Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p7
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 15858–18831

company must consult with APRA on the eligibility of the instrument for inclusion in a category of the life company's capital base in advance of the issuance of the instrument, and provide APRA with all information it requires to assess the eligibility of the instrument.
30.         As part of the documentation provided for the purposes of paragraphs 28 and 29 of this Prudential Standard, a life company must include a statement of compliance of the capital instrument signed by a senior manager of the life company. The statement must:
(a)          address how the 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.
31.         A life company must obtain APRA's written approval before the terms of an instrument are altered in a way that may affect its eligibility as a component of the capital base.

Common Equity Tier 1 Capital
32.         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 policy owners and other creditors in the event of winding-up of the issuer.
33.         Common Equity Tier 1 Capital consists of the sum of:
(a)          paid-up ordinary shares issued by a life company (whether listed on exchange or unlisted) that meet the criteria in Attachment A to this Prudential Standard;
(b)          paid-up mutual equity interests issued by a mutually-owned life company that meet the criteria in paragraph 1 of Attachment G to this Prudential Standard up to the limit specified in paragraph 4 of Attachment G;
(c)          retained earnings;
(d)          undistributed current year earnings (refer to paragraph 34 of this Prudential Standard);
(e)          accumulated other comprehensive income and other disclosed reserves (refer to paragraph 38 to this Prudential Standard); and
(f)           regulatory adjustments applied in the calculation of Common Equity Tier 1 Capital required under Attachment B to this Prudential Standard.
34.         Current year earnings must take into account:
(a)          negative goodwill;
(b)          expected tax expenses; and
(c)          dividends when declared in accordance with Australian Accounting Standards.
35.         Declared dividends for the purpose of paragraph 34(c) of this Prudential Standard may be reduced by the expected proceeds, as agreed in writing by APRA, of a Dividend Reinvestment Plan (DRP) to the extent that dividends are used to purchase new ordinary shares issued by the life company. A life company must review every