Recital 5

(5)According to the second condition, CRAs in the third country must be subject to legally binding rules which are equivalent to those set out in Articles 6 to 12 and Annex I to Regulation (EC) No 1060/2009, with the exception of Articles 6a, 6b, 8a, 8b, 8c and 11a, point (ba) of point 3 and points 3a and 3b of Section B of Annex I to that Regulation. When assessing the fulfilment of this condition due regard should be paid to Article 2(1) of Regulation (EU) No 462/2013 of the European Parliament and of the Council ² in respect of the date of application of certain provisions of Regulation (EC) No 1060/2009. With regard to corporate governance, the Brazilian legal and supervisory framework requires CRAs as part of their registration procedure to have a corporate governance structure with a minimum of two directors, one of which must be independent and responsible for compliance with the rules. The Brazilian legal and supervisory framework, which requires mandatory compliance with the IOSCO code, obliges CRAs to have in place adequate arrangements for the management of conflicts of interest. A CRA's code of conduct must provide for the adoption of mechanisms to identify, eliminate, manage and disclose situations involving conflicts of interest. The Brazilian framework also contains detailed rules on outsourcing, record keeping and confidentiality. CRAs are required to establish a review function for reviewing rating methodologies and the Brazilian framework contains a wide range of disclosure requirements with regard to credit ratings and rating activities, for example the requirement to distribute in a timely manner its ratings decisions, to publish a document based on the historical performance of ratings and to make public an annual report including information on its activities. Therefore, the Brazilian legal and supervisory framework should achieve the same outcomes as Regulation (EC) No 1060/2009 in respect of the management of conflicts of interest, the organisational processes and procedures that a CRA needs to have in place, the quality of ratings and of rating methodologies, the disclosure of credit ratings and the general and periodic disclosure of credit rating activities and. It should provide for equivalent protection in terms of integrity, transparency, good governance of CRAs and reliability of the credit rating activities.