Chapter 10
Useful Information and Samples of Legal Documentation
10.0. INTRODUCTION
This chapter includes various samples of contracts in different applications of Islamic finance. It also includes contracts of ABIM, the Association of Islamic Banking Institutions Malaysia, as approved by the AIBIM Sharī`ah Advisory Committee.
10.1. SAMPLE OF AN AGREEMENT (MUSHARAKAH AGREEMENT IN SUKUK ISSUANCE)
The following is a sample of a contract of management agreement in sukuk musharakah issuance.
THIS MANAGEMENT AGREEMENT is made on the_________ day of 2014
BETWEEN:
1. ABC bank Islamic Berhad (Company No. 11111), a company incorporated in Malaysia with its registered office at Kuala Lumpur (the “Issuer”);
AND
2. XYZ Trustees Berhad (Company No. 22222), a company incorporated with limited liability under the laws of Malaysia and having its registered office at Kuala Lumpur (as the “Sukuk Trustee”).
RECITALS
A. Pursuant to the resolutions of the Board of Directors of the Issuer passed on 19 June 2015, the Issuer has been empowered to undertake the issuance of Ringgit One Billion (RM1,000,000,000.00) in aggregate nominal value of redeemable unsecured subordinated sukuk based on the Sharī`ah principles of Musharakah (“Sukuk”). The Sukuk will mature on the Maturity Date with an option given to the Issuer (subject to the fulfilment of the Redemption Conditions) to redeem all and not a part only of the Sukuk on the fifth (5th) anniversary of the Issue Date and every Periodic Distribution Date thereafter but prior to the Maturity Date.
B. The Sukuk are constituted by a Sukuk Trust Deed dated the___________ day of 2014 entered into between the Issuer and the Sukuk Trustee.
C. By a Sukuk Trust Deed made between the Issuer and the Sukuk Trustee acting on behalf of the Sukukholders, the Issuer has declared a trust of all its rights, title and interests in and to the Trust Assets in favour of the Sukukholders upon the terms and subject to the conditions contained therein.
D. The Sukuk shall represent the Sukukholders’ undivided proportionate interest in the Trust Assets as between the Sukukholders. Each Sukuk will constitute an undivided proportionate interest in the Trust Asset and shall rank paripassu, without discrimination, preference or priority among themselves.
E. Pursuant to the Musharakah Agreement, the Sukuk Trustee is desirous of appointing the Issuer to act as manager in connection with the Musharakah Venture (including managing the Trust Assets) to provide the services and perform the duties set out in this Management Agreement on the terms and subject to the conditions of this Management Agreement.
THIS MANAGEMENT AGREEMENT WITNESSES as follows:
1. INTERPRETATION
1.1 In this Management Agreement (including the recitals):
a. Words and expressions defined and the rules of construction and interpretation set out in the Sukuk Trust Deed and the Musharakah Agreement, as such definitions and rules may be amended from time to time shall, unless otherwise provided herein or the context otherwise requires, have the same meanings herein save that, in the event that there is a conflict between a definition in the Sukuk Trust Deed, the Musharakah Agreement and in this Management Agreement, the definition in this Management Agreement shall prevail; and
b. Except so far as the context otherwise requires, “Agreement” means this Management Agreement as the same may be amended or supplemented from time to time.
2. APPOINTMENT OF THE MANAGER AND THE INCENTIVE FEE
2.1 Pursuant to the Musharakah Agreement, the Sukuk Trustee, acting on behalf of the Sukukholders, hereby appoints and gives the Issuer full authority to act as manager, subject to the terms of this Management Agreement, the Issuer has absolute discretion with respect to all the trusts, power, authorities and discretions vested in it, in relation to the Musharakah Venture (including the Trust Assets and the Business) and the Issuer hereby accepts such appointment.
2.2 The responsibilities of the Issuer (in its capacity as the manager) shall be to manage the Business as follows:
a. To manage the Business in such manner it thinks fit, subject to the provisions in the Musharakah Agreement;
b. To distribute the income received from the Musharakah Venture to the Sukuk Trustee (on behalf of the Sukukholders) and the Issuer being partners to the Musharakah Venture based on the pre-agreed profit sharing ratio set out in the Musharakah Agreement. The distribution to the Sukukholders shall be applied in the following manner and order of priority:
i. All income distributable to the Sukuk Trustee (on behalf of the Sukukholders) will be applied to pay the Sukuk Trustee (on behalf of the Sukukholders) up to the Expected Periodic Distribution generated from the Musyarakah Venture;
ii. In the event there is any excess after applying the above, such excess shall be retained by the Issuer (in its capacity as the manager) as an Incentive Fee. For the avoidance of doubt, the Issuer shall have no obligation to guarantee, pay, or distribute the income generated from the Musharakah Venture should there be no income generated except that in the event of any shortfall between the Expected Periodic Distribution and the actual income generated from the Musharakah Venture, the Issuer shall pay to the Sukuk Trustee (on behalf of the Sukukholders) the shortfall, and such payment shall constitute an Advance Part Payment of the Exercise Price.
2.3 a. The Musharakah Partners shall pay to the Issuer the Incentive Fee, if any, on each Periodic Distribution Date. Other than the Incentive Fee mentioned in Clause 2.3(b) or other fees or amounts payable to the Issuer under the other Transaction Documents, the Issuer is not entitled to any other fees under this Agreement or otherwise by virtue of its appointment as a manager hereunder.
b. Notwithstanding any other provisions in the Transaction Documents relating to the Sukuk and subject to Clause 2.3(c) below, payment of such Incentive Fee mentioned in Clause 2.3(a) above by the Sukukholders to the Issuer shall only be by way of the Sukukholders hereby agreeing that any amount of Income Entitlement that is over and above the Sukukholders’ respective Expected Periodic Distributions shall be retained by the Issuer as Incentive Fee.
c. The Incentive Fee mentioned in Clause 2.3(a) above shall belong to the Issuer immediately upon the determination and payment of Periodic Distributions in accordance with the provisions of the Sukuk Trust Deed in respect of the Sukuk.
3. OTHER DUTIES OF THE ISSUER AS THE MANAGER
3.1 The Issuer hereby agrees and undertakes with the Sukuk Trustee that in consideration of the agreement for payment of the Incentive Fee (as mentioned in Clause 2 above) from the Musharakah Partners, and as long as any Sukuk remain outstanding, the Issuer shall carry out the following duties and functions for and on behalf of the Sukukholders:
a. Exercise reasonable degree of skill and diligence in carrying out it business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices;
b. Maintain in full force and effect all relevant and necessary authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) and will promptly obtain any further authorisations, consents, rights, licences, approvals and permits (governmental and otherwise), the absence of which would give rise to a Material Adverse Effect on the Issuer and which are or may become necessary to enable it to own its assets, to carry on its business or for the Issuer to enter into or perform its obligations under this Agreement or to ensure the validity, enforceability, admissibility in evidence of the obligations of the Issuer or the priority or rights of the Sukuk Trustee and the Sukukholders under this Agreement and the Issuer shall comply with the same;
c. Obtain and maintain all takaful or insurances with respect to its assets and business against all risk that a prudent company carrying on a business similar to that of the Issuer would normally insure;
d. Diligently manage and administer the Trust Assets;
e. Maintain such records as are reasonably necessary to adequately record and maintain the Trust Assets, the income and proceeds (including dividends) generated thereby and the reinvestment of such income/proceeds.
