IN THE NAME
OF ALLAH THE MOST BENEFICIENT, THE MOST COMPASSIONATE
GUIDELINES FOR ISSUE OF
CERTIFICATES OF MUSHARAKA FOR MODARABAS
The following guidelines are issued
dated 7th Sept., 94 with the approval of the Religious Board,
constituted under section 9 of the Modaraba Ordinance, 1980, for allowing the
Modarabas to issue Certificates of Musharaka.
1.
DEFINITION
(1) In these Guidelines, unless any thing is
repugnant to the subject or context:
(a) “Certificate”
means a certificate of definite denomination issued by the Modaraba to the
contributory acknowledging the receipt of money contributed by him under these
guidelines on the basis for arrangement described herein:
(b) “Contributory”
means the holder of a valid Certificate.
( c )
“Contributories Fund” means the amount contributed by the Contributories
through the Certificates issued under these Guidelines.
(d)“Modaraba” means a legal
entity established and floated under the Ordinance. (e) “Modaraba Fund” means
the daily product of the following, based on the books of account of a
Modaraba:
i) paid
up fund of the Modaraba; ii) revenue
and capital reserves; iii) un-appropriated
profit; and
iv) accumulated
losses, if any, which shall be deducted from the aggregate of (i) , (ii) and
(iii) above.
(f)“Ordinance” means the Modaraba
Companies and Modaraba (Floatation and Control) Ordinance, 1980.
(g)“Principles of Sharia” means
the pertinent principles of Sharia as interpreted by the Religious Board;
(h)“Total Fund” means the
aggregate of Contributories Fund and Modaraba Fund as defined in ( c ) and (e)
above.
2.
All the definitions, terms and expression used but not
defined in these Guidelines shall have the same meanings as in the Modaraba
Companies and Modaraba (Floatation & Control), Ordinance, 1980 and the
Modaraba Companies and Modaraba Rules, 1981.
3.
SUPREMACY OF SHARIA
(1) In
all matters relating to application of these Guidelines, Sharia shall be
absolutely supreme and over-riding in all respects.
(2) The
management of a Modaraba authorized through these Guidelines to raise capital
through Certificates of Musharaka shall ensure that all the business
transactions and dealings undertaking by the Modaraba and its conduct in all
respects shall conform with Sharia. All
the business arrangements and agreements shall be in accordance with those
approved by the Religious Board.
(3) None
of the business undertaken by the Modaraba, financing arrangements and transactions shall involve directly or
indirectly any element of “Riba”.
(4) These
Guidelines have been approved by the Religious Board in its meeting held on
September 07, 1994 and any change in these Guidelines shall be made with the
approval of Religious Board.
4.
MUSHARAKA ARRANGEMENT
(1) The
amount received by a Modaraba from the Contributories shall be invested in the
overall business activity of the Modaraba on the basis of full participation in
the profit and loss of the Modaraba;
(2) The
profit and loss of the Modaraba shall be shared on following basis;
(i)
Losses shall be shared by the Contributories and the
Modaraba in
proportion of their fund in the
total fund;
(ii)
Upto 90% of the total profit shall be shared by the
Contributories and the Modaraba certificate holders in accordance with ratio
declared by the Modaraba and accepted by the contributory, and in the absence
of any such declaration in proportion of their respective contribution to the
total fund.
(3) Unless
otherwise provided the profit and loss of the Modaraba shall be determined at
quarterly intervals. The quarterly
profit and loss account of the Modaraba shall be published in at least two
national newspapers for the information of this Musharaka Certificate holders.
(4) In
case of loss resulting into winding up of the Modaraba, the payments out of the
realizable assets shall be made after discharging liability of creditors, to
the Musharaka Certificate holders and Modaraba Certificate holders.
(5) The
Musharaka arrangements specified by the Modaraba shall clearly indicate the
frequency of distribution of profit or adjustment of losses to the Musharaka
Certificate holders i.e. quarterly, half yearly, annually or at maturity. In all cases the concept of final
determination and adjustment of profit and loss at maturity against the total
sum repayable to the Musharaka Certificate holders must be clearly stated in
all schemes of Musharaka Certificate under these Guidelines.
5.
APPROVAL BY THE RELIGIOUS BOARD
The Musharaka agreement as well
as the certificate of Musharaka and any document providing the terms and
conditions of Certificate of Musharaka or pertaining to mobilization of
finances by the Modaraba shall be got approved by the Religious Board.
6.
FEATURES OF CERTIFICATE OF MUSHARAKA
(1) A
certificate of Musharaka issued under these Rules shall be registered in the
name of Contributory/Contributories to who it is issued.
(2) The
maturity period of Certificate of Musharaka shall not be less than three
months. However, the term of certificate
must be specified at the time of issue and shall be indicated in the
certificate of Musharaka.
(3) The
return on Certificate of Musharaka shall be determined and payable in
accordance with the Musharaka arrangements stated herein.
(4) The
Certificates of Musharaka may be listed on the Stock Exchange or traded over
the counter.
(5) Any
public notice or offer issued in connection with sale of Certificate of
Musharaka shall specify that the certificates are not guaranteed by the
Government and shall also include other conditions that the Registrar may
prescribe.
(6) The
Certificates of Musharaka shall be transferable in the manner and upon such
conditions as are applicable to the Modaraba Certificates under the
Ordinance.
7.
