrective actions taken or planned and their results ; a management declaration providing reasonable assurance that : - the information contained in the accounts presents a true and fair view ; - the expenditure referred in the accounts has been used for its intended purpose and in accordance with the principle of sound financial management ; - the control procedures put in place give the necessary guarantees concerning the legality and regularity of the underlying transactions . these documents shall be accompanied by an opinion of an independent audit body , drawn up in accordance with the internationally accepted audit standards , on the contents of the management declaration . the audit body shall report if the examination puts in doubt the assertions made in the management declaration . an annex to the opinion shall present the error rate per funds and an analysis of the errors as well as reservations ; ensure in conformity with article 31 , annual ex post publication of recipients of union funds ; and ensure a protection of personal data which satisfies the principles laid down in directive 95 / 46 / ec . if a member state has accredited more than one body per policy area , it shall by 15 march of the following financial year provide the commission with a synthesis report consisting of an overview at national level of all management declarations of assurance and the independent audit opinions thereon , prepared for the policy area concerned . the member states shall bring legal proceedings as necessary and appropriate . as far as member states disclose errors and / or irregularities they discover immediately to the commission and remedy these , they shall be exempt from financial corrections concerning such errors and / or irregularities .


### without prejudice to the powers of the commission under article 226 of the treaty , where a competent authority does not comply with the decision of the authority , and thereby fails to ensure that a financial market participant complies with requirements directly applicable to it by virtue of the legislation referred to in article 1 , the authority may adopt an individual decision addressed to a financial market participant requiring the necessary action to comply with its obligations under community law , including the cessation of any practice . ### without prejudice to the powers of the commission under article 258 of the treaty on the functioning of the european union , where a competent authority does not comply with the decision of the authority , and thereby fails to ensure that a financial market participant complies with requirements directly applicable to it by virtue of the legislation referred to in article 1 , the authority may adopt an individual decision , in accordance with the procedure laid down in article 9 , addressed to a financial market participant requiring the necessary action to comply with its obligations under union law , including the cessation of any practice .


### without prejudice to the powers of the commission under article 226 of the treaty , where a competent authority does not comply with the decision referred to in paragraph 4 of this article within the period of time specified therein , and where it is necessary to remedy in a timely manner the non compliance by the competent authority in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system , the authority may , where the relevant requirements of the legislation referred to in article 1 are directly applicable to financial market participants , adopt an individual decision addressed to a financial market participant requiring the necessary action to comply with its obligations under community law including the cessation of any practice . ### without prejudice to the powers of the commission under article 258 of the treaty on the functioning of the european union , where a competent authority does not comply with the decision referred to in paragraph 4 of this article within the period of time specified therein , and where it is necessary to remedy in a timely manner the non - compliance by the competent authority in order to maintain or restore neutral conditions of competition in the internal market or ensure the orderly functioning and integrity of the financial system in cross - border activities , the authority may , where the relevant requirements of the legislation referred to in article 1 are directly applicable to financial market participants , adopt an individual decision addressed to a financial market participant requiring the necessary action to comply with its obligations under union law including the cessation of any practice . before adopting an individual decision , the authority shall inform the commission thereof . the commission shall ensure that the right to be heard of the addressees of the decision is respected . the authority and the competent authorities shall provide the commission with all necessary information . within two weeks of receipt of the draft decision of the authority , the commission shall decide whether to endorse the draft decision . the commission may not extend that period . the commission may endorse the draft decision only in part or with amendments where the union interest so requires . where the commission does not endorse the draft decision or endorses it in part or with amendments , it shall inform the authority without delay via a formal opinion . within one week , the authority shall review and adapt its decision to the commission ' s formal opinion and transmit it without delay to the commission . within one week of receipt of the amended decision of the authority , the commission shall decide whether to endorse it or reject it . if the amended decision is rejected by the commission , the decision shall be deemed not to have been adopted .


### it is important to provide investors with an effective right of redress against credit rating agencies . as investors do not have close insight in internal procedures of credit rating agencies a partial reversal of the burden of proof with regard to the existence of an infringement and the infringement ' s impact on the rating outcome seems to be appropriate if the investor has made a reasonable case in favour of the existence of such an infringement . however , the burden of proof as regards the existence of a damage and the causality of the infringement for the damage , both being closer to the sphere of the investor , should fully be on the investor . ### it is important to provide third parties with an effective right of redress against credit rating agencies . as third parties do not have close insight in internal procedures of credit rating agencies a partial reversal of the burden of proof with regard to the existence of an infringement and the infringement ' s impact on the rating outcome seems to be appropriate if the third parties have made a reasonable case in favour of the existence of such an infringement . however , the burden of proof as regards the existence of a damage and the causality of the infringement for the damage , both being closer to the sphere of the third party , should fully be on the latter .


