Document ID: chunk:federal_register_of_legislation:F2023L00684:body:0:p45
Version: federal_register_of_legislation:F2023L00684
Segment Type: other
Provision Reference: 
Character Range: 113973–116802

For the purposes of determining whether a capital instrument constitutes capital support, including a guarantee provided to a related entity, APRA will have regard to, amongst other things, whether:
 1. the facility represents a recognised capital instrument or is otherwise accepted as standing in place of capital required to be held by a related entity; or
 2. the provider of the facility, in terms of either repayment or maturity, ranks below other senior unsecured or unsubordinated creditors: or
 3. the facility is provided by an insurer or other group entity and the funding provided flows through one group entity (including any SPV) to another group entity and the funding received by the second entity meets either (a) or (b).
If a facility covered in paragraph 18 of this Attachment represents a form of capital support, it must be considered for the purposes of this Prudential Standard to form part of the Level 2 insurance group's 'other capital investments'. Investments are not deducted from Common Equity Tier 1 Capital, must be subject to the Asset Risk Charge under Prudential Standard GPS 114 Capital Adequacy: Asset Risk Charge.

Attachment G – Mutual Equity Interests
 1. To be classified as a mutual equity interest, an instrument must satisfy all of the criteria in this Attachment and Attachment A to this Prudential Standard, except that paragraphs 1(b), 1(c), 1(e), 1(g), and 1(h) of Attachment A are to be read as follows:
     1. the mutual equity interest represents a claim against the issuer in liquidation that is subordinate to all claims other than members' rights to residual assets;
     2. the holder of the mutual equity interest is entitled to a claim on the residual assets of the issuer after all senior claims, including the aggregate subscription price paid for all member shares, have been repaid in liquidation and;
         1. the holder's claim ranks equally and proportionately with all other mutual equity interests directly issued or created on conversion of Additional Tier 1 Capital or Tier 2 Capital instruments in accordance with Attachment E to this Prudential Standard; and
         2. the holder's claim cannot exceed the principal amount of the mutual equity interest, that amount being measured as:
             1. if the mutual equity interest was issued directly, the paid-up amount of the mutual equity interest; or
             2. if the mutual equity interest was created on conversion of Additional Tier 1 Capital and Tier 2 Capital instruments, the nominal dollar value of the Additional Tier 1 Capital or Tier 2 Capital instrument prior to conversion into the mutual equity interest;
     3. distributions on the mutual equity interest are paid out of distributable items (including retained earnings) of the issuer, and there are no features that require the