S.L. 330.9 Art. 47Treatment of shareholders in bail-in or write- down or conversion of capital instruments.

(1) When applying the bail-in tool in regulation 43(2) or the write-down or conversion of capital instruments in regulation

59, the Resolution Committee shall, in respect of shareholders and holders of other instruments of ownership, take one or both of the following actions:

(a) cancel existing shares or other instruments of ownership or transfer them to bailed-in creditors;

(b) provided that, in accordance to the valuation carried out under regulation 36, the institution under resolution has a positive net value, dilute existing shareholders and holders of other instruments of ownership as a result of the conversion into shares or other instruments of ownership of:

(i) relevant capital instruments issued by the institution pursuant to the power referred to in regulation 59(2); or

(ii) bail-inable liabilities issued by the institution under resolution pursuant to the power referred to in regulation 63(1)(f):

Provided that with regard to paragraph (b), the conversion shall be conducted at a rate of conversion that severely dilutes existing holdings of shares or other instruments of ownership.

(2) The actions referred to in sub-regulation (1) shall also be taken in respect of shareholders and holders of other instruments of ownership where the shares or other instruments of ownership in question were issued or conferred in the following circumstances:

(a) pursuant to conversion of debt instruments to shares or other instruments of ownership in accordance with contractual terms of the original debt instruments on the occurrence of an event that preceded or occurred at the same time as the assessment by the Resolution Committee that the institution or entity referred to in paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1) met the conditions for resolution;

(b) pursuant to the conversion of relevant capital instruments to Common Equity Tier 1 instruments pursuant to regulation 60.

(3) When considering which action to take in accordance with sub-regulation (1), the Resolution Committee shall have regard to:

(a) the valuation carried out in accordance with regulation 36;

(b) the amount by which the Resolution Committee has assessed that Common Equity Tier 1 items must be reduced and relevant capital instruments must be written down or converted pursuant to regulation 60(1); and

(c) the aggregate amount assessed by the Resolution Committee pursuant to regulation 46.

(4) By way of derogation from Articles 22 to 25 of the CRD, the requirement to give a notice in Article 26 of the CRD, articles 10, 10A and 10B of the Investment Services Act and the Investment

Services Rules for Investment Services Providers, where the application of the bail-in tool or the conversion of capital instruments would result in the acquisition of or increase in a qualifying holding in an institution as referred to in article 13(1) of the Banking Act or article 10 of the Investment Services Act, the

Authority shall carry out the assessment required under those Articles (and those articles) in a timely manner that does not delay the application of the bail-in tool or the conversion of capital instruments, or prevent resolution action from achieving the relevant resolution objectives.

(5) If the Authority has not completed the assessment required under sub-regulation (4) on the date of application of the bail-in tool or the conversion of capital instruments, regulation 38(9) shall apply to any acquisition of or increase in a qualifying holding by an acquirer resulting from the application of the bail-in tool or the conversion of capital instruments.