Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p45
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 115923–118779

timing and amount of any distributions paid on the mutual equity interest, including not paying a distribution.
3.             A life company must obtain APRA's approval prior to issuing mutual equity interests, or Additional Tier 1 Capital or Tier 2 Capital instruments that convert to mutual equity interests in accordance with Attachment E to this Prudential Standard.
4.             The principal amounts of all mutual equity interests on issue (determined in accordance with paragraph 1(c)(ii) of this Attachment) are eligible for inclusion in Common Equity Tier 1 Capital up to a maximum limit of 25 per cent of the life company's Common Equity Tier 1 Capital before applying regulatory adjustments under paragraph 33(f) of this Prudential Standard.
5.             The principal amounts of all mutual equity interests on issue (determined in accordance with paragraph 1(c)(ii) of this Attachment) are eligible for inclusion in Tier 1 Capital and the capital base.

[1]  Refer to subsection 21(1) of the Act.
[2]  Refer to section 16ZD of the Act.
[3]  Refer to subsection 230A(4) of the Act.
[4]  This item only applies to friendly society benefit funds providing defined benefits. It includes unallocated surplus that must be transferred to the management fund and unallocated surplus that may either be transferred to the management fund or used for benefit enhancement under the benefit fund rules.
[5]  The net assets of the life company referred to in subparagraphs 15(d), 15(e) and 15(f) is as defined in subparagraph 11(c) but excludes equity components that are classified as Additional Tier 1 Capital.
[6]  This includes, but is not limited to, the future sale or issuance of a capital instrument and the future conversion of an instrument or debt into ordinary shares or mutual equity instruments.
[7]  As an example, repackaging may occur where an instrument is not marketed in line with its prudential treatment, or if the transaction documentation suggests to investors that the instrument has attributes of a lower level of capital than claimed for prudential treatment.
[8]  This includes cumulative unrealised gains or losses on effective cash flow hedges as defined in Australian Accounting Standards.
[9]  These vehicles exclude any SPV, such as a trust, involved with employee share‑based remuneration schemes.
[10]  The net assets of each statutory fund referred to in subparagraphs 53(c) and 53(d) is as defined in subparagraph 11(c) but includes seed capital transferred to the statutory fund from the general fund.
[11]  The net assets of the general fund referred to in paragraph 57 is as defined in subparagraph 11(c) but excludes seed capital that is a receivable from a statutory fund.
[12]  In cases where capital instruments have a permanent write-off feature, this criterion is still deemed to be met by ordinary shares.