3.2 The Issuer shall have absolute control of the collections of the Trust Assets mentioned in Clause 2.1 above and shall continue to manage such collections for itself and the Sukukholders and if necessary, to outsource any management functions as it deems fit. All decisions pertaining to the collections of the Trust Assets and the exercise of such voting rights shall be made and implemented solely by the Issuer. Notwithstanding any outsourcing, sub-contract or delegation of the performance of its obligations under this Management Agreement, the Issuer shall not thereby be released or discharged from any liability under this Management Agreement and shall remain fully responsible for the performance of the obligations of the Issuer under this Management Agreement and the performance or non-performance or the manner of performance of any sub-contractor or delegate of any of the services shall not affect the Issuer’s obligations under this Management Agreement.
4. SUKUK TRUST DEED AND PURCHASE UNDERTAKING/SALE UNDERTAKING
4.1 The Issuer hereby agrees and acknowledges that its obligations as manager as set out under Clause 3 above shall be in addition to and shall not in any way prejudice or derogate from its substantive obligations as Issuer under the Sukuk Trust Deed and as Obligor under the Purchase Undertaking/Sale Undertaking.
5. RETIREMENT OR REMOVAL OF MANAGER
5.1 The Issuer shall continue as the manager for the Sukuk holders for as long as any of the Sukuk remains outstanding. Upon repurchase in full by the Issuer of the Sukuk, the appointment of the Issuer by the Sukuk holders hereunder shall forthwith come to an end and neither the Issuer, the Sukuk Trustee nor any of the Sukuk holders shall have any further rights or obligations in respect of each other save and except for antecedent breaches.
5.2 The Sukuk Trustee shall be entitled, upon the declaration of a Dissolution Event, to terminate the appointment of the Issuer herein by giving thirty (30) days’ notice in writing to the Issuer. For the avoidance of doubt, such termination shall not entitle the Sukuk Trustee to appoint a substitute entity to act as a replacement manager.
6. THE SUKUK TRUSTEE
6.1 Declaration of trust The Sukuk Trustee hereby declares itself to be trustee for the Sukuk holders of the interests, covenants, undertakings and rights hereby created or conferred upon it for the Sukuk holders by the Issuer on the terms and conditions contained in the Sukuk Trust Deed.
6.2 Duties and powers The duties and powers of the Sukuk Trustee arising out of this Management Agreement shall be performed and exercised in accordance with the relevant provisions of the Sukuk Trust Deed, which provisions shall apply to this Management Agreement as if the same were expressly set out herein.
6.3 Retirement or removal The retirement or removal of the Sukuk Trustee as trustee hereof, and the appointment of any replacement or additional trustee hereof, shall be effected in accordance with the relevant provisions of the Sukuk Trust Deed as if the same were expressly set out herein.
7. INDEMNITY
7.1 The Issuer hereby agrees to and shall indemnify and keep the Sukuk Trustee and the Sukuk holders fully indemnified from and against all losses, charges, damage, costs, expenses and liabilities as may be incurred or suffered by them as a result of any breach or non-performance by the Issuer of its obligations hereunder.
8. OTHER PROVISIONS
8.1 The other provisions of the Sukuk Trust Deed, to the extent that they do not conflict with the provisions hereof, shall apply to this Management Agreement as if the same were expressly set out herein respectively in relation to the Sukuk, the Sukuk Trustee and the Sukuk holders.
9. MISCELLANEOUS
9.1 This Management Agreement may not be supplemented or amended in any manner except by an instrument in writing signed by the parties hereto.
9.2 In the event that any one or more of the provisions in this Management Agreement shall for any reason be held to be unenforceable, illegal, or otherwise invalid in any respect under the law governing this Management Agreement or its performance, such unenforceability, illegality, or invalidity shall not affect any other provisions of this Management Agreement and this Management Agreement shall then be construed as if such unenforceable, illegal, or invalid provisions had never been contained herein.
9.3 Each of the parties hereto undertakes with each other to do all things reasonably within their power that are necessary or desirable to give effect to the spirit and intent of this Management Agreement.
9.4 Time whenever mentioned shall be deemed to be of the essence of this Management Agreement.
9.5 The failure of a party to insist in any one or more instances upon the performance of any provision of this Management Agreement shall not be construed as a waiver or relinquishment of that party’s right to future performance of such provision and the other party’s or parties’ obligation with respect to such future performance shall continue in full force and effect.
9.6 This Management Agreement shall be governed by and be construed in accordance with the laws of Malaysia.
9.7 Each and every one of the agreements, indemnities, covenants, representations, warranties, and undertakings of any party contained in this Management Agreement shall survive the lawful termination of this Management Agreement and shall continue to be binding upon the defaulting party and shall take effect and enure for the benefit of the other party notwithstanding any lawful termination of this Management Agreement by such other party as a result of any breach by the defaulting party of any of the provisions of this Management Agreement.
10. STAMP DUTY
10.1 The Issuer has obtained the approval of the SC on February 25, 2014, with respect to the issue of the Sukuk undertaken by the Issuer and for the purposes of the Stamp Duty (Exemption) (No. 23) Order 2000 (“Order”), IT IS HEREBY DECLARED THAT this Management Agreement constitutes one of the several instruments relating to the issue of the Sukuk and is, therefore, exempt from stamp duty pursuant to the Order.
IN WITNESS WHEREOF the parties hereto have executed this Management Agreement.
10.2. SAMPLE OF AN OFFER LETTER
MURABAHAH VEHICLE TERM FINANCING FACILITY (MVTF-i)
Our Ref. No.:
Date:
Customer’s Name
Address
Dear Sir/Madam,
RE: MURABAHAH VEHICLE FINANCING FACILITY
We are pleased to offer you the above Facility subject to the followings terms and conditions:
Purpose:
Method of Financing:
Bank’s Purchase Price:
Facility Amount:
Bank’s Selling Price:
Margin of Finance:
Financing Tenure:
Ceiling Profit Rate:
Effective Profit Rate:
Monthly Installment:
Payment Mode:
Security:
Late Payment Charges (Ta`widh):
Legal Cost and Expenses:
Disbursement:
Rebate:
Takaful:
Other Conditions:
This Letter of Offer shall be valid for a period of fourteen days (14) days from the date hereof or such other extended period as we may allow. In the event that it is not duly accepted, signed and returned to us within the aforesaid period, the offer herein contained shall lapse and be of no further effect.
Yours faithfully,
For ISLAMIC BANK ABC
____________________________
Manager
cc: The solicitor
Acknowledgment of Acceptance
1 Subject to the terms and conditions of the legal documentation to be executed, I further agree that this letter embodies in writing all and the entire terms of our agreement and I hereby declare and confirm that no warranties, promises, representations, collateral agreements have been made to me and if, which is denied, that any such warranties, promises, representations or collateral agreements were made they have now lapsed and are superseded by this letter and be of no effect whatsoever.
2 I hereby acknowledge receipt and I have read and understood the contents of this Letter of Offer including all its Appendices (if any) and [I further warrant that I have sought independent legal advice in relation to this letter and] acknowledge and understand the obligations arising therefrom. I hereby further confirm the acceptance of the above terms and conditions.
Name:_______________________________
NRIC No.:_______________________________
10.3. SAMPLE OF LEGAL DOCUMENT STRUCTURE
MURABAHAH VEHICLE FINANCING FACILITY AGREEMENT THIS AGREEMENT is made this_________ day of______________, 20____.
BETWEEN
ABC ISLAMIC BANK, a company incorporated in Malaysia and having its registered office at XYZ Kuala Lumpur hereto and includes its successors in title and assigns, (“Bank”) of the one part;
AND
THE PARTY named in Item 1 of First Schedule hereto (“Customer”) of the other part.
