Members' capital

Major solvency event

1.12 On the occurrence of an event, or series of events, that has a material impact on the level of a member’s solvency, the Society may temporarily prohibit releases of surplus FAL or FIS until such time as the full impact on the member’s solvency can be adequately assessed.

^{Membership & Underwriting Conditions and Requirements, section 2.5L}

1.13 A Capital Test will be performed for every member, to assess the impact of the major event on the member’s solvency. Where as a result the value of a member’s assets is less than 90% of its Adjusted ECA, the member will be required (if the amount is in excess of the De Minimis Amount) to provide or procure additional FAL or FIS to make up the shortfall in accordance with a timetable specified by the Society.

^{Membership & Underwriting Conditions and Requirements, section 2.5M}

1.14 Where the deadline for the provision of additional FAL or FIS under paragraph M above differs from that set out in paragraph 2.5C, prior notice will be given to the member in advance of funds being required.

^{Membership & Underwriting Conditions and Requirements, section 2.5N}

1.15 Notwithstanding the above, the Society may at any time require a member to provide or procure additional FAL or FIS so that their member’s assets are at an amount up to 100% of their Adjusted ECA.

^{Membership & Underwriting Conditions and Requirements, section 2.5O}

Cash Calls

1.16 A member that does not intend to meet a cash call through the provision of new monies shall give instructions to the Society as to how that cash call shall be met from their FAL, either directly or through their members’ agent (if one). If the member fails to provide such instructions then the Society may give effect to a compulsory drawdown.

^{Membership & Underwriting Conditions and Requirements, section 2.5O}

^{Membership & Underwriting Conditions and Requirements, section 4.1}

1.1 Income received on assets held within FAL (other than cash) will be paid out to the member or Third Party Capital Provider on a quarterly basis (in the currency in which it was received) unless the member or Third Party Capital Provider elects for it to be paid into FAL. Income that was previously paid direct from the registrar to the member, or Third Party Capital Provider, will now be collected by the Society and paid out quarterly as above.

^{Membership & Underwriting Conditions and Requirements, section 4.1A}

1.2 Interest received on cash held in FAL will be paid to the member or Third Party Capital Provider at least every six months, unless the member or Third Party Capital Provider elects for it to be paid into FAL.

^{Membership & Underwriting Conditions and Requirements, section 4.1B}

1.3 For members other than DCPs, and their Third Party Capital Providers, tax vouchers of all income arising on FAL will be provided on a regular basis.

^{Membership & Underwriting Conditions and Requirements, section 4.1C}

^{Membership & Underwriting Conditions and Requirements, section 4.2}

1.1 Subject to paragraph [1.3], a member or Third Party Capital Provider will be informed of all voluntary corporate actions where an instruction is required and given the options available to them.

^{Membership & Underwriting Conditions and Requirements, section 4.2A}

1.2  A member must ensure that if a capital sum is required to take up a corporate action event that cleared funds (in the correct currency) are available in FAL by the deadline date set out in the notification. The funds must have been submitted from a bank account verified by Lloyd’s; failure to comply with this requirement may prevent the corporate action from being able to be taken up.

^{Membership & Underwriting Conditions and Requirements, section 4.2B}

1.3 Where a member has an investment manager with a discretionary mandate in place the corporate action notification will be sent to the investment manager for their instruction.

^{Membership & Underwriting Conditions and Requirements, section 4.2C}

1.4 Where a mandatory corporate action affects a holding within a member’s FAL, the member will be notified via the FAL Online portal after the event of the change to their FAL.

^{Membership & Underwriting Conditions and Requirements, section 4.2D}

1.5 New assets received as a result of a corporate action event will remain in the jurisdictional custody account and /or currency in which they have been delivered. If the new asset resulting from a mandatory corporate action is not an acceptable asset for the purposes of paragraph 3.1C , the member will be required to substitute it within 30 days. A voluntary corporate action will not be offered by the Society if no acceptable asset is available as a result.

^{Membership & Underwriting Conditions and Requirements, section 4.2E}

1.6 Subject to paragraph [1.5], all cash or assets resulting from corporate actions will be retained within FAL.

^{Membership & Underwriting Conditions and Requirements, section 4.2F}

^{Membership & Underwriting Conditions and Requirements, section 4.3}

1.1 The allocation of assets to debts within distribution will be carried out in line with the allocation timetable, as notified to members. Instructions will be executed as expeditiously as possible but without any liability on the Society’s part for any interest or other expense incurred by the member after the date of receipt.

^{Membership & Underwriting Conditions and Requirements, section 4.3A}

1.2 As per [1.4 in Maintenance of capital above], surpluses will only be released to the member at distribution to the extent that their member’s assets (excluding distribution surpluses) are in excess of their Adjusted ECA.

^{Membership & Underwriting Conditions and Requirements, section 4.3B}

1.3 Members are not permitted to settle their members agents’ Non-PTF expenses through the distribution process.

^{Membership & Underwriting Conditions and Requirements, section 4.3C}

Drawdowns to meet insurance losses 

1.4 For individual members with a SRF, any drawdowns will be made from the SRF in the first instance as required under HMRC rules.

^{Membership & Underwriting Conditions and Requirements, section 4.3D}

1.5 Assets held subject to the premiums trust fund under the premiums trust deed must be utilised prior to submission of any drawdown request. The Society will proceed with compulsory drawdowns on the PRF 21 days after a loss payment date.

^{Membership & Underwriting Conditions and Requirements, section 4.3E}

1,6 Further guidance on deposit drawdowns is set out on the FAL Online portal.

^{Membership & Underwriting Conditions and Requirements, section 4.3F}

Except where otherwise provided or where the context otherwise requires, the words and expressions used in the Membership & Underwriting Conditions and Requirements have the meanings given to them in Definitions or, where shown in italics, the Glossary of the PRA Handbook.

Additionally, some terms which are used in Members are defined, and relevant interpretive guidance is given, in Appendix 5 to the Membership & Underwriting Conditions and Requirements.