Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p45
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 116858–119809

there will be a capital injection into the ADI to replace the transferred capital instrument. The replacement capital injection must occur at least simultaneously with the substitution and must be unconditional. The capital injection must be of equal or better quality capital and at least the same amount as the original issue, unless otherwise approved by APRA.
14.         The rate of dividend or interest on the instrument, or the formulae for calculating dividend or interest payments, must be predetermined and set out in the issue documentation.
15.         If an issuer defaults under the terms of the instrument, the remedies available to the holders must be limited to actions for specific performance, recovery of amounts currently outstanding or the winding-up of the issuer. The amounts that may be claimed in the event that the issuer defaults may include any accrued unpaid dividends and interest, including payment of market interest on these unpaid amounts. Any claim against the issuer for unpaid dividends and interest must be the most subordinated claims in liquidation of the issuer after Common Equity Tier 1 Capital instruments and Additional Tier 1 Capital instruments.
16.         The instrument must not provide for payment of a higher dividend or interest rate if dividend or interest payments are not made on time, or a reduced dividend or interest rate if such payments are made on time.
17.         The instrument includes provisions which comply with the loss absorption requirements at the point of non-viability under Attachment H to this Prudential Standard.
18.         The instrument is clearly and separately disclosed in the issuer's financial statements and, at Level 2, in any consolidated financial statements.
19.         The instrument must not include the following clauses:
(a)          a cross-default clause linking the issuer's obligations under any debt instrument or other capital instrument to default by the issuer, or default by another party (related or otherwise), under the instrument itself; or
(b)          an event of default clause specifying an event relating to any debt instrument or other capital instrument (other than the instrument itself) of the issuer, that brings the issuer into default under the instrument itself.
    For purposes of paragraph 19(b), an event of default clause includes a clause specifying the following events:
(i)            the exercise or non-exercise of discretions within the debt instrument or other capital instrument;
(ii)         an adverse event or change, however so described or determined, occurring in respect of the debt instrument or other capital instrument; and
(iii)       any consequence arising from, or any action taken or intended to prevent[48], the above events or a default by the issuer under the debt instrument or other capital instrument,
but does not include a clause specifying the irrevocable winding-up (that is, either by way