IT IS HEREBY AGREED as follows:
1.0 DEFINITION AND INTERPRETATION
1.1 Definition
1.2 Interpretation
2.0 RECITALS
2.1 Application for Facility
2.2 Purpose of the Facility
2.3 Method of Financing
2.4 Appointment of the Customer as The Bank’s Agent
2.5 Dispute
3.0 REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties
3.2 Continuing Nature of Representations and Warranties
4.0 CONDITIONS PRECEDENT
4.1 Conditions Precedent to Disbursement
4.2 Waiver of Conditions
4.3 Discretion of the Bank on Disbursement
5.0 TENURE
5.1 Tenure
6.0 PROFIT
6.1 Fixed Rate Financing
6.2 Variable Rate Financing
7.0 PAYMENT
7.1 Payment for Bank’s Selling Price
7.2 Variation of Dates for Payment
7.3 Variation of Installment or Tenure
7.4 Rebate
8.0 REGISTRATION OF OWNERSHIP CLAIM
8.1 Endorsement of Ownership Claim
8.2 Custody of the Vehicle Registration Card
9.0 COVENANTS
9.1 Positive Covenants
9.2 Negative Covenants
10.0 MUTUAL COVENANTS
10.1 Irrevocable Consent and Authorization
11.0 REMEDIES OF THE BANK
11.1 Events of Default
11.2 Rights of Bank on Default
11.3 Procedures for Taking Possession
11.4 Procedure for Sale
11.5 Proceeds of Sale
11.6 Deficiency in Proceeds of Sale
11.7 Bank’s Right to Enforce This Agreement and Legal Proceedings Concurrently
11.8 Bank’s Right to Reinstate This Agreement
12.0 TAKAFUL
12.1 Takaful on Vehicle
12.2 Terms and Form of Takaful
12.3 Assignment of Takaful
12.4 Evidence of Takaful
12.5 Bank’s Right to Collect Proceeds and covered under Takaful
12.6 Compliance with Takaful Terms, Laws, Regulations, etc.
12.7 Application of Takaful Money
13.0 ASSIGNMENT
13.1 Absolute Assignment
13.2 Licencee
13.3 Peaceful Enjoyment
14.0 CUSTOMER’S OBLlGATIONS
14.1 Customer’s Obligations
14.2 Continuing Obligation to Pay Installment
15.0 MISCELLANEOUS
15.1 Time
15.2 Reconstruction of the Bank or Customer
15.3 Late Payment Charges (Ta`widh)
15.4 Stamp Duties
15.5 Modifications and Indulgence
15.6 Costs
15.7 Cumulative Remedies
15.8 Expenditure Incurred by the Bank for and on Behalf of the Customer
15.9 Severability
15.10 Cross Default
15.11 Suspense Account
15.12 All Payments Received to be Payments in Gross
15.13 Discharge of Indebtedness
15.14 Consolidation and Combination of Accounts
15.15 Extent of Agreement
15.16 Certificate of Indebtedness
15.17 Early Settlement
15.18 General Indemnity
15.19 Effective Date
15.20 Disclosure
15.21 Incorporation of the Provisions of Letter of Offer
15.22 Assignment and Transfer
16.0 LAW AND LEGAL PROCESS
16.1 Law
16.2 Service of Legal Process
16.3 Notices
16.4 Changes in Law
16.5 Place of Contract
16.6 Termination by the Customer Prior to Disbursement
16.7 Other Terms and Conditions of Approval (If Any)
16.8 Principal and Secondary Instruments
10.4. MASTER AGENCY AGREEMENT (AIBIM)
Association of Islamic Banking Institutions Malaysia
Dated: March 23, 2014
As approved by AIBIM Sharī`ah Advisory Committee on February 27, 2014.
DATED THIS________ DAY OF_______________________, 20____
___________________________________________________
MASTER AGENCY AGREEMENT
___________________________________________________
BETWEEN
[ Insert Name of Deposit Placing Entity ]
(Company No. •)
(“Principal”)
AND
[ Insert Name of Deposit Taking Entity ]
(Company No. •)
(“Bank”)
THIS AGREEMENT is made BETWEEN
[Insert Name of Deposit Placing Entity ] (Company No. •), a company incorporated in Malaysia under the Companies Act, 1965 and having its registered office at [Insert Registered Office of Deposit Placing Entity] and business address at [Insert Business Address of Deposit Placing Entity] and includes its successors in title and permitted assigns (“the Principal”) of the one part;
AND
[Insert Name of Deposit Taking Entity ] (Company No. •), a company incorporated in Malaysia under the Companies Act, 1965 and having its registered office at [Insert Registered Office of Deposit Taking Entity] and business address at [Insert Business Address of Deposit Taking Entity] and includes its successors in title and permitted assigns (the “Bank”) of the other part.
WHEREAS:
A. By the Interbank Murabahah Master Agreement dated [Insert date of Inter-bank Murabahah Master Agreement] (“Master Agreement”) made between the Principal and the Bank, at the request of the Principal, the parties agree, from time to time, to enter into a Murabahah arrangement whereby the Bank will, upon the Principal’s request, purchase the Merchandise on terms and conditions set out in the Master Agreement.
B. The Principal wishes to appoint the Bank as its agent to do all acts as the Principal could do itself with respect to the purchase of the Merchandise on a cash basis (“Purchase Transactions”) and the Bank is willing to accept such appointment on the terms and conditions set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Incorporated Definitions and Interpretations
All terms, expressions and interpretations defined in the Master Agreement shall unless otherwise defined herein or repugnant to the context hereto have them eanings when used or referred to herein.
1.2 Further Definitions
In this Agreement the following expression shall, unless the context otherwise requires, have the following meanings:
| Master Agreement | Means the Interbank Murabahah Master Agreement dated [Insert date of Master Agency Agreement] made between the Principal and the Bank upon the terms and conditions therein contained and includes any variation, modification and supplement thereof; and |
| Parties or Party | Means the parties or party to this Agreement. |
2. AGENCY
2.1 The Principal hereby appoints the Bank to be its agent and the Bank hereby accepts the appointment as the Principal’s agent to do and execute all acts with respect to the Purchase Transactions through purchase agreements, certificates, and other instruments as the Principal could do and execute itself and to negotiate with the Supplier and their clients on behalf of the Principal in relation thereto.
2.2 Each Purchase Transaction will be governed by the terms and conditions of the Master Agreement in accordance with the guidelines detailed in Appendix 1 hereto.
2.3 In consideration of the Bank undertaking the Purchase Transactions as the Principal’s agent, the Principal shall pay to the Bank such fees as agreed between the Principal and the Bank.
2.4 The Bank hereby agrees with the Principal that it will in performing its activities under the Master Agreement protect the interests of the Principal and to act in good faith. The Bank shall not in any circumstances whatsoever be liable to the Principal for any consequential losses, even if informed in advance of the likelihood of them being incurred (including, without limitation, economic loss, loss of goodwill, loss of business opportunity or loss of profits). The Bank’s actions on behalf of the Principal hereunder and in connection with any Purchase Transaction are for the Principal’s account and risk (save for any gross negligence or wilfull misconduct on the part of the Bank).
2.5 Subject to the Bank not being in breach of its obligations or negligent, the Principal hereby undertakes to indemnify and keep the Bank indemnified on its first demand against all losses, claims, actions, proceedings, damage, costs and expenses whatsoever brought or claimed by any party and/or incurred or sustained by the Bank as a result of the purchase of Merchandise under any Purchase Transaction as agent of the Principal or any breach by the Principal of its obligations herein. The indemnity given herein shall survive termination of this Agreement and any sums payable under it shall not be subject to any deduction whether by way of set off, counter claim or otherwise.
