Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p40
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 104047–106922

country, except that the terms of the instrument that relate to:
(a)          loss absorption conversion or write-off (where relevant); and
(b)          non-viability conversion or write-off
must be subject to the laws of an Australian jurisdiction.
40.         Where the instrument, whether issued by the ADI or another member of the Level 2 group to which the ADI belongs (including an overseas subsidiary), is subject to the laws of a foreign country, the ADI must also ensure that all relevant eligibility criteria applicable to the instrument under this Attachment are enforceable under the laws of that jurisdiction.
41.         APRA may require an ADI to provide an independent expert opinion, addressed to APRA by a firm or practitioner of APRA's choice at the ADI's expense, confirming that the instrument satisfies all applicable criteria for an Additional Tier 1 Capital instrument under this Prudential Standard.

Attachment F -         Loss absorption requirements: Additional Tier 1 Capital
     1. An Additional Tier 1 Capital instrument classified as 'liabilities' under Australian Accounting Standards must include a provision whereby upon the occurrence of a loss absorption event it will be immediately and irrevocably:
(a)          converted into the ordinary shares of the ADI or its ultimate parent entity, which must be listed at the time the instrument is issued. For an unlisted ADI with no listed upstream entity at the time the instrument is issued, the instrument is to be converted into the unlisted ordinary shares of the ADI. Where an unlisted ADI issues the instrument to its listed parent entity, conversion may be into the unlisted ordinary shares of the ADI;
(b)          converted into mutual equity interests; or
(c)          written off.
2.             A loss absorption event occurs when the issuing ADI's Level 1 or Level 2 Common Equity Tier 1 Capital ratio under APS 110 falls to, or below 5.125 per cent of total risk-weighted assets (the loss absorption trigger point).
3.             Conversion or write-off must generate an unequivocal addition to Common Equity Tier 1 Capital under Australian Accounting Standards.
4.             For the purposes of conversion or write-off in whole or in part of an Additional Tier 1 Capital instrument, the amount to be converted or written off must be the face value of the instrument or relevant part thereof. Dividends and interest associated with the instrument which have been converted or written off, but which are not yet due and payable must also be extinguished.
5.             In order to comply with the immediate conversion or write-off in paragraph 1 of this Attachment, the instrument must be capable of conversion or write-off taking place at any time of day:
(a)          during a business day; or
(b)          on a day that is not a business day.
6.             To qualify as