AI Summary of Article 29 Capital instruments issued by mutuals, cooperative societies, savings institutions and similar institutions
This document outlines the conditions under which capital instruments issued by mutuals and similar entities qualify as Common Equity Tier 1 instruments. Key conditions include the ability of institutions to refuse or limit redemption of these instruments, ensuring that such actions do not constitute an event of default.
Further provisions specify limitations on claims in insolvency cases and the treatment of non-voting instruments, which must comply with proportionality in claims relative to the total instruments issued. The European Banking Authority (EBA) is tasked with developing regulatory technical standards to clarify limitations on redemption where national laws prohibit refusal of instrument redemption.
Article 29 Capital instruments issued by mutuals, cooperative societies, savings institutions and similar institutions
1. Capital instruments issued by mutuals, cooperative societies, savings institutions and similar institutions shall qualify as Common Equity Tier 1 instruments only if the conditions laid down in Article 28 with modifications resulting from the application of this Article are met.
2. The following conditions shall be met as regards redemption of the capital instruments:
(a) except where prohibited under applicable national law, the institution shall be able to refuse the redemption of the instruments;
(b) where the refusal by the institution of the redemption of instruments is prohibited under applicable national law, the provisions governing the instruments shall give the institution the ability to limit their redemption;
(c) refusal to redeem the instruments, or the limitation of the redemption of the instruments where applicable, may not constitute an event of default of the institution.
3. The capital instruments may include a cap or restriction on the maximum level of distributions only where that cap or restriction is set out under applicable national law or the statute of the institution.