2.6 The Bank shall not be obliged to enter into any Purchase Transaction, nor follow any instruction of the Principal, if in the opinion of the Bank by entering into such Purchase Transaction or following such instruction, the Bank and/or any of its affiliates would be in contravention of any law, policy, rule, or regulation.
2.7 On execution of this Agreement, the Principal shall deliver to the Bank the following documents in form and substance satisfactory to the Bank:
a. a list of signatories, with specimen signatures, of those persons authorised by the Principal to give instructions to the Bank; and
b. any other relevant documents as requested by the Bank.
3. TERMINATION
3.1 This Agreement shall terminate upon termination of the Master Agreement, and without prejudice to the foregoing, either Party may terminate this Agreement by giving at least Fourteen (14) days’ notice of termination in writing to the other Party.
3.2 No termination shall affect any rights and obligations of the Parties subsisting at the date of termination.
4. MISCELLANEOUS
4.1 This Agreement is intended to be Sharī`ah-compliant. Both the Bank and the Principal hereby agree and acknowledge that their respective rights and obligations under this Agreement are intended to be subject to and in conformity with Sharī`ah principles (such Sharī`ah principles as are determined by the Sharī`ah Committee/Sharī`ah Supervisory Board of the Bank) (“Sharī`ah Principles”).
4.2 The illegality, invalidity, or unenforceability of any provision of this Agreement under the laws of any jurisdiction or under any Sharī`ah principles shall not affect the validity or enforceability of any other provision of this Agreement or other agreements and/or documents to be entered into pursuant hereto.
4.3 Subject to Clause 4.1 above, this Agreement shall be governed by and construed in accordance with the laws of Malaysia in so far as it complies with the Sharī`ah principles and each of the Parties hereto irrevocably agrees that the Courts of Malaysia shall have exclusive jurisdiction for the purpose of any proceedings arising out of or in connection with this Agreement in so far as it complies with the Sharī`ah principles and, for such purposes, irrevocably submits to the jurisdiction of such courts.
4.4 Notwithstanding the provisions of this Agreement, the Parties hereto recognise and agree that the principle of the payment of interest is repugnant to Sharī`ah Principles and accordingly, to the extent that laws of Malaysia would but for the provisions of Clause 4.3 above impose whether by contract or by statute any obligation to pay interest, the Parties hereto hereby irrevocably, unconditionally and expressly waive and reject any entitlement to recover interest from each other.
4.5 This Agreement may be executed in counterparts, each of which when executed and delivered shall constitute an original, but all the counterparts together shall be deemed to constitute one and the same instrument.
4.6 Time wherever mentioned shall be of the essence.
[The rest of this page has been intentionally left blank]
AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.
Principal
Signed by:
or and on behalf of:
[Insert Name of Deposit Placing Entity ]:
(Company No. •):
as its authorised signatory:
in the presence of:
Bank
Signed by:
for and on behalf of:
[Insert Name of Deposit Taking Entity]:
(Company No. •):
as its authorised signatory:
in the presence of:
APPENDIX 1
(which shall be read, taken, and construed as an integral part of this Agreement)
GUIDELINES
No Purchase Transaction may be entered into by the Bank or its agents, on behalf of the Principal without the Principal’s express confirmation in accordance with the provisions of the Master Agreement. The Purchase Transaction shall adhere to the following guidelines:
Eligible Instruments
A. The Bank may purchase for the Principal’s account non-precious commodities evidenced by London Metal Exchange (LME) Metal Warrants or any other recognized exchanges on which such non-precious commodities are traded (“the Merchandise”). Ownership of the Merchandise shall be evidenced to the Principal by indicia documents of title made out in the name of the Principal or the Bank (as its agent) or by crediting and debiting a commodity account.
B. The Merchandise purchased should be items that are acceptable to the Principal and the Bank and valued according to Sharī`ah. No Trade Transaction can be made in any Merchandise that consists of pork, alcoholic drinks, tobacco, narcotics, gold, silver, or any other items that are not acceptable to the Principal and the Bank.
Currency
The proceeds of the Purchase Transactions will be in Ringgit Malaysia or such other currencies as the Parties hereto may agree from time to time.
10.5. CORPORATE WAKALAH PLACEMENT AGREEMENT (AIBIM)
Association of Islamic Banking Institutions Malaysia
Dated: November 24, 2014
As approved by AIBIM Sharī`ah Advisory Committee on November 19, 2014
Dated ____________________________________
[-](1)
(as Muwakkil)
and
(2)
(as Wakil)
THIS AGREEMENT is made on the date set out in Section 1 of Schedule 1 hereto BETWEEN:
1. the party whose particulars are set out in Section 2 of Schedule 1 hereto (the “Muwakkil”); and
2. the party whose particulars are set out in Section 3 of Schedule 1 hereto (the “Wakil”),
(each a “Party” and together the “Parties”).
WHEREAS
The Muwakkil, as principal, wishes to appoint the Wakil as its agent in connection with the investment of the Muwakkil’s funds in transactions permitted under the Sharī`ah (as defined in Clause 1.1) upon the terms and subject to the conditions set out in this Agreement.
AND IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 As used herein and in the preceding recitals, the following terms shall have the meanings hereby assigned to them, unless the context expressly requires otherwise:
“Actual Profit” means the realized profit from a Transaction;
“Anticipated Profit” means the profit anticipated by the Wakil to be made with the relevant Investment Amount from a Transaction and as specified in paragraph 4 of the relevant Wakil Offer;
“Business Day” means a day on which the Muwakkil and the Wakil are open for business;
“Insolvency Proceedings” means, proceedings or a case or petition or resolution or arrangement for insolvency, bankruptcy, composition, rehabilitation, reorganisation, administration, winding-up, liquidation or other similar relief with respect to a Party or its debts or assets or the appointment of a trustee, receiver, liquidator, conservator, custodian or other similar official of a Party or any substantial part of its assets, under any bankruptcy, insolvency or other similar law or any banking, insurance, or similar law governing the operation of a Party and any analogous proceedings in any jurisdiction to which a Party is subject. For avoidance of doubt, “Insolvency Proceedings” shall not include any contested proceedings until the outcome of such proceedings is determined by court;
“Investment Amount” means, in relation to a Transaction, the amount invested by the Muwakkil and as specified in paragraph 1 of the relevant Wakil Offer;
“Investment Date” means, in relation to a Transaction, the date on which the Muwakkil shall pay the relevant Investment Amount to the Wakil and as specified in paragraph 2 of the relevant Wakil Offer;
“Loss” means the loss incurred in a Transaction;
“Maturity Date” means, in relation to a Transaction, the date on which the relevant Maturity Proceeds shall be payable by the Wakil to the Muwakkil and as specified in paragraph 3 of the relevant Wakil Offer;
“Maturity Proceeds” means, in relation to a Transaction, the proceeds of such Transaction generated by the Wakil and due to the Muwakkil on the relevant Maturity Date and calculated in accordance with Clause 5.4.1;
“Muwakkil” means the Muwakkil in its capacity as the principal of the Wakil appointed in accordance with Clause 3;
“Muwakkil Acceptance” means, in relation to a Transaction, a written notice to be sent by the Muwakkil pursuant to Clause 5.2 and substantially in the form of Schedule 3 (Form of Muwakkil Acceptance);
“Sharī`ah” means the rules, principles, and parameters of Islamic law as interpreted, ascertained, determined, or pronounced by the Wakil’s Sharī`ah advisory body;
“Transaction” means an investment made by the Muwakkil through the Wakil, the terms of which are agreed by the Parties pursuant to the issuance of a Wakil Offer and a corresponding Muwakkil Acceptance, each in accordance with this Agreement;
“Wakalah” means a contract of agency under the Sharī`ah whereby a person appoints another to perform a certain task on his behalf;
“Wakil” means the Wakil in its capacity as agent for and on behalf of the Muwakkil pursuant to its appointment in accordance with Clause 3.1;
“Wakil Fee” means the agency fee chargeable by the Wakil under this Agreement and as specified in paragraph 7 of the relevant Wakil Offer; and
“Wakil Offer” means, in relation to a Transaction, a written notice to be sent by the Wakil to the Muwakkil pursuant to Clause 5.1 and substantially in the form of Schedule 2 (Form of Wakil Offer).
