Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p54
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 140108–142939

into account any tax or other potential offsets which might impact the minimum level if conversion or write-off were to take place. Adjustments to the amount of an instrument included in Tier 1 Capital or Total Capital must be updated over time to reflect any change in the best estimates of the offset value. Where an instrument's primary loss absorption mechanism is conversion into ordinary shares, an ADI is not required to take into account any tax effect resulting from write-off of the instrument in the event conversion was not achievable.
11.         The aggregate amount of full or partial conversion or write-off of Additional Tier 1 Capital or Tier 2 Capital instruments must, at a minimum, be no less than the lower of:
(a)          the amount required to ensure the non-viability event no longer applies[56]; and
(b)          the principal amounts of all instruments.
12.         An ADI must carry out full conversion or write-off of its Additional Tier 1 Capital and Tier 2 Capital instruments unless APRA is satisfied that the aggregate amount of a partial conversion or partial write-off is sufficient to meet the requirements of paragraph 11 of this Attachment and a public sector injection of funds into the ADI would not be necessary. If a non-viability event no longer applies, unless otherwise required by APRA, further conversion or write-off of Additional Tier 1 Capital or Tier 2 Capital instruments need not be undertaken.
13.         Where an Additional Tier 1 Capital instrument or Tier 2 Capital instrument provides for conversion into ordinary shares (or mutual equity interests), the ADI must ensure that, at the time of issue and on a continuing basis, there are no legal or other impediments to issuing the relevant number of shares (or mutual equity interests) and all necessary approvals have been obtained to effect conversion.
14.         An Additional Tier 1 Capital or Tier 2 Capital instrument must unequivocally provide for the amount of the instrument to be immediately and irrevocably written-off (including termination of the right to receive ordinary shares, mutual equity interests, principal, dividends or interest) in the accounts of the ADI and result in an unequivocal addition to Common Equity Tier 1 Capital if, following a non-viability event, conversion of the instrument:
(a)          is not capable of being undertaken;
(b)          has not been fully effected for any reason within 5 business days;
(c)          is not irrevocable; or
(d)          will not result in an immediate and unequivocal increase in Common Equity Tier 1 Capital of the ADI, at Level 1 and Level 2, as applicable.
15.         Issue documentation may provide for a ranking of conversion under which instruments may be converted or written-off upon a non-viability event, provided that the terms of the