This section applies to an IFPRU investment firm, unless it is an exempt IFPRU commodities firm.

This section applies to a firm in relation to the whole of its business, except where a particular provision provides for a narrower scope.

1. (1)

   Subject to (2), an IFPRU investment firm must maintain, at all times, common equity tier 1 capital equal to, or in excess of, the base own funds requirement.

2. (2)

   For the purpose of (1), the common equity tier 1 capital of an IFPRU investment firm must comprise only of one or more of the items referred to in article 26(1)(a) to (e) of the EU CRR (Common equity tier 1 items).

[Note: article 28(1) of CRD]

At the time that it first becomes an IFPRU investment firm, a firm must hold initial capital of not less than the base own funds requirement applicable to that firm.

The amount of an IFPRU investment firm'sbase own funds requirement is set out in the table in IFPRU 3.1.9 R.

IFPRU 3 applies to an IFPRU investment firm, unless it is an exempt IFPRU commodities firm.

In respect of the qualifying holdings described in article 89(1) and (2) of the EUCRR, a firm must, in accordance with article 89(3) of the EUCRR, comply with the requirement in article 89(3)(a) of the EUCRR.

In determining whether an item of capital qualifies as common equity tier 1 capital, additional tier 1 capital or tier 2 capital, a firm must take into account any connected transaction which, when taken together with the item of capital, would cause it not to display the characteristics of common equity tier 1 capital, additional tier 1 capital or tier 2 capital.

A firm must report to the FCA all connected transactions described in IFPRU 3.2.6 R at least one month in advance of entry into the relevant transaction and identify each relevant transaction with sufficient detail to allow the FCA to evaluate it.

A firm must demonstrate to the FCA that any additional tier 1 instrument or tier 2 instrument issued by it that is governed by the law of a third country is by its terms capable, as part of a resolution of the firm, of being written down or converted into a common equity tier 1 instrument of the firm to the same extent as an equivalent own funds instrument issued under the law of the UK.

A firm must include, in the materials it provides to the FCA under IFPRU 3.2.8 R, a properly reasoned legal opinion from an individual appropriately qualified in the relevant third country.

A firm must notify the FCA of the following:

1. (1)

   its intention; or

2. (2)

   the intention of another member of its group that is not a firm, but is included in the supervision on a consolidated basis of the firm;

to issue a capital instrument that it believes will qualify under the EUCRR as own funds other than a common equity tier 1 capital at least one month before the intended date of issue.

A firm does not have to give notice under IFPRU 3.2.10 R if the capital instrument is:

1. (1)

   an ordinary share; or

2. (2)

   a debt instrument issued under a debt securities programme under which the firm or group member has previously issued and the firm has notified the FCA, in accordance with IFPRU 3.2.10 R, prior to a previous issuance under the programme.

When giving notice, the firm must provide:

1. (1)

   details of the amount and type of own funds the firm is seeking to raise through the intended issue and whether the capital instrument is intended to be issued to external investors or other members of its group;

2. (2)

   a copy of the term sheet and details of any features of the capital instrument which are novel, unusual or different from a capital instrument of a similar nature previously issued by the firm or widely available in the market;

3. (3)

   confirmation from a member of the firm'ssenior management responsible for authorising the intended issue or, in the case of an issue by another group member, for the issue's inclusion in the firm's consolidated own funds, that the capital instrument meets the conditions for qualification as an own funds item; and

4. (4)

   a properly reasoned legal opinion from an appropriately qualified individual confirming that the capital instrument meets the conditions for qualification as the relevant type of own funds.

A firm must notify the FCA in writing, no later than the date of issue of its intention, or the intention of another member of its group that is not a firm included in the supervision on a consolidated basis of the firm, to issue a capital instrument described in IFPRU 3.2.11 R.

When giving notice under IFPRU 3.2.13 R, the firm must provide:

1. (1)

   confirmation that the terms of the capital instrument have not changed since the previous issue by the firm of that type of capital instrument; and

2. (2)

   the information in IFPRU 3.2.12 R (1) and-IFPRU 3.2.12 R (3).

The firm must promptly notify the FCA of any change to the intended date of issue, amount of issue, type of investors, type of own funds or any other feature of the capital instrument to that previously notified to the FCA under IFPRU 3.2.10 R or IFPRU 3.2.13 R.

A firm must notify the FCA of its intention, or the intention of another member of its group that is not a firm included in the supervision on a consolidated basis of the firm, to amend or otherwise vary the terms of any own funds instrument included in its own funds or the own funds of its consolidated group at least one month before the intended date of such amendment or other variation.

A firm must notify the FCA of its intention, or the intention of another member of its group included in the supervision on a consolidated basis of the firm, to carry out any of the actions described in article 77 of the EUCRR (Conditions for reducing own funds) for an own funds instrument.