Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p4
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 8244–11094

Common Equity Tier 1 Capital, Additional Tier 1 Capital and Tier 2 Capital;
(b)          distributable items – means items which are permitted to be distributed to holders of capital instruments in accordance with relevant statutory and regulatory requirements applicable to distributions by the issuer;
(c)          mutual equity interests – capital instruments issued by mutually owned life companies that meet the criteria in Attachment G to this Prudential Standard;
(d)          mutually-owned life company – means a life company that is a 'mutual entity' as defined in the Corporations Act;
(e)          non-viability event – has the meaning in paragraph 2 of Attachment E to this Prudential Standard;
(f)           paid-up instrument means a capital instrument where:
(i)            the payment of the capital has been received with finality by the issuer;
(ii)         the capital is reliably valued;
(iii)       the capital is fully under the issuer's control; and
(iv)        the instrument does not, directly or indirectly, expose the issuer to the credit risk of an investor; and
(g)          related entity – means an entity over which a life company or parent entity of the life company exercises control or significant influence and can include a parent company, a sister company, a subsidiary or any other affiliate.

Capital base of a life company
13.         The capital base must be assessed for the life company as a whole and for each of its funds.  The requirements for statutory funds are specified in paragraphs 51 to 54. The requirements for general funds are specified in paragraphs 55 to 57.  Paragraphs 14 to 50 set out the requirements for the life company as a whole.
14.         The capital base of a life company consists of the following categories:
(a)          Tier 1 Capital, which comprises:
(i)            Common Equity Tier 1 Capital;
(ii)         Additional Tier 1 Capital; and
(iii)       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 and are above the limit specified in paragraph 4 of Attachment G; and
(b)          Tier 2 Capital;
that satisfy the criteria in this Prudential Standard.
15.         A life company must ensure that at all times[5]:
(a)          the Common Equity Tier 1 Capital for the life company exceeds 60 per cent of the prescribed capital amount of the life company;
(b)          the Tier 1 Capital for the life company exceeds 80 per cent of the prescribed capital amount of the life company;
(c)          the capital base for the life company exceeds the Prudential Capital Requirement (PCR) of the life company;
(d)          120 per cent of the net assets for the life company exceeds 60 per cent of the prescribed capital amount of the life company;
(e)          the sum of