# Commission Delegated Regulation (EU) No 241/2014 of 7 January 2014 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for Own Funds requirements for institutions (Text with EEA relevance), Article 7a: Multiple distributions constituting a disproportionate drag on own funds

Extent: E+W+S+N.I.

1. Distributions on Common Equity Tier 1 instruments referred to in Article 28 of Regulation (EU) No 575/2013 shall be deemed not to constitute a disproportionate drag on capital where all of the following conditions are met:
(a) the dividend multiple is a multiple of the distribution paid on the voting instruments and not a predetermined fixed amount;
(b) the dividend multiple is set contractually or under the statutes of the institution;
(c) the dividend multiple is not revisable;
(d) the same dividend multiple applies to all instruments with a dividend multiple;
(e) the amount of the distribution on one instrument with a dividend multiple does not represent more than 125 % of the amount of the distribution on one voting Common Equity Tier 1 instrument.
In formulaic form this shall be expressed as:
l ≤ 1,25 × k
where:
k shall represent the amount of the distribution on one instrument without a dividend multiple;
l shall represent the amount of the distribution on one instrument with a dividend multiple;
(f) the total amount of the distributions paid on all Common Equity Tier 1 instruments during a one year period does not exceed 105 % of the amount that would have been paid if instruments with fewer or no voting rights received the same distributions as voting instruments.
In formulaic form this shall be expressed as:
kX + lY ≤ 1,05 × k × X + Y
where:
k shall represent the amount of the distribution on one instrument without a dividend multiple;
l shall represent the amount of the distribution on one instrument with a dividend multiple;
X shall represent the number of voting instruments;
Y shall represent the number of non-voting instruments.
The formula shall be applied on a one-year basis.
2. Where the condition of point (f) of paragraph 1 is not met, only the amount of the instruments with a dividend multiple that exceeds the threshold defined therein shall be deemed to cause a disproportionate drag on capital.
3. Where any of the conditions of points (a) to (e) of paragraph 1 are not met, all outstanding instruments with a dividend multiple shall be deemed to cause a disproportionate drag on capital.

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Source: https://www.legislation.gov.uk/eur/2014/241/article/7a (the official version)
Page: https://openlegislation.uk/eu-regulation-2014-241/article-7a
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.