### credit rating agencies should only be held liable if they infringe intentionally or with gross negligence any obligations imposed on them by regulation no 1060 / 2009 . this standard of fault means that credit rating agencies should not face liability claims if they neglect individual obligations under the regulation without disregarding their duties in a serious way . this standard of fault is appropriate because the activity of credit rating involves a certain degree of assessment of complex economic factors and the application of different methodologies may lead to different rating results , non of which can be qualified as incorrect . ### credit ratings are merely an opinion by a single rating agency on the credit quality of a financial instrument and shall be considered as such . elevating these opinions into a legally enforceable assurance , true in all its predictions , would reduce the incentive of the investor to scrutinise the instrument at hand by himself , thereby further risking to increase the reliance on such ratings . rather , the use of ratings shall be subject to the responsibility of the issuer and the investor not to base decisions on them in a mechanical fashion . an agency which consequently misperforms will face significant credibility problems which will affect its ability to pursue its business .


### regular rotation of credit rating agencies issuing credit ratings on an issuer or its debt instruments should bring more diversity to the evaluation of the creditworthiness of the issuer that selects and pays that credit rating agency . multiple and different views , perspectives and methodologies applied by credit rating agencies should produce more diverse credit ratings and ultimately improve the assessment of the creditworthiness of the issuers . for this diversity to play a role and to avoid complacency of both issuers and credit rating agencies , the maximum duration of the business relationship between the credit rating agency and the issuer paying must be restricted to a level guaranteeing regular fresh looks at the creditworthiness of issuers . therefore , a time period of three years would seem appropriate , also considering the need to provide certain continuity within the credit ratings . the risk of conflict of interest increases in situations where the credit rating agency frequently issues credit ratings on debt instruments of the same issuer within a short period of time . in those cases , the maximum duration of the business relationship should be shorter to guarantee similar results . hence , the business relationship should stop after a credit rating has rated ten debt instruments of the same issuer . however , in order to avoid imposing a disproportionate burden on issuers and credit rating agencies , no requirement to change credit rating agency within the first 12 months of the business relationship should be imposed . where an issuer mandates more than one credit rating agency , either because as an issuer of structured finance instruments he is obliged to do so , or on a voluntary basis , it should be sufficient that the strict rotation periods only apply to one of the credit rating agencies . however , also in this case , the business relationship between the issuer and the additional credit rating agencies should not exceed a period of six years . ### financial markets perform at best when there is a multitude of opinions and ideas expressed as to what the macro and micro financial development will be like . the opinions issued by leading credit rating agencies shall not be taken as the ultimate truth nor be the sole basis for an investment decision . rather , they are to support the risk assessment of financial actors in their role as allocators of savings and investments . therefore , it is of outmost importance that rules and provisions regulating the credit rating industry promote and encourage a plurality of views and estimates of the credit quality of private and public issuers . this objective is best obtained by ensuring that entry of new rating agencies is facilitated by removing excessive regulatory hurdles and disapproving of proposals such as making agencies civilly liable for their ratings as that would constitute a paramount disincentive for any new player to enter the industry .


### regulation no 1060 / 2009 already provided a first round of measures to address the question of independence and integrity of credit rating agencies and their credit rating activities . the objectives of guaranteeing the independence of credit rating agencies and of identifying , managing and , to the extent possible , avoiding any conflict of interest that could arise were already underlying several provisions of that regulation in 2009 . whilst providing a sound basis , the existing rules do not appear to have had a sufficient impact in this regard . credit rating agencies still are not perceived as sufficiently independent actors . the selection and remuneration of the credit rating agency by the rated entity engenders inherent conflicts of interest , which are insufficiently addressed by the existing rules . under this model , there are incentives for credit rating agencies to issue complacency ratings on the issuer in order to secure a long - standing business relationship guaranteeing revenues or in order to secure additional work and revenues . moreover , relationships between the shareholders of credit rating agencies and the rated entities may cause conflicts of interest which are not sufficiently dealt with by the existing rules . as a result , credit ratings issued under the issuer - pays model may be perceived as the credit ratings that suit the issuer rather than the credit ratings needed by the investor . without prejudice to the conclusions of the report to be submitted by the commission on the issuer - pays model by december 2012 pursuant to article 39 of regulation no 1060 / 2009 , it is essential to reinforce the conditions of independence applying to credit rating agencies in order to increase the level of credibility of credit ratings issued under the issuer - pays model . ### regulation no 1060 / 2009 already provided a first round of measures to address the question of independence and integrity of credit rating agencies and their credit rating activities . the objectives of guaranteeing the independence of credit rating agencies and of identifying , managing and , to the extent possible , avoiding any conflict of interest that could arise were already underlying several provisions of that regulation in 2009 . whilst providing a sound basis , the existing rules do not appear to have had a sufficient impact in this regard . the selection and remuneration of the credit rating agency by the rated entity might increase the risk of conflicts of interest , which are insufficiently addressed by the existing rules . moreover , relationships between the shareholders of credit rating agencies and the rated entities may cause conflicts of interest which are not sufficiently dealt with by the existing rules . without prejudice to the conclusions of the report to be submitted by the commission on the issuer - pays model by december 2012 pursuant to article 39 of regulation no 1060 / 2009 , it is essential to reinforce the conditions of independence applying to credit rating agencies in order to increase the level of credibility and independence of credit ratings .


