Rotation of Analyst

Sr. # Contents Page #
1 Objective 1
2 Applicability 1
3 Background 1
4 Rotation Mechanism 1
5 Cooling-off Period 2
6 Tasks 2
7 Policy Administration 2
8 Regulatory Framework 3
THE PAKISTAN CREDIT RATING AGENCY LIMITED Awami Complex, FB-1, Usman Block, New Garden Town Lahore Phone: +92 42 3586 9504 - 6 Web: www.pacra.com Approved by Chief Executive Officer Approval Date July 28, 2025 Effective Date July 28, 2025 Signing Authority _________________________ USMAN HAIDER Chief Executive Officer POLICY | ROTATION OF ANALYST

The Pakistan Credit Rating Agency Limited POLICY | ROTATION OF ANALYST PACRA POLICY Page 1 of 3 July 2025 www.pacra.com 1 OBJECTIVE 1.1 To establish a policy regarding rating analysts to an appropriate rotation mechanism that provides for gradual change in rating teams.
1.2 To manage actual, potential, or perceived conflicts of interest that may
arise from long-standing relationships between rating analysts and clients.
1.3 To facilitate capacity building and knowledge assimilation through
exposure to multiple sectors within PACRA’s rating universe. 2 APPLICABILITY 2.1 This policy is applicable to rating analysts.
2.1.1 "Rating Analyst" means an employee of the credit rating company who
performs analytical functions that are necessary for the issuing or monitoring of a credit rating or participates in determining credit ratings. [Ref: Annexure F of CRC Regulations, 2016] “Rating Analyst” includes Analyst, Team Lead and Rating Committee Member (internal & external).
2.1.2 Team Lead: Only to the extent of this policy team lead is defined as Lead
rating analyst responsible for supervising the work of other rating analysts or team members.
2.1.3 Rating Committee Member: PACRA RC is structured to include both
internal (in-house) and external RC members:

• Internal RC Members: A PACRA employee who has been formally
  designated in the position. He may have other responsibilities / functions in PACRA.
• External RC Members: A person who has been nominated in this role
  by PACRA. External RC member should not have any direct or indirect association with PACRA or any of its Directors and shareholders. [Ref: PACRA Glossary] 3 BACKGROUND 3.1 Ratings are assigned by PACRA Rating Committee (RC) and not by any individual rating analyst.
  3.2 Analyst (by whatever name called) are part of rating teams. At times, a
  single member rating team may be assigned to undertake the rating of a client.
  3.3 Analysts shall submit their initial analysis reports along with the initial
  indicative ratings to the RC. [Reference: CRC Regulations 2016; clause 11-(C)-(t)] 4 ROTATION MECHANISM
  4.1 For each outstanding rating, PACRA will rotate its Rating Analysts, Team
  Leads and RC Members in the following manner:
  Sr. No. Type of Rating
  Analyst
  Time Period for Rotation
  1 Analyst Continuous period of three (3) years on the same client 2 Team Lead Continuous period of five (5) years on the same client 3 RC Members Continuous period of ten (10) years on the same client

The Pakistan Credit Rating Agency Limited POLICY | ROTATION OF ANALYST PACRA POLICY Page 2 of 3 July 2025 www.pacra.com
4.2 Time period for rotation shall be calculated from the day when rating is
being finalized in the rating committee for the first time by the respective analyst, team lead or RC member.
4.3 If rating analyst takes long-term leave - e.g., maternity leave or sick leave
or any other long leave - his / her rotation clock(s) will reset if his / her leave is more than the prescribed cooling off period in this policy.
4.4 If rating analyst leaves PACRA and later on rejoins then his / her rotation
clock will reset if the period he / she was not part of PACRA was more than cooling off period. 5 COOLING-OFF PERIOD
5.1 The cooling-off Period begins the day after the last day of the Time on
Period:

• Rating Analysts shall observe a cooling-off period of a continuous one
  year or two rating reviews (whichever is longer). The Rating Review is considered complete when an opinion is approved by the RC.
• After the cooling-off period is over, the individual may be assigned to
  undertake the rating of the same client.
  6 TASKS 6.1 The management information technology (MIT) department generates and maintains record that can be generated as a report for any given date as per following specifications:
  Rotation of Analyst
  Opinion Rating Analyst Date Duration
  7 POLICY
  ADMINISTRATION
  7.1 Interpretation: Competent authority is responsible for interpreting and
  applying the policy to specific situations when questions arise.
  7.2 Review: This Policy is subject to review as follows:
  Reviewed by Scope Frequency
  (Minimum) Regulation
  Compliance
  Officer
  Appropriateness
  & sufficiency Annual Chapter III |
  11-B-(k)
  Firm of Chartered
  Accountants
  Actual vs.
  Policy Semi-Annual Chapter III |
  11-F-(g)
  7.3 Policy Approval: This policy is required to be approved by the Board of
  Directors.
  7.4 Investigations of Suspected Violations: All reported violations shall be
  promptly investigated and treated confidentially to the extent reasonably possible.
  7.5 Disciplinary Protocol: Compliance with all codes of conduct and PACRA
  policies, including this policy, is a condition for employment. Compliance with the codes and PACRA policies shall be monitored on periodic basis:
• Those who come within the bounds of this policy shall cooperate fully to
  provide truthful, accurate information.
  Capitalized terms used herein are defined in PACRA Glossary. Moreover, current version of this policy is available on the website:
  www.pacra.com

The Pakistan Credit Rating Agency Limited POLICY | ROTATION OF ANALYST PACRA POLICY Page 3 of 3 July 2025 www.pacra.com 8 REGULATORY FRAMEWORK
8.1 PACRA’s compliance to SECP’s regulatory framework in terms of
Rotation of Analyst Policy is as follows:
PACRA’s Compliance for Rotation of Analyst Policy CRC Regulation, 2016 Policy Reference Chap. III; 11-A-(i): A CRC shall consider the adequacy of its staffing strength, use its best endeavor to subject its rating analysts to an appropriate rotation mechanism that provides for gradual change in rating teams; Clause 1.1 Chap. III; 11-C-(t): A credit rating company shall ensure that the analysts shall submit their initial analysis reports along with the initial indicative ratings to the rating committee. Clause 3.3 Chap. III; 11-B-(j): A credit rating company shall ensure that all policies are duly approved by its board of directors and shall define clear lines of responsibility, authority and tasks that are adequately assigned to employees; Clause 7.3 & Cover Page Annexure H: List of Policies to be developed & disclosed by a credit rating company / agency | Policy for rotation of analyst Policy developed & disclosed on website