CAPI 3.1.2 What is a firm's total eligible capital?

(1) The total eligible capital of a firm is the amount of the firm's eligible capital, calculated in accordance with the following formula:

Eligible capital — Required deduction

where:

eligible capital, of a firm, means the sum of;
(a) the firm's permanent share capital;
(b) the firm's share premium account;
(c) the firm's retained earnings or losses; and
(d) the following items (up to an amount not exceeding 50% of the sum of the amounts referred to in paragraphs (a), (b) and (c)):
(i) qualifying letters of credits under rule 3.1.5;
(ii) any other instrument allowed by the Regulatory Authority under subrule (2) (a).
Required deduction, for a firm, means the sum of—
(a) investments in subsidiaries and associates; and
(b) intangible assets; and
(c) inadmissible assets; and
(d) any other asset that the Regulatory Authority directs, under subrule (2) (b), the firm to include.
(2) For calculating the firm's total eligible capital, the Regulatory Authority may, by written notice, do any 1 or more of the following:
(a) allow the firm to include an instrument as eligible capital;
(b) direct the firm to include an asset as a required deduction;
(c) allow the firm to exceed the 50% limit in paragraph (d) of the definition of eligible capital in subrule (1).
(3) Permission under subrule (2) (a) or (c) may be given on application of the firm or on the Regulatory Authority's own initiative.

Note The following table summarises the components for working out total eligible capital.

item Components applicable rule (if any)
Eligible capital    
1.1 permanent share capital 3.1.3
1.2 share premium account 3.1.4
1.3 retained earnings or losses
1.4 qualifying letter of credit 3.1.5
1.5 instruments allowed by the Regulatory Authority 3.1.2 (2) (a)
Required deductions    
2.1 investments in subsidiaries and associates
2.2 intangible assets 3.1.6
2.3 inadmissible assets 3.1.7
2.4 deductions that the Regulatory Authority directs the firm to include 3.1.2 (2) (b)

Amended by QFCRA RM/2015-1 (as from 1st July 2015).