2. Circumstances other than those related to the valuation of the firm’s assets and liabilities …

Circumstances other than those related to the valuation of the firm’s assets and liabilities

1.19. Where more than one option may be appropriate based on the valuation, or when choosing between tools to achieve dilution, resolution authorities should choose the option or options which best meet the resolution objectives in Article 31 of the BRRD.

1.20. In particular, provisions of national or EU company law may affect the appropriate choice between achieving dilution solely by issuing new shares, through the combination of cancelling some shares and issuing new shares, or through the transfer of some shares. 1.21. The following examples provide a non-exhaustive illustration of the factors which resolution authorities should consider. The examples are not definitive and complying with the guidance does not require that authorities decide to choose the options suggested when the circumstances described apply.

1.22. When considering whether to cancel and/or to transfer shares or other instruments of ownership (singly or in combination with dilution), authorities may have regard to the particular features of the shares or other instruments. For example, where certain shares confer particular special voting rights, authorities may consider that it would be more appropriate to cancel those shares than to transfer them in order to simplify the structure of the reorganised firm.

1.23. In some cases, there may be shares or other instruments of ownership which do not qualify as CET1 capital, for example preference shares which qualify as Additional Tier 1 instruments. Authorities may choose to transfer only the CET1 instruments and to cancel any shares or other instruments of ownership (respecting the relevant safeguards and legal protections).

1.24. Where resolution authorities have used the option under Article 43(4) of Directive 2014/59/EU to change the legal form of a previously mutualised institution following a bail-in, a cancellation of the instruments of ownership should be carried out if necessary to effect that change.

1.25. Where shares of a public company are listed on official stock exchanges, transferring shares rather than cancelling them may be necessary to avoid an interruption of listings and discontinuity in valuation of the shares.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

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