Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p42
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 109150–111991

to issuing the relevant number of shares (or mutual equity interests) and all necessary authorisations have been obtained to effect conversion.
11.         An Additional Tier 1 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) effective from the occurrence of the loss absorption event and result in an unequivocal addition to Common Equity Tier 1 Capital if, following a loss absorption event, conversion of the Additional Tier 1 Capital 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 or Level 2, as applicable.
12.         Issue documentation may provide for a ranking under which instruments may be converted or written-off upon a loss absorption event. The terms attached to such a hierarchy must not impede the ability of the capital instrument to be immediately converted or written off.
13.         Where an Additional Tier 1 Capital instrument provides for conversion into ordinary shares (or mutual equity interests) when a loss absorption event occurs, the conversion provisions in the issue documentation must satisfy the requirements in paragraphs 29 and 30 of Attachment E to this Prudential Standard.
14.         Where an Additional Tier 1 Capital instrument provides for a write-off upon a loss absorption event, the write-off provisions in the issue documentation must satisfy the requirements in paragraph 33 of Attachment E to this Prudential Standard.
15.         The contractual terms of an Additional Tier 1 Capital instrument must provide that, on conversion of the instrument upon a loss absorption event, any residual claims against the issuer in relation to the converted portion of the instrument are not senior to claims in relation to the ordinary shares or mutual equity interests of the ADI, and not senior to claims in relation to ordinary shares of any parent entity of the ADI.
16.         An ADI must notify APRA immediately, if:
(a)          the ADI anticipates that its Level 1 or Level 2 Common Equity Tier 1 Capital ratio may fall to or below 5.125 per cent; or
(b)          the ADI's Level 1 or Level 2 Common Equity Tier 1 Capital ratio falls to or below 5.125 per cent.

Attachment G -       Criteria for inclusion in Tier 2 Capital
     1. To be classified as Tier 2 Capital, an instrument must satisfy all of criteria in this Attachment.
     2. The instrument must be paid-up and the amount must be irrevocably received by the issuer.
     3.