### immediately publish on its website the new methodologies together with a detailed explanation thereof ; ### immediately publish on its website the new methodologies together with a detailed explanation thereof as well as the date of application of the new methodologies ;


### the perception of independence of credit rating agencies would be particularly affected should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies , at least if this investment reaches a certain size that could allow these shareholders or members to exercise a certain influence on the agency ' s business . therefore , in order to ensure the independence of credit rating agencies , it is appropriate to provide for stricter rules regarding the relations between the credit rating agencies and their shareholders . for this reason , no person should simultaneously hold a participation of 5% or more in more than one credit rating agency , unless the agencies concerned belong to the same group . ### the perception of independence of credit rating agencies would be particularly affected should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies . therefore , in order to ensure the independence of credit rating agencies , it is appropriate to provide for stricter rules regarding the relations between the credit rating agencies and their shareholders . for this reason , a shareholder or member holding a participation of 5% or more in one credit rating agency should not be allowed to hold any participation in another credit rating agency , unless the agencies concerned belong to the same group .


### this regulation introduces a common regulatory approach in order to enhance the integrity , transparency , responsibility , good governance and reliability of credit rating activities , contributing to the quality of credit ratings issued in the union , thereby contributing to the smooth functioning of the internal market while achieving a high level of consumer and investor protection . it lays down conditions for the issuing of credit ratings and rules on the organisation and conduct of credit rating agencies , including their shareholders and members , to promote credit rating agencies ' independence , the avoidance of conflicts of interest and the enhancement of consumer and investor protection . ### this regulation introduces a common regulatory approach in order to enhance the integrity , transparency , responsibility , good governance and independence of credit rating activities , contributing to the quality of credit ratings issued in the union , thereby contributing to the smooth functioning of the internal market while achieving a high level of consumer and investor protection . it lays down conditions for the issuing of credit ratings and rules on the organisation and conduct of credit rating agencies , including their shareholders and members , to promote credit rating agencies ' independence , the avoidance of conflicts of interest and the enhancement of investor protection .


### where an investor establishes facts from which it may be inferred that a credit rating agency has committed any of the infringements listed in annex iii , it will be for the credit rating agency to prove that it has not committed that infringement or that that infringement did not have an impact on the issued credit rating . ### where a credit rating agency may have been guilty of serious errors or negligence giving rise to damages , investors shall be entitled to initiate proceedings in support of their claims by establishing the existence of a direct link of causality between the alleged error or negligence and the damages sustained . the credit rating agency shall be held not accountable if it establishes that it has not been guilty of the alleged error or negligence or that this did not influence the issued credit rating .


### where an investor establishes facts from which it may be inferred that a credit rating agency has committed any of the infringements listed in annex iii , it will be for the credit rating agency to prove that it has not committed that infringement or that that infringement did not have an impact on the issued credit rating . ### where an investor brings an action against a credit rating agency for damages arising from a credit rating issued in breach of this article , the burden shall be on the investor to prove that the infringement had an impact on the issued credit rating and that this impact influenced the investor ' s investment decision .


### requiring issuers to regularly change the credit rating agency they mandate to issue credit ratings is proportionate to the objective pursued . this requirement only applies to certain regulated institutions which provide a service affecting the public interest under certain conditions . the privilege of having its services recognised as playing an important role in the regulation of the financial services market and being approved to carry out this function , entails the need to respect certain obligations in order to guarantee independence and the perception of independence in all circumstances . a credit rating agency which is prevented from providing credit rating services to a particular issuer would still be allowed to provide credit ratings to other issuers . in a market context where the rotation rule applies to all players , business opportunities will arise since all issuers would need to change credit rating agency . moreover , credit rating agencies may always issue unsolicited credit ratings on the same issuer , capitalising on their experience . unsolicited ratings are not constrained by the issuer - pays model and therefore are less affected by potential conflicts of interests . for issuers , the maximum duration of the business relationship with a credit rating agency or the rule on the employment of more than one credit rating agency also represents a restriction on their freedom to conduct their own business . however , this restriction is necessary on public - interest grounds considering the interference of the issuer - pays model with the necessary independence of credit rating agencies to guarantee independent credit ratings that can be used by investors for regulatory purposes . at the same time , these restrictions do not go beyond what is necessary and should rather be seen as an element increasing the issuer ' s creditworthiness towards other parties , and ultimately the market . ### requiring institutions , issuers or their related third parties and sovereigns to have a double rating - one from a chosen credit rating agency and a second from an appointed one - is proportionate to the objective pursued . this requirement only applies to certain credit ratings which provide a service affecting the public interest . in a market context where the double rating rule applies to all players , business opportunities will arise since the appointed credit rating agency shall be chosen among all recognised ecai . the appointment of the second credit rating agency by an independent authority shall favour smaller credit rating agencies already operating in the market and recognised .


### “rating outlook” means an opinion regarding the likely direction of a credit rating over the short and medium term . ### “rating outlook” means an opinion regarding the likely direction of a credit rating over the short and medium term , in particular a banking sector outlook .


### a credit rating agency shall disclose on its website , on an ongoing basis , information about all entities or debt instruments submitted to it for their initial review or for preliminary rating . such disclosure shall be made whether or not issuers contract with the credit rating agency for a final rating . ### a credit rating agency shall report to esma , on an ongoing basis , information about all entities or debt instruments submitted to it for their initial review or for preliminary rating , indifferent with regard to whether or not the issuers contract with the credit rating agency for a final rating .


