Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p5
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 10903–13636

capital instrument in its Regulatory Capital if the capital instrument has features that hinder recapitalisation of the ADI, or any other members of the group to which the ADI belongs. This includes features that require the ADI or any other members of the group, to compensate investors if a new instrument is issued at a lower price during a specified timeframe.
22.         A capital instrument is not eligible for inclusion in Regulatory Capital if it contains any terms that could inhibit the ADI's ability to be managed in a sound and prudent manner, particularly in times of financial difficulty, or restrict APRA's ability in its role as prudential regulator to resolve any problems encountered by the ADI.
23.         A capital instrument is not eligible for inclusion in Regulatory Capital if it includes any 'repackaging' arrangements that have the effect of compromising the quality of the capital raised.[5]
24.         An ADI, or any other member of the group to which the ADI belongs, must not create an expectation at issuance that a capital instrument will be bought back, redeemed or cancelled, and the statutory or contractual terms of the instrument must not include any feature that may give rise to such an expectation. An ADI, or any other members of the group, must not assume, or create market expectations, that supervisory approval will be forthcoming for the ADI or any other members of the group, to buy back, redeem or cancel an instrument.
25.         An ADI must provide APRA, as soon as practicable, with copies of documentation associated with the issue of Additional Tier 1 Capital and Tier 2 Capital instruments.
26.         Where the terms of a capital instrument depart from established precedent, an ADI must consult with APRA on the eligibility of the instrument for inclusion as a category of the ADI's Regulatory Capital in advance of the issuance of the instrument, and provide APRA with all information it requires to assess the eligibility of the instrument.
27.         As part of the documentation provided for the purposes of paragraphs 25 and 26 of this Prudential Standard, an ADI must include a statement of compliance of the capital instrument signed by a senior manager of the ADI if it is the issuer or, in the case of a capital instrument issued by a non-ADI member of the Level 2 group, signed by a senior manager of the ADI or authorised NOHC with group responsibility. The statement must:
(a)          address how the issuer is satisfied that each required capital eligibility criterion set out in this Prudential Standard is met and will continue to be met in the future; and
(b)          clearly set out references to supporting documents and opinions that demonstrate that