Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p39
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 99903–102684

the amount of conversion or write-off of Additional Tier 1 or Tier 2 Capital instruments issued by a locally incorporated life company that is a subsidiary of a foreign parent will be determined by the relevant host or home regulator or statutory requirements.
9.             The amount of an instrument that may be recognised in the life company's Tier 1 and capital base is the minimum level of Common Equity Tier 1 Capital that would be generated by full conversion or write-off of the instrument on the occurrence of a non-viability event. In determining, at any point in time, the minimum level of Common Equity Tier 1 Capital that would be generated by conversion or write-off, the life company must take into account any tax or other potential offsets which might impact the minimum level if conversion or write-off were to take place. Adjustments to the amount of an instrument included in Tier 1 Capital or capital base must be updated over time to reflect any change in the best estimates of the offset value. Where an instrument's primary loss absorption mechanism is conversion into ordinary shares, a life company is not required to take into account any taxation effect resulting from write-off of the instrument in the event conversion was not achievable.
10.         The aggregate amount of full or partial conversion or write-off of Additional Tier 1 Capital or Tier 2 Capital instruments must, at a minimum, be no less than the lower of:
(a)          the amount required to ensure the non-viability event no longer applies[47]; and
(b)          the principal amounts of all instruments.
11.         A life company must carry out full conversion or write-off of its Additional Tier 1 Capital and Tier 2 Capital instruments unless APRA is satisfied that the aggregate amount of a partial conversion or partial write-off is sufficient to meet the requirements of paragraph 10 of this Attachment and a public sector injection of funds into the life company would not be necessary. If a non-viability event no longer applies, unless otherwise required by APRA, further conversion or write-off of Additional Tier 1 Capital or Tier 2 Capital instruments need not be undertaken.
12.         Where an Additional Tier 1 or Tier 2 Capital instrument provides for conversion into ordinary shares (or mutual equity interests), the life company must ensure that at the time of issue and on a continuing basis, there are no legal or other impediments to issuing the relevant number of shares (or mutual equity instruments) and all necessary approvals have been obtained to effect conversion.
13.         An Additional Tier 1 Capital or Tier 2 Capital instrument must unequivocally provide for the amount of the instrument to be immediately and irrevocably written-off (including