### immediately publish on its website the new methodologies together with a detailed explanation thereof ; ### inform esma and publish on its website the new methodologies with a detailed explanation ;


### the new rules limiting the duration of the business relationship between an issuer and the credit rating agency would significantly reshape the credit rating market in the union , which today remains largely concentrated . new market opportunities would arise for small and mid - size credit rating agencies , which would need to develop to take up those challenges in the first years following the entry into force of the new rules . those developments are likely to bring new diversity into the market . the objectives and the effectiveness of the new rules would , however , be largely jeopardised if , during these initial years , large established credit rating agencies would prevent their competitors from developing credible alternatives by acquiring them . further consolidation in the credit rating market driven by large established players would result in a reduction of the number of available registered credit rating agencies , thus creating selection difficulties for issuers at the moment in which they regularly need to appoint one or more new credit rating agencies and disturbing the smooth functioning of the new rules . more importantly , further consolidation driven by large established credit rating agencies would particularly prevent the emergence of more diversity in the market . ### further consolidation in the credit rating market driven by large established players would result in a reduction of the number of available registered credit rating agencies , thus creating selection difficulties for issuers and disturbing the smooth functioning of the market . more importantly , further consolidation driven by large established credit rating agencies would particularly prevent the emergence of more diversity in the market .


### have the right or the power to exercise 5% or more of the voting rights in any other credit rating agency ; ### have the right or the power to exercise voting rights in any other credit rating agency ;


### requiring issuers to regularly change the credit rating agency they mandate to issue credit ratings is proportionate to the objective pursued . this requirement only applies to certain regulated institutions which provide a service affecting the public interest under certain conditions . the privilege of having its services recognised as playing an important role in the regulation of the financial services market and being approved to carry out this function , entails the need to respect certain obligations in order to guarantee independence and the perception of independence in all circumstances . a credit rating agency which is prevented from providing credit rating services to a particular issuer would still be allowed to provide credit ratings to other issuers . in a market context where the rotation rule applies to all players , business opportunities will arise since all issuers would need to change credit rating agency . moreover , credit rating agencies may always issue unsolicited credit ratings on the same issuer , capitalising on their experience . unsolicited ratings are not constrained by the issuer - pays model and therefore are less affected by potential conflicts of interests . for issuers , the maximum duration of the business relationship with a credit rating agency or the rule on the employment of more than one credit rating agency also represents a restriction on their freedom to conduct their own business . however , this restriction is necessary on public - interest grounds considering the interference of the issuer - pays model with the necessary independence of credit rating agencies to guarantee independent credit ratings that can be used by investors for regulatory purposes . at the same time , these restrictions do not go beyond what is necessary and should rather be seen as an element increasing the issuer ' s creditworthiness towards other parties , and ultimately the market . ### requiring issuers to regularly change the credit rating agency they mandate to issue credit ratings is proportionate to the objective pursued . this requirement only applies to certain regulated institutions which provide a service affecting the public interest under certain conditions . the privilege of having its services recognised as playing an important role in the regulation of the financial services market and being approved to carry out this function , entails the need to respect certain obligations in order to guarantee independence and the perception of independence in all circumstances . a credit rating agency which is prevented from providing credit rating services to a particular issuer would still be allowed to provide credit ratings to other issuers . in a market context where the rotation rule applies to all players , business opportunities will arise since all issuers would need to change credit rating agency . moreover , credit rating agencies may always issue unsolicited credit ratings on the same issuer , capitalising on their experience . unsolicited ratings are not constrained by the issuer - pays model and therefore are less affected by potential conflicts of interests . for issuers , the maximum duration of the business relationship with a credit rating agency or the rule on the employment of more than one credit rating agency also represents a restriction on their freedom to conduct their own business . however , this restriction is necessary on public - interest grounds considering the interference of the issuer - pays model with the necessary independence of credit rating agencies to guarantee independent credit ratings that can be used by investors for regulatory purposes . at the same time , these restrictions do not go beyond what is necessary and should rather be seen as an element increasing the issuer ' s creditworthiness towards other parties , and ultimately the market , and promoting the genuinely balanced functioning of the internal market .


### in order to further mitigate conflicts of interest and facilitate fair competition in the credit rating market , it is important to ensure that the fees charged by credit rating agencies to customers are not discriminatory . differences in fees charged for the same type of service should only be justifiable by a difference in the actual costs in providing this service to different customers . moreover , the fees charged for rating services to a given issuer should not depend on the results or outcome of the work performed or on the provision of related services . furthermore , in order to allow for the effective supervision of those rules , credit rating agencies should disclose to esma the fees received from each of their clients and their general pricing policy . ### in order to further mitigate conflicts of interest and facilitate fair competition in the credit rating market , the fees charged for rating services to a given issuer should not depend on the results or outcome of the work performed . furthermore , in order to allow for the effective supervision of those rules , credit rating agencies should disclose to esma the fees received from each of their clients and their general pricing policy .


### a credit rating agency that intends to change or use any new rating methodologies , models or key rating assumptions shall publish the proposed changes or proposed new methodologies on its website inviting stakeholders to submit comments for a period not shorter than one month , together with a detailed explanation of the reasons for and the implications of the proposed changes or proposed new methodologies . ### a credit rating agency that intends to materially change or use any new rating methodologies , models or key rating assumptions shall publish the proposed changes or proposed new methodologies on its website inviting stakeholders to submit comments for a period of one month , together with a detailed explanation of the reasons for and the implications of the proposed material changes or proposed new methodologies .


