Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p30
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 80757–83592

the exercise of the call, replaces the instrument with a capital instrument of the same or better quality, and the replacement of the instrument is done at conditions that are sustainable for the income capacity of the issuer; or
                 2.          the private health insurer meets the requirements relating to reductions in capital in HPS 110.
 9.          The instrument may provide for multiple call dates after five years. However, the specification of multiple call dates must not act to create an expectation that the instrument will be redeemed upon any call date.
10.          The instrument must confer no rights on holders to accelerate the repayment of future scheduled payments (coupon or principal) except in bankruptcy (including winding-up) and liquidation. Winding-up of the private health insurer must be irrevocable (that is, either by way of an effective resolution by the members of a mutual for winding-up, or a court orders has been made, and the time for appeal of the decision has passed). The making of an application for winding-up or the appointment of a terminating manager, or other external administrator including the exercise of APRA's powers under Part 3, Divisions 6 to 8 of the Act, must not be sufficient to accelerate repayment of the instrument.
11.          The instrument must not provide for payment to investors other than in the form of a cash payment.
12.          The instrument cannot have a credit sensitive distribution/payment feature (i.e. a distribution/payment that is reset based in whole or part on the credit standing of the issuer or the group or any other member of the group to which it belongs). The instrument may utilise a broad index as a reference rate for distribution or payments calculation purposes. Where an issuer is a reference entity in the determination of the reference rate, the reference rate must not exhibit any significant correlation with the issuer's credit standing. APRA may require a private health insurer to exclude an instrument from treatment as Tier 2 Capital where APRA considers that the reference rate is sensitive to the credit standing of the issuer.
13.          The instrument is directly issued by the issuer, and, except where otherwise permitted in this Prudential Standard, the issuer, any other member of a group to which the issuer belongs, or any other related entity[37] cannot have purchased or directly or indirectly[38] funded the purchase of the instrument or be funding the purchase of the instrument.
14.          If the terms of the instrument provide the ability (even in contingent circumstances) to substitute the issuer of the Tier 2 Capital instrument, or the issuer of ordinary shares into which they convert (i.e. to replace the private health insurer with another party), the relevant documentation must set