SEC Grants Japan Credit Rating Agency Conditional Exemption from Board Governance Rules

The Securities and Exchange Commission issued Order No. 34-106795 on November 2, 2026, granting Japan Credit Rating Agency, Ltd. (JCR) a conditional exemption from the board-of-directors requirements of Section 15E(t)(2) and (3) of the Securities Exchange Act of 1934. The exemption permits JCR to satisfy those statutory duties through its supervisory committee rather than a traditional board.

JCR previously received three-year conditional exemptions on August 20, 2015 and August 17, 2018, the latter extended for an additional two years, and a temporary exemption on September 28, 2023 that was set to expire on October 30, 2026. The November 2 order extends the exemption beyond that date, subject to the conditions described below.

In its request, JCR cited Japanese law that obliges credit-rating agencies to maintain a supervisory committee with independent members - at least one-third of the committee, or at least two members where the committee has three or fewer. JCR confirmed that its four-member supervisory committee includes two independent members, one of whom is a user of JCR's ratings, and that those independent members receive no prohibited compensation, are not associated with JCR or its affiliates, and serve terms not exceeding five years.

SEC staff have examined JCR annually since 2016 and determined that JCR continues to meet the conditions of the 2023 order. The new order conditions require JCR to (1) maintain a supervisory committee that complies with applicable Japanese standards, (2) ensure the committee fulfills all duties mandated by Section 15E(t)(3), and (3) allow continued staff examinations. Failure to satisfy these conditions could lead the Commission to modify, suspend, or terminate the exemption.

Pursuant to Section 36 of the Exchange Act, JCR is therefore exempt from the requirements of Section 15E(t)(2) and (3) as of the order's effective date, pending compliance with the specified conditions.