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The document clarified that these distributions would only be banned when a lender's capital level fell below the legal requirement. Previously this was a gray area, leaving bank watchdogs more discretion.
Daniele Nouy, chair of the ECB's supervisory board, said she welcomed the Commission's clarification and hoped it could converted into legislation.
The Commission document said supervisors could give further "guidance" to a bank about its capital, but failure to follow this advice would not result in a ban on paying out profits.
It also said that holders of convertible bonds "may deserve particular protection" because, unlike staff members and shareholders, they cannot be compensated for missed coupons.
The European Union's financial services chief, Jonathan Hill, has been an advocate of easing rules on banks to stimulate lending and foster the economic recovery.
The ECB's Single Supervisory Mechanism, which scrutinizes the euro zone's largest banks, on the other hand has insisted on higher capital requirements and on strict monitoring of risks such as big piles of bad loans.