RAR 3.4.3

(1) When applying the Bail-in Tool, the DFSA shall take, in respect of shareholders of the Authorised Firm in Resolution, one or both of the following actions:
(a) cancel existing Shares or transfer them to bailed-in creditors; or
(b) where, in accordance with the Pre-Resolution Valuation (or Provisional Valuation, if applicable), the Authorised Firm in Resolution has a positive net value, dilute existing shareholders as a result of the conversion into Shares of:
(i) relevant capital instruments; or
(ii) Eligible Liabilities,
issued by the Authorised Firm in Resolution.
(2) The DFSA shall take the action referred to in (1) in respect of shareholders where the Shares were issued or conferred in the following circumstances:
(a) pursuant to the conversion of Debt Instruments to Shares in accordance with the contractual terms of the original Debt Instruments, on the occurrence of an event that preceded or occurred at the same time as the assessment by the DFSA that the Authorised Firm met the Resolution Conditions; or
(b) pursuant to the conversion of relevant capital instruments to CET1 Capital instruments, under the Write Down or Conversion Power.
(3) In considering which action to take in accordance with (1), the DFSA will have regard to:
(a) the Pre-Resolution Valuation (or Provisional Valuation, if applicable);
(b) the amount by which the DFSA has assessed that CET1 Capital items are to be reduced and relevant capital instruments are to be written down or converted pursuant to the Write Down or Conversion Power; and
(c) the aggregate amount assessed by the DFSA under RAR Rule 3.4.2(1).


Derived from DFSA RMI283/2020 (Made 16th December 2020). [VER1/04-21]