974‑135.01 Non‑cumulative redeemable pre974‑135.01 Non‑cumulative redeemable preference shares issued by credit union or mutual building society

974‑135.01 Non‑cumulative redeemable preference shares issued by credit union or mutual building society

(1) For the purposes of paragraph 974‑135(8)(d) of the Act, the obligation in respect of the return of investment on the redemption of a non‑cumulative redeemable preference share issued by an entity that is: (a) a credit union; or (b) a mutual building society that is an ADI; is not an effectively non‑contingent obligation if it meets the criteria in subsection (2) of this section. (2) The criteria in this subsection are: (a) the share is issued on or after 4 March 2003; and (b) the share satisfies, at the time it is issued, the criteria set out in paragraph 1 of Attachment H to the Banking (prudential standard) determination No. 4 of 2017; and (c) the share is issued subject to the following terms and conditions: (i) the share has a minimum term of 5 years; (ii) dividend payments for the share are to be paid only out of operating profits from the current year or the immediately previous year, and only to the extent that payment is permitted by law and by relevant regulatory authorities; (iii) dividend payments for the share are not cumulative; (iv) any payments made in relation to the share out of net profits or net assets have preferential rights over payments made in relation to ordinary shares (if any) from the same sources; (v) if the share is to be redeemed—the redemption cannot be carried out without the approval of the entity’s board; (vi) if the share is to be redeemed, but the redemption of the share would place the entity in breach of a prudential standard made under the Banking Act 1959—the redemption cannot be carried out without the approval of APRA; and (d) the redemption is carried out on or after 4 March 2003; and (e) the share is issued only to a member of the entity; and (f) a member of the entity and its connected entities can together hold not more than 10% by value of the shares of that kind issued by the entity.

Note: For connected entity, see subsection 995‑1(1) of the Act.