1.2 In this Agreement, unless the context otherwise requires:
1.2.1 the recitals to this Agreement and all the schedules hereto shall constitute integral parts of this Agreement and shall be read together with it for all their purposes and intents;
1.2.2 words importing the singular include the plural and vice versa;
1.2.3 words importing a gender include any gender;
1.2.4 a reference to a part, clause, or Schedule is a reference to a part and clause of, and schedule to, this Agreement and a reference to this Agreement includes any schedule;
1.2.5 a reference to a document includes an amendment or supplement to, or replacement or novation of, that document;
1.2.6 where the day on or by which any action is to be done is not a Business Day, that thing must be done on or by the next Business Day;
1.2.7 a reference to an agreement includes an undertaking, agreement or legally enforceable arrangement or understanding whether or not in writing; and
1.2.8 an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and severally.
2. CONDITIONS PRECEDENT The performance of the matters set out in Section 4 of Schedule 1 hereto prior to or on execution of this Agreement shall be a condition precedent to its effectiveness. The Muwakkil hereby expressly acknowledges and declares that the said matters are intended for the benefit of the Wakil and may, therefore, be waived wholly or in part by the Wakil at its discretion without prejudicing the Wakil’s rights and such waiver shall not prejudice the Wakil from insisting on the Muwakkil’s compliance with any such waived matter at any subsequent period as the Wakil may deem fit.
3. TERMS APPLICABLE TO THE WAKALAH RELATIONSHIP
3.1 In respect of each Transaction and in consideration of the Muwakkil paying the Investment Amount to the Wakil in accordance with Clause 5.3, the Muwakkil appoints the Wakil as its agent and the Wakil accepts such appointment to invest the relevant Investment Amount in accordance with the terms of this Agreement.
3.2 Subject to Clause 9, the appointment of the Wakil pursuant to Clause 3.1 shall take effect from the relevant Investment Date and end on the relevant Maturity Date.
3.3 In respect of each Transaction, the Wakil shall invest the Investment Amount on a discretionary basis but, subject always to this Wakalah, shall be restricted to investments in transactions permitted under the Sharī`ah. The Parties agree that the Wakil may aggregate the Investment Amount with the Wakil’s pool of investments and with other amounts received by the Wakil pursuant to Transactions entered into with other counterparties from time to time such that the aggregate return of these investments achieves no less than the Anticipated Profit for such Transaction.
3.4 The Wakil shall arrange for payment and collection of funds on behalf of the Muwakkil and is hereby authorized to execute and deliver any instruments or transfers necessary in connection therewith.
3.5 In connection with its powers, discretions, authorities and duties under this Agreement, the Wakil shall act as the non-exclusive agent of the Muwakkil on a deal by deal basis to the extent expressly provided herein and in respect of Transactions from time to time entered hereunder and shall not otherwise be regarded as agent for and on behalf of the Muwakkil in any other respect whatsoever.
4. TERMS APPLICABLE TO TRANSACTIONS
4.1 The Parties agree that there is no obligation on the part of either the Wakil or the Muwakkil to enter into a Transaction except upon a binding agreement coming into effect in accordance with Clause 5.2.
4.2 The Muwakkil as principal shall bear and indemnify the Wakil against all the risks associated with the acts of the Wakil as agent for the Muwakkil including in the event the Loss exceeds the Investment Amount except those risks resulting from the Wakil’s misconduct, negligence, default, omission, or fraud.
4.3 The Muwakkil is entitled to seek from the Wakil, and the Wakil shall in such circumstances provide, the specifics of investments entered into by the Wakil on behalf of the Muwakkil pursuant to a Transaction.
4.4 Unless provided for to the contrary in Section 5 of Schedule 1 hereto, the Muwakkil irrevocably agrees not to withdraw any Investment Amount prior to the relevant Maturity Date.
4.5 Investment Transactions shall be carried out for and on behalf of the Muwakkil but in the name of the Wakil, or in the name of such other person or persons as the Wakil appoints in its discretion. For the avoidance of doubt, the Wakil shall be entitled to appoint such subagent or agents as the Wakil in its discretion may deem necessary.
4.6 The Wakil shall be entitled to the Wakil Fee notwithstanding that the Actual Profit is less than, equal to or exceeds the Anticipated Profit and in the event of a Loss.
4.7 In the event the Actual Profit is equal to or exceeds the Anticipated Profit, the Muwakkil shall be entitled to receive the Anticipated Profit less the Wakil Fee and the Wakil shall be entitled to retain the difference between the Actual Profit and the Anticipated Profit as an incentive.
5. TRANSACTION ARRANGEMENTS
5.1 Wakil Offer
On any Business Day, the Parties may by telephone or any other means such as facsimile or e-mail agree the terms of a proposed Transaction. As soon as reasonably practicable thereafter, the Wakil shall send to the Muwakkil a Wakil Offer setting out the terms of the proposed Transaction.
5.2 Muwakkil Acceptance
The Muwakkil, if it is willing to accept the Wakil Offer made by the Wakil pursuant to Clause 5.1, shall confirm the terms of the Wakil Offer by sending a Muwakkil Acceptance to the Wakil no later than one (1) Business Day before the proposed Investment Date. Upon receipt by the Wakil of such Muwakkil Acceptance, a conditional Transaction shall be constituted incorporating the terms of the Wakil Offer and the Muwakkil Acceptance.
5.3 Payments by the Investment Date
5.3.1 Pursuant to the agreement of a Transaction in accordance with Clause 5.2, the Muwakkil shall be obliged to pay the Investment Amount to the account specified in the relevant Wakil Offer not later than the relevant Investment Date.
5.3.2 The Parties agree that the payment of the relevant Investment Amount by the Muwakkil to the Wakil shall constitute an unconditional Transaction.
5.3.3 Save in the event the matter set out in Section 6 of Schedule 1 hereto applies, in which case this Clause 5.3.3 shall not apply, if the Muwakkil shall for any reason whatsoever fail to comply with Clause 5.3.1, the Transaction shall thereupon be deemed automatically cancelled and of no further effect and the Parties shall have no further rights or obligations against each other in respect thereof.
5.4 Payments on the Maturity Date
5.4.1 On the Maturity Date, if:
a. The Actual Profit is equal to or exceeds the Anticipated Profit, the Wakil shall pay to the Muwakkil an amount equal to the Investment Amount plus the Anticipated Profit less the Wakil Fee and shall retain the difference between the Actual Profit and the Anticipated Profit as its entitlement;
b. The Actual Profit is less than the Anticipated Profit, the Wakil shall pay to the Muwakkil an amount equal to the Investment Amount plus the Actual Profit less the Wakil Fee; or
c. The Transaction shall have suffered a Loss, the Wakil shall pay to the Muwakkil the Investment Amount less the Wakil Fee andthe Loss; in each case, the amount payable by the Wakil to the Muwakkil shall be the “Maturity Proceeds.”
