Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p24
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 64635–67672

trigger any restrictions[28] on the issuer other than its ability to pay a distribution on Common Equity Tier 1 Capital instruments[29] or to redeem such instruments. Such 'stopper' provisions must not:
         1.           impede the full discretion of the issuer at all times to cancel distributions/payments on the instrument or act in a way that could hinder the recapitalisation of the issuer;
         2.           prevent payment on another instrument where such payment was not fully discretionary;
         3.           prevent distribution to holders of Common Equity Tier 1 Capital instruments for a period that extends beyond the point in time the distributions/payments on the Additional Tier 1 Capital instruments are resumed;
         4.           impede the normal operation of the issuer or any restructuring activity (including acquisitions or disposals); or
         5.           hinder any recapitalisation of the issuer.
    A 'stopper' provision may, however, act to prohibit actions that are equivalent to payment of dividend or interest, such as a private health insurer undertaking discretionary buybacks of ordinary shares.
 1.          An instrument must not include any provision that permits an additional distribution or payment to be made. Any structuring of a distribution or payment as a bonus payment, or any arrangement to compensate for unpaid distributions or payments is also prohibited. An instrument cannot provide for investors to convert an instrument into ordinary shares or mutual equity instruments upon non-payment of a distribution.
 2.          For the purposes of paragraph 6 of this Attachment, an incentive or expectation to call or otherwise redeem an Additional Tier 1 Capital instrument includes, but is not limited to:
         1.           a call option combined with a requirement, or an investor option, to convert the instrument into ordinary shares if the call is not exercised;
         2.           a call option combined with a change in reference rate where the credit spread over the second reference rate is greater than the initial payment rate less the swap rate (i.e. the fixed rate paid to the call date to receive the second reference rate);
         3.           a call option combined with an increase in redemption amount in the future;
         4.           automatic redemption or an option to redeem following a change of control event;
         5.           mandatory conversion within the first five years of issue, except conversions arising from change of control, regulatory or tax events;
         6.            any arrangement whereby an investor will become subject to: (i) known tax or charges, or to (ii) known higher tax or charges than they would have had to pay before, following a call date and the issuer is required to compensate an investor for any payment of additional tax or charges (refer to paragraph 27 of this Attachment); or
         7.           an application of maximum or minimum rates on distributions.
 3.          A call option