3.1 The new Article 16a provides resolution authorities with the power to impose a maximum distributable amount (MDA) restriction on a firm, where it has insufficient resources to meet its combined buffer requirement, in addition to its MREL requirements. An MDA would place restrictions on the ability of a firm to distribute earnings, in the form of dividends on Common Equity Tier 1 capital, obligations to pay variable remuneration payments or discretionary pension benefits, and coupon payments to holders of Additional Tier 1 instruments.
3.2 During the first nine months of a breach of a firm's combined buffer requirement in addition to its MREL requirements, the resolution authority, following consultation with the competent authority, has discretion as to whether to apply this MREL related MDA regime, taking into account a number of specified factors. This assessment must be carried out monthly while the breach exists.
3.3 If the breach persists for more than nine months, the MDA res
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