Treatment of shareholders and holders of Common Equity Tier 1 instruments in applying the instrument for the participation of holders of relevant capital instruments and the creditor participation instrument

(1) In the case of section 96(2), shareholders' holdings are diluted, through the application of the instrument for the participation of holders of relevant capital instruments or the creditor participation instrument, in accordance with the conversion rate. Otherwise, shareholders lose their legal position in full.
(2) Shareholders and holders of Common Equity Tier 1 instruments are also taken into account under section 97(1), first sentence, point 1, where the shares or Common Equity Tier 1 instruments concerned were acquired through a conversion of debt instruments into shares or other Common Equity Tier 1 instruments, in accordance with the contractual terms of the original debt instruments, where the event triggering the conversion occurred no later than the time at which the resolution authority's assessment established that the institution or group entity satisfied the resolution conditions.
(3) In applying the creditor participation instrument, shareholders and holders of Common Equity Tier 1 instruments are also taken into account under section 97(1), first sentence, point 1, where the shares or Common Equity Tier 1 instruments concerned were acquired through a participation of holders of relevant capital instruments and eligible liabilities under section 65(4) under section 89, that took place before or at the time at which the resolution authority's assessment established that the institution or group entity satisfied the resolution conditions.
(4) Where applying the instrument for the participation of holders of relevant capital instruments or the creditor participation instrument would result in the acquisition of, or an increase in, a qualifying holding in the institution or group entity within the meaning of section 1(9) of the Banking Act, the supervisory authority should, by way of derogation from sections 2a, 2c, 24(1), point 10, and 24(1a), point 3, of the Banking Act, and from the provisions of the Ownership Control Regulation, carry out the assessment required under those provisions sufficiently promptly that it does not delay the application of the instrument for the participation of holders of relevant capital instruments and the creditor participation instrument, and does not impair the achievement of the resolution objectives pursued by the measure concerned.
(5) Where the supervisory authority has not completed the assessment under subsection (4) by the time the instrument for the participation of holders of relevant capital instruments or the creditor participation instrument is applied, 1. the acquisition, and any increase, of a qualifying holding by an acquirer becomes effective without there being any impediment to completion; 2. the acquirer's voting rights are suspended during the assessment period and pass to the resolution authority; the resolution authority is not obliged to exercise such voting rights, and is not liable for exercising or failing to exercise them, and 3. the sanctions and measures provided for in sections 2c, 44b, 56(2), point 1, letters a and b, point 2, letter a, and point 3, letter a, of the Banking Act, for infringements of the requirements applicable to the acquisition or disposal of significant holdings, do not apply, during the assessment period, to an acquisition resulting from the application of the instrument for the participation of holders of relevant capital instruments or the creditor participation instrument.
(6) On completing its assessment, the supervisory authority informs the resolution authority and the acquirer, in writing and without delay, whether it prohibits the acquisition under section 2c of the Banking Act. Where the supervisory authority prohibits the acquisition, the resolution authority may require the acquirer to dispose of the holding acquired as a result of the application of the instrument for the participation of holders of relevant capital instruments or the creditor participation instrument, within a disposal period set by the resolution authority, having regard to prevailing market conditions. Subsection (5), points 2 and 3, applies correspondingly until the end of the disposal period referred to in the second sentence.
(7) Voting rights that passed to the resolution authority under subsection (5), point 2, pass in full to the acquirer on expiry of the prohibition period, or with the consent of the supervisory authority.