5.4.2 All payments of the Maturity Proceeds made by the Wakil pursuant to Clause 5.4 shall be made to the account stated in the relevant Muwakkil Acceptance.
6. REPRESENTATIONS AND WARRANTIES
6.1 Each Party represents and warrants for the benefit of the other Party from the date of this Agreement that:
6.1.1 It has and will at all times for the duration of this Agreement have the legal capacity to enter into this Agreement and each Transaction thereby contemplated, and will cause all necessary corporate resolutions and authorities to be made and/or passed to ensure that the persons who purport to enter into Transactions on its behalf are able to commit it in accordance with terms of this Agreement; and
6.1.2 It has and will at all times maintain all authorisations, approvals, licences and consents required to enable it to perform its obligations under this Agreement and each Transaction.
6.2 The Muwakkil hereby represents and warrants to the Wakil that:
6.2.1 It as acted, and will at all times for the duration of this Agreement act, as a principal and not as a trustee for the purposes of entering into a Transaction contemplated by this Agreement;
6.2.2 It has entered into this Agreement and each Transaction and each transaction document after having reviewed them for the purposes of their permissibility under the law including the Sharī`ah and with, to the extent it has considered this necessary taken, independent advice from advisors specialising in the law including the Sharī`ah and:
a. Is satisfied that the provisions of this Agreement and each Transaction do not contravene the law including the Sharī`ah; and
b. Confirms that it does not have any objection, nor will it raise any objections as to the legality or validity under the law including the Sharī`ah of any provision of this Agreement or any Transaction; and
6.2.3 The source(s) of the Investment Amount will be legal and permitted under all applicable laws and regulations (including the laws and regulations relating to foreign exchange) and the Muwakkil will take all such necessary action to ensure that at all times such laws and regulations will be complied with and will not be contravened.
6.3 Neither the Wakil nor the Muwakkil has advised each other to enter into this Agreement or any Transaction entered into or to be entered into under this Agreement but that the Muwakkil has decided to enter into this Agreement and each such Transaction in reliance on its own expertise and/or after taking such third party advice as it saw or sees fit.
6.4 The above warranties shall be deemed to be repeated by:
6.4.1 The Wakil each time a Wakil Offer is sent to the Muwakkil; and
6.4.2 The Muwakkil each time a Muwakkil Acceptance is sent to the Wakil.
7. LIABILITY AND INDEMNITY OF THE AGENT
7.1 The Wakil shall not be liable to the Muwakkil in contract or tort or otherwise for any direct or indirect financial or economic losses, costs, liabilities or expenses (including, without limitation, loss of profit, loss of savings or loss of goodwill) save for those directly arising as a result of the Wakil’s misconduct, negligence, default, omission or fraud. The liability of the Wakil for any losses arising directly as a result of the Wakil’s misconduct, negligence, default, omission or fraud shall not in any event exceed the Investment Amount. The Wakil shall not be liable in relation to the misconduct, negligence, default, omission or fraud of any person, firm or company with whom Transactions are effected for the account of the Muwakkil.
7.2 Neither Party shall be liable for any failure of the other Party to duly and punctually perform any of its respective duties or obligations under this Agreement.
8. PAYMENT
8.1 All payments to be made by either Party shall be without deduction for and free from any present or future taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions or conditions of any nature imposed, levied, collected, or assessed by any taxing authority unless that Party is compelled by law to make any such deduction or withholding. In that event that Party shall ensure that such deduction or withholding does not exceed the minimum legal liability therefor and shall pay to the appropriate authorities the amount deducted or withheld and supply a tax deduction certificate to the other party.
8.2 If the payment due falls on a day that is not a Business Day, the payment shall be made on the next following Business Day.
9. TERMINATION
9.1 This Agreement shall remain in force until and unless either Party has given at least twenty-one (21) days’ notice of termination in writing to the other Party.
9.2 The Muwakkil or the Wakil, as the case may be, shall be entitled to terminate this Agreement forthwith by giving written notice to the other if:
9.2.1 The other Party becomes subject to Insolvency Proceedings; or
9.2.2 The other Party commits a breach of any of its obligations under this Agreement or any of its representations or warranties as stated in Clause 6 is false or incorrect in any material respect, and (if such breach shall be capable of remedy) shall not be remedied by such Party within fourteen (14) days of receipt of a notice served by the first mentioned Party requiring it to make good such breach;
9.2.3 There is evidence of the Wakil’s misconduct, negligence, default, omission or fraud or insolvency; or
9.2.4 The other Party is, or is deemed for the purposes of any law to be, unable to pay its indebtedness as is due or insolvent.
9.3 Termination of this Agreement will be without prejudice to any rights or obligations of a Party accrued up to the date of termination and the completion of any Transaction already executed, whichever is later.
9.4 Following any termination of this Agreement under the provisions hereof, each Party may set off any obligation owed under this Agreement against any other obligation (whether or not matured) owed between the Parties regardless of place of payment, booking branch or currency of the obligation. Written notice is to be given to the other Party after such setting off.
10. CONFIDENTIALITY
The contents of this Agreement and the transactions contemplated by this Agreement shall be kept confidential by the Parties during the currency of this Agreement and after it shall terminate save to the extent that any such matter shall become a matter of public knowledge other than through the fault of either Party and save as required by an order of court of competent jurisdiction or competent administrative authority. The foregoing prohibition shall not apply to disclosures (i) made to the legal or financial or any other professional advisors and service providers of any Party or its Affiliates; (ii) required by law or by any regulatory supervisory, governmental or quasi-governmental authorities or court or tribunal with jurisdiction over the Party or its Affiliates; (iii) made in connection with the enforcement of this Agreement; (iv) made to the Affiliates and the group of companies of either Party and parties providing processing services for the Transactions; (v) made to any actual or potential participant or sub-participant in relation to any of the Party’s rights and/or obligations under any agreement between the Parties or its assignee, novatee or transferee (and any agent or adviser of any of the foregoing); and (vi) made to any rating agency or any insurer or insurance broker of or direct or indirect provider of credit protection to any Party or its Affiliates on a need to know basis. For the purpose of this Clause, “Affiliates” are companies controlled by a Party or any company that (i) controls the Party or (ii) is under common control with the Party.
11. ASSIGNMENT
11.1 Subject to Clause 11.2, this Agreement is personal to the Parties and their respective rights and obligations hereunder shall not be assignable or transferable.
11.2 Notwithstanding Clause 11.1, either Party may assign or transfer its rights, benefits or obligations under this Agreement or under any Transaction to any company in the group of companies of which it is a member with the prior written consent of the other Party.
12. ENTIRE AGREEMENT This Agreement and the documents to be entered into pursuant to this Agreement, including any Wakil Offer and Muwakkil Acceptance, constitute the entire agreement and understanding between the Parties in relation to the subject matter hereof and the terms of this Agreement and such documents may not be rectified by reference to evidence of any prior oral agreement.
13. NOTICES
13.1 Any notice to be given in relation to this Agreement shall, except where communication by telephone is expressly agreed and contemplated, be given in writing. All mail and notices may be given by such modes and subject to such additional terms and conditions as may be agreed between the Parties at their respective addresses, telephone/facsimile/telex and e-mail addresses set out in Schedule 4 hereto and will be deemed to be received:
a. If in writing and delivered in person or by courier on the date it is delivered;
b. If sent by telex, on the date the recipient’s answer back is received;
c. If sent by facsimile transmission, on the date that transmission is received by the recipient in legible form and confirmed by a transmission report generated by the sender’s facsimile machine;
d. If sent by ordinary or registered mail, (unless there is evidence of earlier receipt) three (3) days after posting;
e. If sent by electronic messaging system (which shall include email exchanges), on the date that electronic message is received, unless the date of that delivery or that receipt as applicable is not a Business Day or that communication is delivered or received as applicable after the close of business on a Business Day, in which case that communication shall be deemed given on the first following day that is a Business Day.
