Regulatory Alerts2018-08-23
Guidance on Qualifying Subordinated Loans under the Financial Services Act 2008
The Isle of Man Financial Services Authority issued this guidance to define Qualifying Subordinated Loans (QSLs) as standard, accepted subordinated debt instruments that cannot be repaid or have interest paid if financial resources fall below requirements. The Authority permits QSLs primarily for short-to-medium term supplementary financing to fund business expansion, cover temporary losses, or support start-up initial costs, while explicitly rejecting their use for long-term losses or shareholder drawings. Licenceholders seeking to utilize QSLs must provide a business case, achieve profitability within 24 months, prioritize loan repayment over dividends, and submit to strict monitoring and potential capital increase directives if repayment programs are not met.