• PINS Part 4.3 PINS Part 4.3 Components of capital: tier 1

    Editorial changes (as from 1 January 2015).

    • PINS 4.3.1 PINS 4.3.1 Components of tier 1 capital

      For the purposes of the items under line (A) tier 1 capital in the table in PINS Rule 4.2.2:

      (a) Permanent share capital means ordinary paid-up share capital, or equivalent however called, which meets the following conditions:

      (i) it is fully paid up;
      (ii) any dividends in relation to it are non-cumulative;
      (iii) it is available to absorb losses on a going concern basis;
      (iv) it ranks for repayment upon winding up or insolvency after all other debts and liabilities;
      (v) it is undated;
      (vi) the proceeds of an issue of permanent share capital is immediately and fully available to the insurer;
      (vii) the insurer is not obliged to pay any dividends on the shares (except in the form of shares that themselves comply with this rule);
      (viii) the insurer does not have any other obligation or commitment to transfer any economic benefit in relation to that permanent share capital;
      (ix) dividends and other charges on the shares can only be paid out of accumulated realised profits;
      (b) audited reserves are audited accumulated profits retained by the insurer after deduction of tax and dividends, and other reserves created by appropriations of share premiums and similar realised appropriations;
      (c) audited reserves also include capital contributions if —
      (i) the capital contributions satisfy the requirements of paragraph (a); and
      (ii) the insurer told the Regulatory Authority of its intention to include the capital contributions at least 1 month before the day they were included;
      (d) the share premium account records the difference between the nominal value of shares issued and the fair value of the consideration received;
      (e) externally verified interim net profits are interim profits verified by an insurer's external auditor net of tax, anticipated dividends or other appropriations;
      (f) fund for future appropriations means the fund comprising all funds the allocation of which either to policyholders or to shareholders has not been determined by the end of the financial year, or the balance sheet items under international accounting standards which in aggregate represent as nearly as possible that fund;
      (g) owners' equity can only form part of a takaful entity's tier 1 capital if under the constitutional documents of the takaful entity or the terms of the insurance contract or both, participation in the surpluses and losses of the insurance business is limited to the policyholders of the insurer;
      (h) intangible assets include goodwill, capitalised development costs, brand names, trademarks and similar rights and licences; and
      (i) cumulative losses and other negative reserves must be deducted from tier 1 capital.
      Amended by QFCRA RM 2019-1 (as from 28th March 2019).

      • PINS 4.3.1 Guidance

        The Regulatory Authority may request an insurer to provide it with a copy of its external auditor's opinion referred to in PINS Rule 4.3.1(e) on whether the interim profits are accurately stated.

        Editorial changes (as from 1 January 2015).