4.4. Other Tier 2 Capital instruments

An AIFC-Incorporated Takaful Operator may include additional items in its Tier 2 Capital with the written approval of the AFSA.

Guidance: ASFA approval of other items of Tier 2 Capital

The matters that will be taken into account by the AFSA in considering an instrument for potential approval as Tier 2 Capital include (but are not limited to) the following:

(a) the extent to which and in what circumstances the proposed capital element is subordinated to the rights of policyholders in an insolvency or winding up;

(b) the extent to which the proposed capital element is fully paid and available to avoid losses;

(c) the period for which the proposed capital element is available; and

(d) the extent to which the proposed capital element is free from mandatory payments or encumbrances.