Prudential Regulation Authority Rulebook

5.1

5.2 to 5.6 do not apply in respect of the following:

1. (1) any item which a firm intends to include within its basic own funds that is not covered by the lists of own funds items set out in the Solvency II Regulations, but which may be included in its basic own funds only if the firm has received the PRA’s approval; and
2. (2) any item which a firm intends to include within its ancillary own funds.

5.2

1. (1) A firm must notify the PRA in writing of its intention to issue an item which it intends to include within its basic own funds at least one month before the intended date of issue, unless there are exceptional circumstances which make it impracticable to give such a period of notice, in which event the firm must give as much notice as is practicable in those circumstances.
2. (2) When giving notice, a firm must:
1. (a) provide details of the amount of basic own funds the firm is seeking to raise through the intended issue and whether the own funds is intended to be issued to external investors or within its group;
2. (b) identify the classification of basic own funds the item is intended to fall within;
3. (c) include confirmation from the governing body of the firm that the item complies with the rules applicable to items of basic own funds included in the classification of the item identified in (b); and
4. (d) provide a copy of the term sheet and details of any features of the item it intends to include within its basic own funds which are novel, unusual or different from an item of basic own funds of a similar nature previously issued by the firm or widely available in the market or not specifically contemplated by the Solvency II Firms Sector of the PRA Rulebook or the Solvency II Regulations.

5.3

A firm must provide a further written notification to the PRA including all the information required in 5.2(2) as soon as it proposes any change to the intended date of issue, amount of issue, type of investors, classification of a particular tier of basic own funds or any other feature of the item intended to be included as basic own funds to that previously notified to the PRA.

5.4

If a firm proposes to establish a debt securities program for the issue of an item for inclusion within its basic own funds, it must:

1. (1) notify the PRA of the establishment of the program; and
2. (2) provide the information required by 5.2(2)

at least one month before the first proposed drawdown. The PRA must be notified of any changes in accordance with 5.3.

5.5

The items of basic own funds to which 5.2 does not apply are:

1. (1) ordinary shares which:
1. (a) meet the classification criteria for ordinary share capital in Tier 1 own funds; and
2. (b) are the same as ordinary shares previously issued by the firm;
2. (2) debt instruments issued from a debt securities program, provided that program was notified to the PRA prior to its first drawdown, in accordance with 5.4; and
3. (3) any item which is not materially different in terms of its characteristics and eligibility for inclusion in a particular tier of basic own funds to items previously issued by the firm and included in basic own funds.

5.6

A firm must notify the PRA in writing, no later than the date of issue, of its intention to issue an item listed in 5.5 which it intends to include within its basic own funds. When giving notice, a firm must:

1. (1) provide the information set out at 5.2(2)(a), (b) and (c); and
2. (2) confirm that the terms of the item have not changed since the previous issue by the firm of that type of item of basic own funds.