Sub-paragraph 6: Provisions relating to the implementation of an internal bail-out measure

I. - When it implements an internal bailout measure referred to in I of Article L. 613-55 or a write-down or conversion measure pursuant to the provisions of sub-section 9 of this section, the resolution college shall take one or other of the following measures in respect of the holders of the equity securities referred to in Chapter II of Title I of Book II or other ownership securities:

1° Cancelling the equity securities referred to in Chapter II of Title I of Book II or the other ownership securities or transferring them to the creditors concerned by the internal bail-out;

2° Provided that, in accordance with the valuation carried out pursuant to Article L. 613-47, the net worth of the credit institution or investment firm subject to a resolution procedure is positive, dilute existing equity securities or other ownership interests following the conversion into equity securities or other ownership interests of:

a) Additional Tier 1 capital instruments as well as Tier 2 capital instruments issued by the person subject to the resolution procedure pursuant to the power referred to in Article L. 613-48 ;

b) Commitments usable for an internal bail-in issued by the person subject to the resolution procedure pursuant to Article L. 613-55.

For the purposes of applying 2°, the conversion rate used shall be such as to significantly dilute the existing equity securities or other ownership interests.

II. - The measures mentioned in I also apply to holders of equity securities or other ownership interests whose equity securities or other ownership interests concerned were issued or allocated to them in the following circumstances:

1° Following the conversion of debt instruments into equity securities or other ownership rights as a result of the application of contractual clauses attached to these debt instruments ;

2° Following the conversion, pursuant to Article L. 613-48-3, of additional Tier 1 capital instruments and Tier 2 capital instruments.

III. - When examining the measures to be taken pursuant to I, the collège de résolution shall take into account :

1° The assessment made pursuant to Article L. 613-47 ;

2° The amount by which the nominal value of tier 1 core capital instruments must be reduced;

3° The amount by which the nominal value of additional Tier 1 or Tier 2 capital instruments must be reduced or the amount by which these instruments must be converted;

4° The cumulative amount assessed by it pursuant to I of Article L. 613-55-3.