Document ID: chunk:federal_register_of_legislation:F2023L00684:body:0:p31
Version: federal_register_of_legislation:F2023L00684
Segment Type: other
Provision Reference: 
Character Range: 77905–80713

this Prudential Standard.
18. The instrument is clearly and separately disclosed in the issuer's financial statements and, at Level 2, in any consolidated financial statements.
19. The instrument must not include any of the following clauses:
20. a cross-default clause linking the issuer's obligations under any debt instrument or other capital instrument to default by the issuer, or default by another party (related or otherwise), under the instrument itself; or
21. an event of default clause specifying an event relating to any debt instrument or other capital instrument (other than the instrument itself) of the issuer, that brings the issuer into default under the instrument itself.
For the purposes of paragraph 19(b), an event of default includes a clause specifying the following events:
 1. the exercise or non-exercise of discretions within the debt instrument or other capital instrument;
 2. an adverse event or change, however so described or determined, occurring in respect of the debt instrument or other capital instrument; and
 3. any consequence arising from, or any action taken or intended to prevent[38], the above events or a default by the issuer under the debt instrument or other capital instrument,
but does not include a clause specifying the irrevocable winding-up (that is, either by way of an effective resolution by shareholders or members for winding-up, or a court order has been made, and the time for the appeal of the decision has passed) of the issuer.
 1. Issue documentation must clearly and prominently state:
     1. the maturity date of the instrument at which time the issuer is required to redeem the instrument;
     2. the unsecured and subordinated nature of the instrument, and that neither the issuer nor the holder of the instrument is allowed to exercise any contractual rights of set-off;
     3. the instrument is not subject to netting;
     4. that the issuer cannot buy back, repurchase or redeem the instrument other than in terms permitted under this Prudential Standard;
     5. that the instrument is neither covered by the Financial Claims Scheme nor guaranteed by the Australian Government; and
     6. the application of requirements relating to loss absorption at the point of non-viability under Attachment E to this Prudential Standard.
 2. The amount of an instrument eligible for inclusion in Tier 2 Capital is to be amortised on a straight-line basis at a rate of 20 per cent per annum over the last four years to maturity as follows:
Years to maturity                          Amount eligible for inclusion in Tier 2 Capital
More than 4                                100 per cent
Less than and including 4 but more than 3  80 per cent
Less than and including 3 but more than 2  60 per cent
Less than and including 2 but more than 1