Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p51
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 132420–135257

to be included in Tier 2 Capital.
38.         The instrument, whether issued by the ADI or another member of a Level 2 group to which the ADI belongs (including any overseas subsidiaries) may be subject to the laws of a foreign country, except that the terms of the instrument that relate to non-viability conversion or write-off (refer to Attachment H to this Prudential Standard) must be subject to the laws of an Australian jurisdiction.
39.         Where the instrument whether issued by the ADI or another member of a 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 all relevant eligibility criteria applicable to the instrument under this Attachment is enforceable under the laws of that jurisdiction.
40.         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 meets the requirements of this Prudential Standard.

Attachment H -       Loss absorption at the point of non-viability: Additional Tier 1 and Tier 2 Capital instruments
     1. An Additional Tier 1 Capital or Tier 2 Capital instrument must include a provision whereby upon the earliest occurrence of a non-viability 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. Conversion must be into the ordinary shares of the ADI or its parent entity, which must be listed at the time of issue. 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 non-viability event is:
(a)          in relation to an ADI, when APRA notifies the ADI that APRA considers;
(i)            conversion or write-off of capital instruments is necessary because, without it, the ADI would become non-viable; or
(ii)         without a public sector injection of capital, or equivalent support, the ADI would become non-viable;
(b)          subject to paragraph 6 of this Attachment, in relation to a fully-consolidated subsidiary in the Level 2 group:
(i)            a non-viability event in relation to its parent ADI under this Attachment; or
(ii)         the application of non-viability requirements imposed by a host regulator of the subsidiary or under statute; and
(c)          subject to paragraphs 7 and 8 of this Attachment, where the ADI is a locally-incorporated