The 2009 Committee decision

Learning objectives

• Explain the two-step approach recalled by the Committee in 2009: general analysis first, then the conditions of the exception.L3
• Assess the effect of a redemption option on subordination in the light of the instrument's priority on liquidation.L4

Normative references

The syntheses of the reference register are written in French: only the paragraph reference is shown here.

1 question

• The Opale fund issues two classes of units: class A, redeemable at the holder's option, and class B, with no redemption option. On liquidation, class A ranks last, at the same rank as class B, and no other class is more subordinated (case facts). A colleague argues that class A's redemption option makes it less subordinated than class B and therefore rules out the exception. Which answer is consistent with the explanation the Committee gave in 2009 (background, not a rule)?L4