13.2 a. Each Party (“Recipient”) is authorized, but not obliged, to rely upon and act on all instructions and correspondence (“Instructions”) from the other Party (“Sender”) communicated by telephone or transmitted by facsimile or other electronic mode of communication as may be mutually agreed upon by the Parties.
b. The Sender releases the Recipient which has relied upon or acted on the Instructions from the Sender and indemnifies and holds the Recipient harmless from and against all actions, suits, proceedings, costs (including legal costs), claims, demands, charges, expenses, losses and liabilities however arising (unless due to the gross negligence or wilfull default of the Recipient) in consequence of, or in any way related to:
i. The Recipient having acted in good faith in accordance with the Sender’s Instruction, notwithstanding that such instruction(s), as above have been initiated or transmitted in error or fraudulently altered, misunderstood or distorted in the lines of communication or transmission;
ii. The Recipient having refrained from acting in accordance with the Sender’s Instruction by reason of failure of either actual transmission thereof to the Recipient or receipt by the Recipient for whatever reason, whether connected to the fault or failure or other cause connected to the sending or receiving machine or otherwise; or
iii. The Sender’s failure to forward all original copies of Instruction to the Recipient within such period as the Recipient may specify.
13.3 Each Party shall be entitled to record all telephone conversations and instructions received from the other Party and such recordings and transcripts thereof shall be used by the Parties as evidence in any dispute. Each Party’s recordings shall be and remain the sole property of such Party.
14. UNENFORCEABILITY The illegality, invalidity, or unenforceability of any provision of this Agreement under the laws of any jurisdiction shall not affect or impair the validity or enforceability of any other provision of this Agreement or the other agreements and/or documents to be entered into pursuant to this Agreement, which shall be construed as if such illegal, invalid, or unenforceable provisions had never been contained in this Agreement and/the other agreements and/or documents to be entered into pursuant to this Agreement.
15. AMENDMENTS This Agreement shall not be capable of amendment or variation without the prior written agreement of both Parties to be signed by a duly authorised representative of each Party.
16. COUNTERPARTS This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Agreement.
17. SHURA (CONSULTATION) In the event of any dispute, controversy, claim, or difference whatsoever arising between the Parties at any time hereafter whether during or the continuance in effect of this Agreement or upon or after its discharge or termination touching any Clause, matter or thing herein contained or the operation or construction thereof or any matter or thing in any way connected with or relating to this Agreement or the rights, duties or liabilities of either Party under or in connection with this Agreement or any Transaction, the Parties shall first attempt to resolve them amicably through mutual consultation between them in the true spirit of Shura.
18. GOVERNING LAW AND JURISDICTION
18.1 This Agreement and each Transaction shall be governed by and construed, interpreted and applied in accordance with the laws of Malaysia provided always that in the event there is a conflict between the civil laws and the Sharī`ah on any matter whatsoever, the Sharī`ah shall prevail.
18.2 In the event of a dispute or difference of opinion whatsoever between the Parties in respect of, relating to, or in connection with the Sharī`ah, the Wakil shall seek the advice of the Sharī`ah Advisory Council of Bank Negara Malaysia thereon and such advice shall bind the Parties.
18.3 The Parties irrevocably agree that the courts of Malaysia are to have jurisdiction to settle any disputes that may arise out of or in connection with this Agreement and each Transaction. The Parties hereby irrevocably submit to the jurisdiction of the Malaysian courts and waive any objection on the ground of venue or on the ground that the proceedings have been brought in an inconvenient forum provided that this Clause shall be without prejudice to the right to bring proceedings in any other jurisdiction for the purpose of enforcement or execution of any judgement or other settlement in any other courts.
18.4 The Parties to this Agreement recognise and agree that the payment or the receipt of interest is prohibited under the Sharī`ah and, accordingly, to the extent that any legal system would (but for the provisions of this Clause) impose (whether by contract or by statute) any obligation to pay interest, the Parties hereby irrevocably and unconditionally expressly waive and reject any entitlement to recover interest from each other.
19. SUCCESSORS This Agreement shall ensure to the benefit of and bind the Parties and their respective permitted assigns and transferees.
20. RECONSTRUCTION The liabilities and or obligations created by this Agreement shall continue to be valid and binding for all purposes whatsoever notwithstanding any change by amalgamation, reconstruction or otherwise, which may be made in the constitution of the other party.
21. RIGHTS CUMULATIVE
21.1 The rights of each Party under this Agreement are cumulative and are in addition to its rights under general law.
21.2 The rights of each Party under this Agreement (whether arising under this Agreement or under general law) are not:
21.2.1 Capable of being waived or varied otherwise than by an express waiver or variation in writing;
21.2.2 Waived or varied by any failure to exercise or any delay in exercising any of such rights; and
21.2.3 Precluded from partial exercise of any of such rights.
22. FORCE MAJEURE If the fulfillment of the terms and conditions of this Agreement is rendered impossible due to force majeure events, that is extraordinary and unforeseen circumstances that are beyond the affected Party’s reasonable control, each Party shall not be liable to the other Party for any delay in performance of its obligations under the Transaction but shall not be released from the obligations under this Agreement. The Party affected by such events shall promptly inform the other Party in writing of the circumstances and shall use all reasonable endeavours to comply with its obligations or provide alternative performance reasonably acceptable to the other Party. In the event such incapacitation continues for a period of fourteen (14) days from the date of the first such force majeure event, the Parties shall have the right to terminate the Transaction fully or in part after making mutually agreeable reasonable settlements. For the avoidance of doubt, force majeure events shall include war, hostilities, any state of riots, civil commotion, earthquake, flood, fire, tempest and any other natural disaster or any event beyond the reasonable control of the Parties.
23. TIME Time wherever mentioned herein shall be of the essence.
24. ADDITIONAL TERMS The Parties hereby agree that they shall also be subject to the additional terms and conditions as set out in Schedule 5 hereto.
THERE ARE NO FURTHER CLAUSES.
SCHEDULES 1 TO 5 APPEAR IMMEDIATELY AFTER THIS PAGE.
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Particulars
| Section | Item | Particulars |
| 1. | Date of this Agreement | |
| 2. | Muwakkil | Name:
Registration No.:
Registered Office:
Business Address: |
| 3. | Wakil | Name:
Registration No.:
Registered Office:
Business Address: |
| 4. | Conditions Precedent | The delivery of duly certified true copies of the following documents by the Muwakkil to the Wakil prior to or on execution of this Agreement:
a. its charter or constitutional documents;
b. a copy of the resolution of its board of directors or equivalent management body, approving the execution, delivery and performance of this Agreement, the Transactions contemplated by it and the documents in connection therewith;
c. a list of its authorised signatories containing their specimen signatures; and
d. such other documents as the Wakil may reasonably require. |
| 5. | Premature Withdrawal of Investment Amount | Notwithstanding Clause 4.4, the Muwakkil may withdraw the Investment Account prior to the Maturity Date in which event the provisions of Clause 5.4 shall apply mutatis mutandis save that “Actual Profit” therein shall be construed to be the profit from the Transaction accrued to the day of withdrawal as computed by the Wakil. |
| 6. | Effects of Muwakkil’s non-payment of the Investment Amount if the Wakil has entered into pre-order commitments | Clause 4.2 shall apply mutatis mutandis. |
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SCHEDULE 2
Form of Wakil Offer
Deal No.:
Date: [ ]
To: [Muwakkil]
From: [Wakil]
Corporate Wakalah Placement Agreement dated [insert date of this Agreement] between ourselves and yourselves (the “Corporate Wakalah Placement Agreement”).
