CP12/32: Implementation of the Alternative ... - BVCA admin

9 Long term qualifying subordinated loans (Item 13)
Loans having the characteristics prescribed by IPRU(INV) 7.5.1R may be
included in item 13, subject to the limits set out in paragraph (1) above.
10 Qualifying arrangements (Item 15)
A firm may only include an arrangement in item 15 if it is a qualifying
capital instrument or a qualifying capital item.
7.5 Qualifying subordinated loans
Characteristics of long-term qualifying subordinated loans
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Appendix 1
7.5.1 R A long term qualifying subordinated loan (item 13 of Table 7.4) must have
the following characteristics:
(1) the loan is repayable only on maturity or on the expiration of a
period of notice in accordance with paragraph (3) below or on the
winding up of the firm;
(2) in the event of the winding up of the firm, the loan ranks after the
claims of all other creditors and is not to be repaid until all other
debts outstanding at the time have been settled;
(3) either:
(a) the minimum original maturity of the loan is five years; or
(b) the loan does not have a minimum or fixed maturity but
requires five years notice of repayment; and
(4) the loan is fully paid-up.
[Note: article 4(1)(ad) of AIFMD, article 2(1)(l) of the UCITS Directive and article
64(3) of the Banking Consolidation Directive]
Amount allowable in the calculation of own funds
7.5.2 R A firm may only take into account the paid-up amount of a long term
qualifying subordinated loan in the calculation of its own funds. This
amount must be amortised on a straight-line basis over the five years prior to
the date of repayment.
[Note: article 4(1)(ad) of AIFMD, article 2(1)(l) of the UCITS Directive and article
64(3)(c) of the Banking Consolidation Directive]