### credit ratings , whether issued for regulatory purposes or not , have a significant impact on investment decisions . hence , credit rating agencies have an important responsibility towards investors in ensuring that they comply with the rules of regulation no 1060 / 2009 so that their ratings are independent , objective and of adequate quality . however , in the absence of a contractual relationship between the credit rating agency and the investor , investors are not always in a position to enforce the agency ' s responsibility towards them . therefore , it is important to provide for an adequate right of redress for investors who relied on a credit rating issued in breach of the rules of regulation no 1060 / 2009 . the investor should be able to hold the credit rating agency liable for any damage caused by an infringement of that regulation which had an impact on the rating outcome . infringements which do not impact the rating outcome , such as breaches of transparency obligations , should not trigger civil liability claims . ### credit ratings , whether issued for regulatory purposes or not , have a significant impact on investment decisions . hence , credit rating agencies have an important responsibility towards investors in ensuring that they comply with the rules of regulation no 1060 / 2009 so that their ratings are independent , objective and of adequate quality . although ratings sometimes are associated with broad market interest it shall be remembered they are nothing but the estimation of an individual rating agency . civil liability on behalf of the credit rating agencies would pose a substantial risk of increasing user ' s reliance upon them and thereby be contradictory to the overarching aim of reducing reliance on ratings . regarding matters concerning the civil liability of a credit rating agency such matters should therefore be governed by the applicable national law determined by the relevant rules of international private law .


### investors , issuers and other interested parties should have access to up to date rating information on a central webpage . a european rating index established by esma should allow investors to easily compare all ratings that exist with regard to a specific rated entity and provide them with average ratings . in order to enable investors to compare ratings on the same entity issued by different credit rating agencies it is necessary that credit rating agencies use a harmonised rating scale , to be developed by esma and adopted by the commission as a regulatory technical standard . the use of the harmonised rating scale should only be mandatory for the publication of the ratings on the eurix webpage while credit rating agencies should be free to use their own rating scales when publishing the ratings on their own websites . the mandatory use of a harmonised rating scale should not have a harmonising effect on methodologies and processes of credit rating agencies , but should be limited to making the rating outcome comparable . it is important that the eurix webpage shows , in addition to an aggregate rating index , all available ratings per instrument in order to allow investors to consider the whole variety of opinions before taking their own investment decision . the aggregate rating index may help investors to get a first indication of the creditworthiness of an entity . the eurix should help smaller and new credit rating agencies to gain visibility . the european rating index would complement the information on historical performance data to be published by credit rating agencies in esma ' s central repository . the european parliament supported the establishment of such european rating index in its resolution on credit rating agencies of 8 june 2011 . ### investors , issuers and other interested parties should have access to up to date rating information on a central webpage and via data feeds . a european rating index established by esma should allow investors to easily compare all ratings that exist with regard to a specific rated entity and provide them with average ratings . in order to enable investors to compare ratings on the same entity issued by different credit rating agencies it is necessary that credit rating agencies use a harmonised rating scale , to be developed by esma in cooperation with eba and eiopa and adopted by the commission as a regulatory technical standard . the use of the harmonised rating scale should only be mandatory for the publication of the ratings on the eurix webpage while credit rating agencies should be free to use their own rating scales when publishing the ratings on their own websites . the mandatory use of a harmonised rating scale should not have a harmonising effect on methodologies and processes of credit rating agencies , but should be limited to making the rating outcome comparable . it is important that the eurix webpage shows , in addition to an aggregate rating index , all available ratings per instrument in order to allow investors to consider the whole variety of opinions before taking their own investment decision . the aggregate rating index may help investors to get a first indication of the creditworthiness of an entity . the eurix should help smaller and new credit rating agencies to gain visibility . credit ratings agencies that work on a subscription - or investor - based payment model shall be exempt from the publication of individual credit ratings and should only feature in the establishment of the average ratings . the european rating index would complement the information on historical performance data to be published by credit rating agencies in esma ' s central repository . the european parliament supported the establishment of such european rating index in its resolution on credit rating agencies of 8 june 2011 .


### credit rating agencies should only be held liable if they infringe intentionally or with gross negligence any obligations imposed on them by regulation no 1060 / 2009 . this standard of fault means that credit rating agencies should not face liability claims if they neglect individual obligations under the regulation without disregarding their duties in a serious way . this standard of fault is appropriate because the activity of credit rating involves a certain degree of assessment of complex economic factors and the application of different methodologies may lead to different rating results , non of which can be qualified as incorrect . ### credit ratings are merely an opinion by a single rating agency on the credit quality of a financial instrument and shall be considered as such . elevating these opinions into a legally enforceable assurance , true in all its predictions , would reduce the incentive of the investor to scrutinise the instrument at hand by himself , thereby further risking to increase the reliance on such ratings . rather , the use of ratings shall be subject to the responsibility of the issuer and the investor not to base decisions on them in a mechanical fashion . an agency which consequently misperforms will face significant credibility problems which will affect its ability to pursue its business .


