Document ID: chunk:federal_register_of_legislation:F2024C01248:reg:2:p3
Version: federal_register_of_legislation:F2024C01248
Segment Type: reg
Provision Reference: reg 2 (pt 3/10)
Character Range: 191069–193655

of that kind issued by the entity.
Note: For connected entity, see subsection 995‑1(1) of the Act.

974‑135.02  Redeemable preference shares
  For the purposes of paragraph 974‑135(8)(a) of the Act, an obligation to redeem or buy back a preference share in relation to a company is not a contingent obligation merely because a requirement exists, under a law, to the effect that:
 (a) the redemption or buy back must not prejudice the company's ability to pay its creditors; or
 (b) the redemption or buy back must not cause the company's remaining assets to become insufficient to pay any of the company's debts for which provision for payment has not otherwise been made.

974‑135.03  Term cumulative subordinated note with insolvency or capital adequacy conditions
 (1) This section applies to an obligation to pay the principal or interest on a relevant term subordinated note at a particular time on or after 1 July 2001.
 (2) For the purposes of paragraphs 974‑135(8)(a) and (b) of the Act, the fact that the obligation is subject to insolvency or capital adequacy conditions does not in itself prevent the obligation from being a non‑contingent obligation.

Meaning of relevant
 (3) A term subordinated note is relevant if:
 (a) at the time of the note's issue:
 (i) the note does not constitute or meet the requirements of a Tier 1 capital instrument; and
 (ii) the note does not form part of the Tier 1 capital of the issuer of the note, or a connected entity, and the reason for the note not doing so is not that the instrument is in excess of the Tier 1 capital required for the purposes of prudential standards that deal with capital adequacy; and
 (b) the note has a term of not more than 30 years; and
 (c) the note does not include an unconditional right to extend the term of the note beyond a total term of 30 years; and
 (d) the note is subject to a condition that any payment of the principal or interest beyond the date on which it would otherwise be payable must accumulate (with or without compounding); and
 (e) the note does not give the issuer of the note an unconditional right to decline to provide a financial benefit that is equal in nominal value to the issue price of the note to settle the obligations under the note.

Meaning of insolvency or capital adequacy conditions
 (4) Conditions applying to the obligation are insolvency or capital adequacy conditions if they have the effect that the issuer of the note is obliged or able to defer the payment of the principal or interest beyond the date on which it would otherwise be payable if, on that date: