The Australian Prudential Regulation Authority has released a discussion paper outlining how mutually owned authorised deposit-taking institutions could directly issue Common Equity Tier 1 capital instruments. Previously, APRA had developed a Mutual Equity Interest framework for mutually owned ADIs that allows them to issue Additional Tier 1 and Tier 2 capital instruments that can convert into CET1 capital in certain circumstances. These proposed CET1-eligible capital instruments would share many of the same characteristics as ordinary shares and would, for example, be perpetual, subject to discretionary dividends and accounted for as equity. However, because these instruments are untested, APRA is proposing some restrictions on the amount that may be included in CET1 and, to accommodate the mutual corporate structure of issuing ADIs, proposes limits on MEI holders' share of residual assets.Following consideration of submissions received through this consultation process, APRA expects to release the final revised APS 111 in late 2017 for commencement as soon as practicable afterwards.Copies of the discussion paper and draft revised APS 111 are available on APRA's website at: http://www.apra.gov.au/adi/PrudentialFramework/Pages/Consultation-CET1-Instruments-for-mutually-owned-ADIs-July-2017.aspx