Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p33
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 88670–91569

paid to the call date to receive the second reference rate);
         3.           a call option combined with an increase in the 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 the additional tax or charges (refer to paragraph 28 of this Attachment); or
         7.           an application of maximum or minimum rates on distributions.
 2.          A call option and a provision to convert into ordinary shares will not constitute an incentive to redeem provided there is at least two years from the date upon which the private health insurer may have an option to call the instrument to the nearest subsequent date upon which that conversion option may be exercised.
 3.          Calling an instrument and replacing it with an instrument with a higher credit spread or that is otherwise more expensive is deemed to create the expectation that the issuer will exercise a call option on other outstanding Tier 2 Capital instruments and Additional Tier 1 Capital instruments with call options, unless the issuer can satisfy APRA as to the economic and prudential rationale and that such an action will not create an expectation that other instruments will be called in similar circumstances.
 4.          A Tier 2 Capital instrument must provide for the immediate, automatic and permanent revocation of a call notice upon a non-viability event (refer to Attachment E to this Prudential Standard). A call option cannot be exercised in anticipation of a non-viability event.
 5.          A Tier 2 Capital instrument may only provide for a call within the first five years of issuance as a result of a tax or regulatory event. A tax or regulatory event is confined to:
         1.           changes in statute and regulations (and judicial and administrative actions pertaining to the application of a statute or regulations) which impact a specific capital instrument;
         2.           changes related only to the jurisdictions relevant to an instrument;
         3.           changes that have occurred, or will occur, as opposed to changes that may occur; or
         4.           changes which impact the issuer of an affected capital instrument. Changes in tax or regulation impacting the holder of a capital instrument will not constitute a tax or regulatory event for the purposes of this Attachment.
 6.          APRA may require a private health insurer not to