PURCHASE OF CERTIFICATES OF MUSHARAKA BEFORE MATURITY
BY THE MODARABA.
7.1
The Modaraba shall not redeem or encash certificates of
Musharaka before its maturity; however, in the case of certificates of
Musharaka traded over the counter the Modaraba may provide a facility of
purchase of such certificates of Musharaka on the basis of the guidelines
specified hereunder:
7.2
Every Modaraba permitted by the Registrar to issue
Musharaka Certificate over the counter under these guidelines shall:
a)
Appoint a Trustee to oversee the Musharaka Certificates
redemption reserve fund and use of fund for the purchase of Musharaka Certificates
by the Modaraba before maturity, and
b)
Establish a “Redemption Reserve Fund” to provide for
the scheme for purchase of Certificates
of Musharaka from such reserve fund, before maturity.
8.
THE TRUSTEES
8.1
The Trustee for the purposes of these guidelines shall
be appointed from the practicing members or firms of Chartered Accountants or
the practicing members of Cost and Management Accountants, Investment Banks,
Commercial Banks and DFI’s.
8.2
The Trustee shall report any discrepancy or lack of
compliance of these guidelines in respect of
the Musharaka Certificates redemption reserve fund or its usage for
purchase of Musharaka Certificates before maturity.
8.3
Any dispute between the Trustee and the Modaraba shall
be referred to the Registrar and his decision in such matter shall be final.
8.4
Any dispute pertaining to encashment of Musharaka
Certificates before or after maturity or arising between Modaraba and contributory
shall be referred for decision of Trustee and any party aggrieved of the said
decision shall have the right of representation before the Registrar whose
decision on the representation shall be final.
8.5
The maximum remuneration of trustee shall be 0.05% per
annum of the total Musharaka fund and may be paid quarterly.
9.
MUSHARAKA CERTIFICATE REDEMPTION RESERVE FUND
9.1
The purchase of Musharaka Certificates out of
Redemption Reserve Fund price approved by the Trustee and posted by the Modaraba.
9.2
The minimum contribution to the Musharaka Certificates
redemption reserve fund shall be 5% of the amount of Musharaka Certificates
outstanding.
9.3
The certificates purchased from the Redemption fund may
be sold over the counter or retained till maturity.
9.4
The Modaraba shall not exceed the purchase of
certificates of Musharaka commitment beyond the amount of the reserve
fund.
10.
SAFEQUARDS
10.1
State Bank of Pakistan’s Rules of Business for NBFIs
including the exposure limits will also apply to the Musharaka Certificates
issued by the Modaraba.
10.2
Subject to Rule 3 of these Guidelines, in all cases
International Accounting Standards as
adopted by the Government of Pakistan shall be followed.
10.3
A quarterly report on the Certificates of Musharaka
issued by a Modaraba shall be furnished
to the Registrar within 10 days fro the close olf each quarter, as prescribed
by the Registrar.
11.
CONDITIONS OF ELIGIBILITY
11.1
The following conditions of eligibility shall be
fulfilled by the Modaraba for the grant of consent by the Registrar to issue of
Certificates of Musharaka.
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(i)
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The
prospectus of Modaraba as approved by the Religious Board contains provisions
for resource mobilization on Musharaka basis.
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(ii)
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The
paid up fund of the Modaraba is not less than fifty million rupees;
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(iii)
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The
Modaraba is actively engaged in business for a period of two years and
has obtained credit rating of minimum investment grade from a credit rating
agency registered with the Commission and such credit rating shall be updated
at least once every year during the currency of the issue.”
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(iv)
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The
corporate and fiduciary conduct of the Modaraba and the directors
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of the Modaraba Company has been
found to be satisfactory.
12.
PERMISSION TO ISSUE MUSHARAKA CERTIFICATES
If the Registrar is satisfied that the Modaraba fulfills the
conditions of eligibility as published and the Modaraba has complied with the
Modaraba Ordinance, Rules made thereunder, these guidelines and requirements of
its prospectus, he may consent to the issuance of Certificates of Musharaka by
the Modaraba.
FORMAT OF CERTIFICATE OF MUSHARAKA
ISSUED
BY
_______________________________MODARABA
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Folio
Number
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Certificate
Number
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Distinctive
Numbers (inclusive)
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From To
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Number
of Musharaka Certificates
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This is to certify that
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is/are the Registered Holders of fully paid Musharaka
Shares of Rupees_______ each as mentioned and numbered in the appropriate
boxes on the left in _______Modaraba subject to the term and conditions as
specified in the Guidelines for issue
of Certificate of Musharaka/Redeemable Capital Certificates for
Modaraba.
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Managed
by_________________________________(Co.)
OPTIONAL TERMS (TO BE PRINTED AS
APPLIED)
These certificates will be listed
on the Stock Exchange.
These Certificates will be sold
and purchased over the
Counter at
_______________________________
Upto ______________% of total
profit shall be shared
By the contributories and the
Modaraba
Given
under the common Seal of the Company
This __________________day_________________19_____________
__________
_______________________
DIRECTOR
DIRECTOR/SECRETARY
Memorandum of Transfers
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Date of
Transfer
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No. of
Transfer
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Name of Transferee
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Register Folio
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Authorized Signature
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For
Director/Secretary
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For
Director/Secretary
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For
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For
Director/Secretary
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For
Director/Secretary
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For
Director/Secretary
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For
Director/Secretary
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For
Director/Secretary
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For
Director/Secretary
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