### credit rating agencies should only be held liable if they infringe intentionally or with gross negligence any obligations imposed on them by regulation no 1060 / 2009 . this standard of fault means that credit rating agencies should not face liability claims if they neglect individual obligations under the regulation without disregarding their duties in a serious way . this standard of fault is appropriate because the activity of credit rating involves a certain degree of assessment of complex economic factors and the application of different methodologies may lead to different rating results , none of which can be qualified as incorrect . ### credit rating agencies should only be held liable if they infringe intentionally or with gross negligence any obligations imposed on them by regulation no 1060 / 2009 . any infringement of the organizational and operating rules of rating agencies , even where subject to disciplinary measures by the esma , should not give entitlement to liability claims by third parties . the accountability of rating agencies before the competent civil courts should be decided by the rules of those courts .


### regulation no 1060 / 2009 already provided a first round of measures to address the question of independence and integrity of credit rating agencies and their credit rating activities . the objectives of guaranteeing the independence of credit rating agencies and of identifying , managing and , to the extent possible , avoiding any conflict of interest that could arise were already underlying several provisions of that regulation in 2009 . whilst providing a sound basis , the existing rules do not appear to have had a sufficient impact in this regard . credit rating agencies still are not perceived as sufficiently independent actors . the selection and remuneration of the credit rating agency by the rated entity engenders inherent conflicts of interest , which are insufficiently addressed by the existing rules . under this model , there are incentives for credit rating agencies to issue complacency ratings on the issuer in order to secure a long - standing business relationship guaranteeing revenues or in order to secure additional work and revenues . moreover , relationships between the shareholders of credit rating agencies and the rated entities may cause conflicts of interest which are not sufficiently dealt with by the existing rules . as a result , credit ratings issued under the issuer - pays model may be perceived as the credit ratings that suit the issuer rather than the credit ratings needed by the investor . without prejudice to the conclusions of the report to be submitted by the commission on the issuer - pays model by december 2012 pursuant to article 39 of regulation no 1060 / 2009 , it is essential to reinforce the conditions of independence applying to credit rating agencies in order to increase the level of credibility of credit ratings issued under the issuer - pays model . ### regulation no 1060 / 2009 already provided a first round of measures to address the question of independence and integrity of credit rating agencies and their credit rating activities . the objectives of guaranteeing the independence of credit rating agencies and of identifying , managing and , to the extent possible , avoiding any conflict of interest that could arise were already underlying several provisions of that regulation in 2009 . credit rating agencies still are not perceived as sufficiently independent actors . the selection and remuneration of the credit rating agency by the rated entity engenders inherent conflicts of interest , which are insufficiently addressed by the existing rules . under this model , there are incentives for credit rating agencies to issue complacency ratings on the issuer in order to secure a long - standing business relationship guaranteeing revenues or in order to secure additional work and revenues . moreover , relationships between the shareholders of credit rating agencies and the rated entities may cause conflicts of interest which are not sufficiently dealt with by the existing rules . as a result , credit ratings issued under the issuer - pays model may be perceived as the credit ratings that suit the issuer rather than the credit ratings needed by the investor . without prejudice to the conclusions of the report to be submitted by the commission on the issuer - pays model by december 2012 pursuant to article 39 of regulation no 1060 / 2009 , it is essential to reinforce the conditions of independence applying to credit rating agencies in order to increase the level of credibility of credit ratings issued under the issuer - pays model .


### where an investor establishes facts from which it may be inferred that a credit rating agency has committed any of the infringements listed in annex iii , it will be for the credit rating agency to prove that it has not committed that infringement or that that infringement did not have an impact on the issued credit rating . ### where an investor establishes facts from which it may be inferred that a credit rating agency has committed any of the infringements listed in annex iii , such an investor will have to produce proof that the credit rating agency has committed the infringement intentionally or with gross negligence and that such infringement has had a significant impact on the issued credit rating .


### esma shall also verify that any intended changes to rating methodologies notified by a credit rating agency in accordance with article 8 comply with the criteria laid down in article 8 as specified in the regulatory technical standard referred to in point of article 21 . the credit rating agency may only apply the new rating methodology after esma has confirmed the methodology ' s compliance with article 8 . ### esma shall also verify that any intended changes to rating methodologies notified by a credit rating agency in accordance with article 8 comply with the criteria laid down in article 8 as specified in the regulatory technical standard referred to in point of article 21 . however , esma shall ensure that a certain variety of methodologies is maintained in order to encourage competition for the best methodologies between the rating agencies and to avoid harmonisation of methodologies . if esma detects any deviation , the credit rating agency shall remove this deviation within one month .


