CRR - Own funds requirements: disproportionate drag on own funds and preferential distributions
On 2nd June 2015, the Official Journal of the European Union published its Commission Delegated Regulation (EU) 2015/850 amending Delegated Regulation (EU) No 241/2014 supplementing Regulation (EU) 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for Own Funds requirements for institutions.
The Regulation deals with disproportionate drag on own funds and preferential distributions.
The Delegated Regulation (EU) 241/2014 is amended by the insertion of four new articles. The first one is Article 7a which establishes the multiple distributions constituting a disproportionate drag on own funds.
Article 7b and 7c are also inserted and sets out the preferential distributions regarding preferential rights to payments of distributions and the calculation of the pay-out ratio for the purpose of point (b) of Article 7b(8).
The last Article is Article 7d that presents the preferential distribution payments.
The Regulation entered into force on 22 June 2015.