Document ID: chunk:federal_register_of_legislation:F2020L01591:body:0:p13
Version: federal_register_of_legislation:F2020L01591
Segment Type: other
Provision Reference: 
Character Range: 31825–34673

on-lent directly to the ADI. Taxation liabilities, employee entitlements, administration and operating expenses of the subsidiary are excluded from this requirement; and
(b)          the ADI must:
(i)            have complete information on the individual assets, liabilities and off-balance sheet positions of the subsidiary. The ADI must have access to the stand-alone accounting records of the subsidiary, and must be able to provide APRA with full and unfettered access to those records and any other information, at any time;
(ii)         have unrestricted control over the composition of the subsidiary's assets and liabilities. The ADI must demonstrate to APRA that there are no legal or regulatory barriers, or any other material risks, to the transfer of any assets or funds including assets or funds of underlying subsidiaries back to the ADI. There must be no legal obstacle to the ADI instituting a wind-up of the subsidiary, or any underlying subsidiaries, at any time and placing the remaining assets on the balance sheet of the ADI;
(iii)       manage the assets, liabilities and off-balance sheet business of the subsidiary as part of its internal management practices. This includes reporting structures, accounting processes, audit arrangements and risk management and measurement systems. The ADI's risk management processes, management information systems and internal controls must be applied to the operations of the subsidiary. Senior management of the ADI must monitor the operations of the subsidiary to the same extent as the operations of the ADI itself. Systems for monitoring and control over the subsidiary must be included within the internal and external audit programs of the ADI; and
(iv)        satisfy APRA that the number and size of subsidiaries on an individual and aggregate basis proposed to be included, or currently included, in the ELE does not undermine the ability:
(A)        of the ADI and the subsidiaries to be managed and resolved in a sound and timely manner; and
(B)        for APRA to assess the soundness of the ADI as a stand-alone legal entity.
4.             Where an ADI seeks to include a non-operating holding company (NOHC) as part of its ELE, the ADI may also include the NOHC's subsidiaries as part of the ELE provided these subsidiaries meet the requirements in this Attachment. However, only the first level of subsidiaries below a NOHC are eligible to be treated as part of the ELE.
5.             In assessing whether a subsidiary should form part of an ELE, APRA will have regard to the requirements in this Attachment, as well as the substance and form of the subsidiary and its relationship with the ADI. APRA may, at its discretion, require an ADI to provide additional information, including the provision of an accounting or legal opinion, on any of the requirements in this