Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p6
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 13379–16415

issuer is satisfied that each required capital eligibility criterion set out in this Prudential Standard is met and will continue to be met in the future; and
(b)          clearly set out references to supporting documents and opinions that demonstrate that the criteria are met.
28.         An ADI must obtain APRA's approval before the terms of an instrument are altered in a way that may affect its eligibility as Regulatory Capital.

Application of fair values
29.         Where an ADI measures its financial instruments at fair value for capital adequacy purposes, and where permitted, for other prudential purposes, it must comply with the requirements in Attachment A to this Prudential Standard.

Common Equity Tier 1 Capital
30.         Common Equity Tier 1 Capital comprises the highest quality components of capital that fully satisfy all of the following characteristics:
(a)          provide a permanent and unrestricted commitment of funds;
(b)          are freely available to absorb losses;
(c)          do not impose any unavoidable servicing charge against earnings; and
(d)          rank behind the claims of depositors and other creditors in the event of winding-up of the issuer.
31.         Common Equity Tier 1 Capital consists of the sum of:
(a)          paid-up ordinary shares issued by an ADI (whether listed on an exchange or unlisted) that meet the criteria in Attachment B to this Prudential Standard;
(b)          paid-up mutual equity interests issued by a mutually-owned ADI that meet the criteria in paragraph 1 of Attachment I to this Prudential Standard up to the limit specified in paragraph 4 of Attachment I;
(c)          retained earnings;
(d)          undistributed current year earnings (refer to paragraphs 32 to 36 of this Prudential Standard);
(e)          accumulated other comprehensive income and other disclosed reserves (refer to paragraphs 37 and 38 of this Prudential Standard);
(f)           minority interests (calculated in accordance with Attachment C to this Prudential Standard) arising from the issue of ordinary shares to third parties by a fully consolidated subsidiary or a fully consolidated holding company that heads a Level 2 group, included in the Level 2 group where:
(i)            the shares giving rise to the minority interest would, if issued by the ADI, meet the criteria in Attachment B to this Prudential Standard; and
(ii)         the subsidiary issuing the shares is itself an ADI or an overseas deposit-taking institution that is subject to equivalent minimum prudential requirements and level of supervision as an ADI; and
(g)          regulatory adjustments applied in the calculation of Common Equity Tier 1 Capital in accordance with Attachment D to this Prudential Standard.
32.         Current year earnings must take into account:
(a)          negative goodwill;
(b)          the unwinding of any discount on credit loss provisions;
(c)          expected tax expenses; and
(d)          dividends when declared in accordance with Australian Accounting