Helen Lethaby covers tier 2 capital, the FCE Bank and Explainaway cases – and more
Although the capital requirements directive IV (CRD4) has not yet been enacted banks issuing instruments now which are designed to form part of their additional tier 1 and tier 2 regulatory capital must ensure that the terms of those instruments are prospectively compliant with CRD4. This means disclosing to investors that the instruments could be written down or converted to share capital at the point at which a bank nears insolvency which in turn risks the coupon on those instruments being regarded as results dependent and so non-deductible as a ‘distribution’ (CTA 2010 s 1000(1) para F and s 1015(4)).
On 26 October HMRC issued a technical note attaching draft legislation...
