SEC Division of Corporation Finance no-action letter: Contingent Convertible Capital Securities

The Staff of the Division of Corporation Finance will not recommend enforcement action if non-U.S. financial institutions offer and sell contingent convertible capital securities in reliance on Rule 144A. The securities must qualify as regulatory capital, have a minimum original maturity of five years, and feature mandatory conversion triggered by a non-viability determination or a Common Equity Tier 1 capital ratio falling below a specified percentage not exceeding 7%. Issuers must maintain a Common Equity Tier 1 ratio exceeding the combined minimum ratio and buffer requirement at issuance, and the securities must lack optional conversion rights for either the issuer or securityholders.

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Securities Act of 1933
Section 5
Rule 144A
March 25, 2019
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Eligibility of Contingent Convertible Capital Securities for an Offering Under Rule 144A Ladies and Gentlemen:
We are writing to request that the staff of the Division of Corporation Finance (the “Staff”) advise us that the Staff will not recommend any enforcement action to the Securities and Exchange Commission (the “Commission”) if offers and sales by non-U.S. financial institutions of contingent convertible capital securities having the characteristics described below are made in reliance on Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”). We believe such relief is necessary given that the conversion features of such contingent convertible capital securities may result in their being deemed to be of the same class as listed securities and, therefore, not eligible for the exemption from Securities Act registration provided by Rule 144A. Background In response to the 2008 financial crisis, the Basel Committee on Banking Supervision (the “Basel Committee”) proposed reforms to strengthen global capital and liquidity

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