### hold 5% or more of the capital of any other credit rating agency . this prohibition does not apply to holdings in diversified collective investment schemes , including managed funds such as pension funds or life insurance , provided that the holdings in diversified collective investment schemes do not put him or her in a position to exercise significant influence on the business activities of those schemes ; ### hold capital of any other credit rating agency . this prohibition does not apply to holdings in diversified collective investment schemes , including managed funds such as pension funds or life insurance , provided that the holdings in diversified collective investment schemes do not put him or her in a position to exercise significant influence on the business activities of those schemes ;


### it is important to ensure that modifications to the rating methodologies do not result in less rigorous methodologies . for that purpose , issuers , investors and other interested parties should have the opportunity to comment on any intended change of rating methodologies . this will help them to understand the reasons behind new methodologies and for the change in question . comments provided by issuers and investors on the draft methodologies may provide valuable input for the credit rating agencies in defining the methodologies . moreover , esma should verify and confirm the compliance of new rating methodologies with article 8 of regulation no 1060 / 2009 and the relevant regulatory technical standard before methodologies are applied in practice . esma should verify that the proposed methodologies are rigorous , systematic , continuous and subject to validation based on historical experience , including back - testing . however , this verification process should not grant esma any power to judge the appropriateness of the proposed methodology or the content of the credit ratings issued following the application of the methodologies . ### it is important to ensure that relevant modifications to the rating methodologies do not result in less rigorous methodologies . for that purpose , issuers , investors and other interested parties should have the opportunity to comment on any intended relevant change of rating methodologies . this will help them to understand the reasons behind new methodologies and for the change in question . comments provided by issuers and investors on the draft methodologies may provide valuable input for the credit rating agencies in defining the methodologies . moreover , esma should be notified when new methodologies are applied in practice . however , this notification should not grant esma any power to judge the appropriateness of the proposed methodology or the content of the credit ratings issued following the application of the methodologies or to certify or pre - approve methodologies used by credit rating agencies .


### examination of rating methodologies ### examination of procedures used for the establishment of new and material changes to rating methodologies


### where a credit rating agency has entered into a contract with an issuer or its related third party for the issuing of credit ratings on that issuer , it shall not issue credit ratings on that issuer for a period exceeding three years . ### where a credit rating agency has entered into an exclusive contract with an issuer or its related third party for the issuing of credit ratings on that issuer , it shall not issue credit ratings on that issuer for a period exceeding five years .


### where a credit rating agency issues sovereign ratings or related rating outlooks , it shall publish these ratings or outlooks only after the close of business of trading venues established in the union and at least one hour before their opening . point 3 of section d . i . remains unaffected . ### where a credit rating agency issues sovereign ratings or related rating outlooks , it shall publish these ratings on the first friday of each calendar quarter only , after the close of business of trading venues established in the union and at least one hour before their opening . point 3 of section d . i remains unaffected .


### the perception of independence of credit rating agencies would be particularly affected should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies , at least if this investment reaches a certain size that could allow these shareholders or members to exercise a certain influence on the agency ' s business . therefore , in order to ensure the independence of credit rating agencies , it is appropriate to provide for stricter rules regarding the relations between the credit rating agencies and their shareholders . for this reason , no person should simultaneously hold a participation of 5% or more in more than one credit rating agency , unless the agencies concerned belong to the same group . ### the perception of independence of credit rating agencies would be particularly affected should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies . therefore , in order to ensure the independence of credit rating agencies , it is appropriate to provide for stricter rules regarding the relations between the credit rating agencies and their shareholders . for this reason , a shareholder or member holding a participation of 5% or more in one credit rating agency should not be allowed to hold any participation in another credit rating agency , unless the agencies concerned belong to the same group .


### investors , issuers and other interested parties should have access to up to date rating information on a central webpage . a european rating index established by esma should allow investors to easily compare all ratings that exist with regard to a specific rated entity and provide them with average ratings . in order to enable investors to compare ratings on the same entity issued by different credit rating agencies it is necessary that credit rating agencies use a harmonised rating scale , to be developed by esma and adopted by the commission as a regulatory technical standard . the use of the harmonised rating scale should only be mandatory for the publication of the ratings on the eurix webpage while credit rating agencies should be free to use their own rating scales when publishing the ratings on their own websites . the mandatory use of a harmonised rating scale should not have a harmonising effect on methodologies and processes of credit rating agencies , but should be limited to making the rating outcome comparable . it is important that the eurix webpage shows , in addition to an aggregate rating index , all available ratings per instrument in order to allow investors to consider the whole variety of opinions before taking their own investment decision . the aggregate rating index may help investors to get a first indication of the creditworthiness of an entity . the eurix should help smaller and new credit rating agencies to gain visibility . the european rating index would complement the information on historical performance data to be published by credit rating agencies in esma ' s central repository . the european parliament supported the establishment of such european rating index in its resolution on credit rating agencies of 8 june 2011 . ### investors , issuers and other interested parties should have access to up to date rating information on a central webpage . a european rating index should allow investors to easily compare all ratings that exist with regard to a specific rated entity and provide them with average ratings . in order to enable investors to compare ratings on the same entity issued by different credit rating agencies , eurix shall create an equivalence chart between all different rating scales used by credit rating agencies . the equivalence chart may help investors to get a first indication of the creditworthiness of an entity rated by several different agencies . historical performance data on credit rating agencies shall be periodically published by esma .


