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Version date: 14 September 2015 - onwards

Section 6: Own fund requirements and the system of governance (Guidelines 36-37)

Guideline 36 - Capital management policy

1.79. The undertaking should develop a capital management policy which includes a description of the procedures to:

a) ensure that own-fund items, both at issue and subsequently, are classified according to the features in Articles 71, 73, 75 and 77 of Commission Delegated Regulation 2015/35;

b) monitor tier by tier the issuance of own fund items according to the medium-term capital management plan, and ensure before issuance of any own fund items that it can satisfy the criteria for the appropriate tier on a continuous basis;

c) monitor that own-funds items are not encumbered by the existence of any agreements or connected transactions, or as a consequence of a group structure, which would undermine their efficacy as capital;

d) ensure that the actions required or permitted under the contractual, statutory or legal provisions governing an own-fund item are initiated and completed in a timely manner;

e) ensure that ancillary own-fund items can be, and are, called in a timely manner when necessary;

f) identify and document any arrangements, legislation or products that give rise to ring-fenced funds, and ensure that appropriate calculations and adjustments in the determination of the solvency capital requirement and own funds are made;