PRU 3.17.1

Past version: effective from 21/10/2015 - 20/10/2015
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(1) Where an Authorised Person has a Qualifying Holding in an Undertaking which is not one of the following:
(a) an Undertaking that is a Relevant Entity; or
(b) an Undertaking that carries on activities that are:
(i) a direct extension of banking;
(ii) ancillary to banking; or
(iii) leasing, factoring, the management of unit trusts, the management of data processing services or any other similar activity,
and the amount of the holding exceeds 15% of the eligible total Capital Resources of the Authorised Person, the Authorised Person must comply with the requirements in (3).
(2) The total amount of the Qualifying Holdings of an Authorised Person in Undertakings other than those referred to in (1) that exceeds 60% of its Capital Resources are subject to the requirements in (3).
(3) An Authorised Person must apply the following requirements to Qualifying Holdings referred to in (1) and (2):
(a) a risk weight of 1000% to the following:
(i) the amount of Qualifying Holdings referred to in (1) in excess of 15% of Capital Resources; and
(ii) the total amount of Qualifying Holdings referred to in (2) in excess of 60% of the Capital Resources of the Authorised Person; and
(b) must not count Qualifying Holdings referred to in (1) and (2) where the amount of those holdings exceeds the percentages of Capital Resources laid down in (1) and (2).
(4) As an alternative to applying a 1000% risk weight to the amounts in excess of the limits specified in (1) or (2), an Authorised Person may deduct those amounts from CET1 Capital.
(5) Shares of Undertakings to which (1) or (2) do not apply must not be included in calculating the eligible capital limits specified in (1) where any of the following conditions are met:
(a) those Shares are held temporarily during a financial reconstruction or rescue operation;
(b) the holding of the Shares is an Underwriting position held for five working days or less; or
(c) those Shares are held in the name of the Authorised Person on behalf of others.