Document ID: chunk:federal_register_of_legislation:F2023L00684:body:0:p29
Version: federal_register_of_legislation:F2023L00684
Segment Type: other
Provision Reference: 
Character Range: 72812–75583

not create an expectation at issuance that the instrument will be bought back, redeemed or cancelled before its contractual maturity. The contractual terms of the instrument must not provide any feature that might give rise to such an expectation.[35]
 7. The instrument may only be callable at the initiative of the issuer and only after a minimum of five years from the date on which the issuer irrevocably receives the proceeds of payment for the instrument. The issuer:
     1. must receive prior written approval from APRA to exercise a call option;
     2. must not do anything that creates an expectation that a call will be exercised; and
     3. must not exercise a call unless:
         1. the issuer, prior to or concurrent with the exercise of the call, replaces the instrument with a capital instrument of the same or better quality, and the replacement of the instrument is done at conditions that are sustainable for the income capacity of the issuer; or
         2. the regulated institution meets the requirements relating to reductions in capital in GPS 110.
 8. The instrument may provide for multiple call dates after five years. However, the specification of multiple call dates must not act to create an expectation that the instrument will be redeemed upon any call date.
 9. The instrument must confer no rights on holders to accelerate the repayment of future scheduled payments (coupon or principal) except in bankruptcy (including winding-up) and liquidation. Winding-up of the regulated institution must be irrevocable (that is, either by way of an effective resolution by shareholders or members for a wind-up, or a court order has been made, and the time for appeal of the decision has passed). The making of an application for winding-up or the appointment of a receiver, administrator, or official with similar powers, including the exercise of APRA's powers under Part V of the Act, must not be sufficient to accelerate repayment of the instrument.
10. The instrument must not provide for payment to investors other than in the form of a cash payment.
11. The instrument cannot have a credit sensitive distribution/payment feature (i.e. a distribution/payment that is reset based in whole or part on the credit standing of the issuer or the group or any other member of the group to which it belongs). The instrument may utilise a broad index as a reference rate for distribution or payments calculation purposes. Where an issuer is a reference entity in the determination of the reference rate, the reference rate must not exhibit any significant correlation with the issuer's credit standing. APRA may require a regulated institution to exclude an instrument from treatment as Tier 2 Capital where APRA considers that the reference rate