Life Insurance (prudential standard) determination No. 12 of 2010 - Prudential Standard LPS 700 Friendly Society Benefit Funds
Seed capitalSeed capital
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Seed capital
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Subject to paragraph 14, a friendly society may transfer an amount from the management fund to an approved benefit fund with prior written approval from APRA. Such an amount is “seed capital”. The friendly society may use such seed capital for the purposes of meeting the capital adequacy requirement for the benefit fund.
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A friendly society must not repay seed capital from an approved benefit fund to the management fund unless:
(a) the approved benefit fund, after any such repayment, continues to meet the capital adequacy requirement; and
(b) any interest paid to the management fund in relation to the seed capital exceeds the earning rate of the approved benefit fund during the period when the seed capital forms part of the approved benefit fund.
- Any seed capital provided from the management fund to an approved benefit fund is inadmissible for the purposes of the management fund capital requirement.