### the commission should adopt the draft regulatory technical standards developed by esma regarding the content of the handover file when a credit rating agency is replaced by another credit rating agency , the content , frequency and presentation of the information to be provided by issuers on structured finance instruments , harmonisation of the standard rating scale to be used by credit rating agencies , the presentation of the information , including structure , format , method and timing of reporting , that credit rating agencies should disclose to esma in relation to eurix and the content and format of the periodic reporting on fees charged by credit rating agencies for the purposes of ongoing supervision by esma . the commission should adopt those standards by means of delegated acts pursuant to article 290 of the treaty and in accordance with articles 10 to 14 of regulation no 1095 / 2010 . ### the commission should adopt the draft regulatory technical standards developed by esma regarding the content , frequency and presentation of the information to be provided by issuers on structured finance instruments , the presentation of the information , including structure , format , method and timing of reporting , that credit rating agencies , eba and national central banks of member states should disclose to esma in relation to eurix and the content and format of the periodic reporting on fees charged by credit rating agencies for the purposes of ongoing supervision by esma . the commission should adopt those standards by means of delegated acts pursuant to article 290 of the treaty and in accordance with articles 10 to 14 of regulation no 1095 / 2010 .


### the perception of independence of credit rating agencies would be particularly affected should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies , at least if this investment reaches a certain size that could allow these shareholders or members to exercise a certain influence on the agency’s business . therefore , in order to ensure the independence of credit rating agencies , it is appropriate to provide for stricter rules regarding the relations between the credit rating agencies and their shareholders . for this reason , no person should simultaneously hold a participation of 5% or more in more than one credit rating agency , unless the agencies concerned belong to the same group . ### the independence of credit rating agencies could be particularly affected should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies . therefore , in order to avoid actual or potential conflicts of interest and to ensure the independence of credit rating agencies , it is appropriate to provide for stricter rules regarding the relations between the credit rating agencies and their shareholders . for this reason , a shareholder or member of a credit rating agency should not simultaneously invest in another credit rating agency , unless the latter belongs to the same group .


### a credit rating agency that intends to change or use any new rating methodologies , models or key rating assumptions shall publish the proposed changes or proposed new methodologies on its website inviting stakeholders to submit comments for a period not shorter than one month , together with a detailed explanation of the reasons for and the implications of the proposed changes or proposed new methodologies . ### a credit rating agency that intends to materially change or use any new rating methodologies , models or key rating assumptions shall publish the proposed changes or proposed new methodologies on its website inviting stakeholders to submit comments for a period of one month , together with a detailed explanation of the reasons for and the implications of the proposed material changes or proposed new methodologies .


### the credit rating agency infringes the first subparagraph of article 8 by not publishing on its website the proposed changes to the methodologies , models or key rating assumptions or the proposed new methodologies , models or key rating assumptions together with a detailed explanation of the reasons for and the implications of the proposed changes . ### the credit rating agency infringes the first subparagraph of article 8 by not notifying esma and publishing on its website the proposed relevant changes to the methodologies , models or key rating assumptions or the proposed new methodologies , models or key rating assumptions together with a detailed explanation of the reasons for and the implications of the proposed changes .


### the new rules limiting the duration of the business relationship between an issuer and the credit rating agency would significantly reshape the credit rating market in the union , which today remains largely concentrated . new market opportunities would arise for small and mid - size credit rating agencies , which would need to develop to take up those challenges in the first years following the entry into force of the new rules . those developments are likely to bring new diversity into the market . the objectives and the effectiveness of the new rules would , however , be largely jeopardised if , during these initial years , large established credit rating agencies would prevent their competitors from developing credible alternatives by acquiring them . further consolidation in the credit rating market driven by large established players would result in a reduction of the number of available registered credit rating agencies , thus creating selection difficulties for issuers at the moment in which they regularly need to appoint one or more new credit rating agencies and disturbing the smooth functioning of the new rules . more importantly , further consolidation driven by large established credit rating agencies would particularly prevent the emergence of more diversity in the market . ### further consolidation in the credit rating market driven by large established players would result in a reduction of the number of available registered credit rating agencies , thus creating selection difficulties for issuers and disturbing the smooth functioning of the market . more importantly , further consolidation driven by large established credit rating agencies would particularly prevent the emergence of more diversity in the market .


### the new rules limiting the duration of the business relationship between an issuer and the credit rating agency would significantly reshape the credit rating market in the union , which today remains largely concentrated . new market opportunities would arise for small and mid - size credit rating agencies , which would need to develop to take up those challenges in the first years following the entry into force of the new rules . those developments are likely to bring new diversity into the market . the objectives and the effectiveness of the new rules would , however , be largely jeopardised if , during these initial years , large established credit rating agencies would prevent their competitors from developing credible alternatives by acquiring them . further consolidation in the credit rating market driven by large established players would result in a reduction of the number of available registered credit rating agencies , thus creating selection difficulties for issuers at the moment in which they regularly need to appoint one or more new credit rating agencies and disturbing the smooth functioning of the new rules . more importantly , further consolidation driven by large established credit rating agencies would particularly prevent the emergence of more diversity in the market . ### increased competition in the credit rating industry shall be promoted and a through consultation with industry players including credit rating agencies , financial intermediaries , institutional investors , financial consumer organisations , national debt offices and other relevant interests shall be carried out in order to find viable and constructive actions for the fulfilment of this objective .


### after expiry of the consultation period referred to in the first subparagraph , the credit rating agency shall notify esma of the intended changes or proposed new methodologies . ### esma shall be notified of the intended changes or proposed new methodologies .