We refer to the Corporate Wakalah Placement Agreement (terms defined in which shall have the same meanings herein) and your instructions of today, in which you indicated your wish to place an amount with us for investment by us in transactions permitted under the Sharī`ah on your behalf:
1 Investment Amount: [ ]
2 Investment Date: [ ]
3 Maturity Date: [ ]
4 We will invest the Investment Amount in transactions expected to generate for you in aggregate an Anticipated Profit of [ ] % per annum. Any profit exceeding this will be retained by us as an incentive.
5 In respect of the Investment Amount, please authorize us to debit your account with us or credit the amount to our following account: [ ].
6 This offer is conditional upon receipt by us of the Investment Amount in cleared funds no later than the Investment Date.
7 We shall be entitled to a Wakil Fee in the sum of RM [insert amount] in accordance with the provisions of the Corporate Wakalah Placement Agreement.
________________________________
Signed for and on behalf of
________________________________
[Wakil]
Name___________________________
Title___________________________
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SCHEDULE 3
Form of Muwakkil Acceptance
Deal No.:
Date: [ ]
To: [Wakil]
From: [Muwakkil]
Corporate Wakalah Placement Agreement dated [insert date of this Agreement] between ourselves and yourselves (the “Corporate Wakalah Placement Agreement”).
1. We refer to the Corporate Wakalah Placement Agreement (terms defined in which shall have the same meanings herein) and to your Wakil Offer dated [ ].
2. We accept your offer to enter into a Transaction and hereby enter into a Transaction with you under the terms of the Corporate Wakalah Placement Agreement and the above referenced Wakil Offer.
3. Please transfer any Maturity Proceeds on the Maturity Date to the following Account: [ ]
________________________________
Signed for and on behalf of
________________________________
[Wakil]
Name___________________________
Title___________________________
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SCHEDULE 4
Particulars of Communication
Attention: [Name] – [Title]
Postal Address:
Telephone:
Fax:
SWIFT:
E-mail:
The Muwakkil
Attention:
Postal Address:
Telephone:
Fax:
SWIFT:
E-mail:
Or in accordance with such other contact details as one Party may from time to time notify in writing to the other.
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SCHEDULE 5
Additional Terms and Conditions
1 COMPENSATION (TA`WIDH)
1.1 Any payment due to the Muwakkil under this Agreement that is not paid on the due date by the Wakil shall be deemed to be a late payment. It is expressly agreed by the Parties that, in addition to the payments then due and payable, the Wakil shall pay a compensation on late payments, which shall be calculated based on the compensation rate of one percent (1%) per annum of the overdue payment or by any other method approved by the Sharī`ah Advisory Council of Bank Negara Malaysia from time to time.
1.2 Any payment due to the Muwakkil under this Agreement that is not paid on the due date by the Wakil shall be deemed to be a late payment. If any of the payments shall be required to be recovered by the Muwakkil from the Wakil through any process of law or otherwise, the Wakil shall pay (in addition to the payments then due and payable) all actual fees and expenses properly incurred in respect of such collection or recovery process including the Muwakkil’s solicitors’ fees (on a solicitor and client basis) provided that the actual fees and expenses shall not exceed the amount of the compensation rate as approved by the Sharī`ah Advisory Council of Bank Negara Malaysia from time to time.
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THERE ARE NO FURTHER SCHEDULES.
THE TESTIMONIUM APPEARS IMMEDIATELY AFTER THIS PAGE.
IN WITNESS WHEREOF, the Parties or their respective duly authorised representatives have caused this Agreement to be duly executed as of the date first above written.
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THE MUWAKKIL
| If under hand: | |
| For and on behalf of | |
| ___________________________ | ___________________________ |
| Authorised signatory | Authorised signatory |
| Name______________________ | Name______________________ |
| Title_______________________ | Title_______________________ |
| If under seal: | |
| The common seal of __________________________ was hereunto affixed in the presence of: | |
| _______________________ | _______________________ |
| Director | Director/Secretary |
| Name______________________ | Name______________________ |
| Title_______________________ | Title_______________________ |
The Wakil
| For and on behalf of | |
| ___________________________ | |
| ___________________________ | ___________________________ |
| Authorised signatory | Authorised signatory |
| Name______________________ | Name______________________ |
| Title_______________________ | Title_______________________ |
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10.6. CORPORATE MURABAHAH MASTER AGREEMENT
Association of Islamic Banking Institutions Malaysia As approved by AIBIM Sharī`ah Advisory Committee on December 11, 2014
DATED THIS_______ DAY OF_____________20__ |
__________________________________________________ |
CORPORATE MURABAHAH MASTER AGREEMENT |
___________________________________________________ |
BETWEEN |
<∗∗∗> |
(Company No. <∗∗∗>) |
(“Principal”) |
AND |
<∗∗∗> |
(Company No. <∗∗∗>) |
(“Bank”) |
THIS AGREEMENT is made
BETWEEN
The Party whose name and particulars are set out in Section 1 of Appendix 1 and includes its successors in title and permitted assigns (“Principal”) of the one part;
AND
The Party whose name and particulars are set out in Section 2 of Appendix 1 and includes its successors in title and assigns (“Bank”) of the other part.
WHEREAS:
A. The Bank is carrying on the business of Murabahah activities as part of its<∗∗∗investment activities/Islamic banking business1>, which includes buying and selling of the Merchandise (as herein defined) by way of Murabahah.
B. By an agreement dated on the date specified in Section 3 of Appendix 1(“Master Agency Agreement”) made between the Principal and the Bank, the Principal has agreed to appoint the Bank as its agent to do all acts as the Principal could do itself with respect to the purchase of the Merchandise on a cash basis (“Purchase Transactions”) and the Bank has agreed to accept such appointment on the terms and conditions set out therein.
C. The Bank will from time to time enter into arrangement with the Principal whereby, the Bank, upon the completion of each of the Purchase Transactions, <∗∗∗may/will2> purchase from the Principal the Merchandise at an agreed sale price for a spot delivery date and a deferred cash consideration on terms and conditions set out in this Agreement (“Sale Transactions”). The Principal as the seller shall always ensure all elements of Murabahah are preserved where the Principal must disclose its profit and cost of the Merchandise to the Bank as the buyer upon the Parties’ (as herein defined) agreement to enter into this transaction.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Incorporated Definitions
In this Agreement the following expression shall, unless the context otherwise requires, have the following meanings:
| Bank | Means the party whose name and particulars are set out in Section 2 of Appendix 1 and includes its successors in title and assigns; |
| Bank’s Confirmation | Means the confirmation issued by the Bank to the Principal upon the completion of the Purchase Transaction in the form set out in Appendix 5 herein or in such other form mutually agreed; |
| Bank’s Offer | Means the offer to purchase the Merchandise issued by the Bank to the Principal in the form set out in Appendix 6 herein or in such other form mutually agreed; |
| Business Day | Means a day (excluding Saturday, Sunday and public holiday) on which commercial banks are open for business in Kuala Lumpur save that to the extent it refers to any payment, in which event the expression “Business Day” shall mean a day (excluding Saturday, Sunday and public holiday) on which commercial banks are open for business in Kuala Lumpur and London, and, in relation to payments in (i) Dollars, New York; and (ii) any other currency, in the principal financial centre for foreign exchange dealings in such currency; |
| Insolvency Proceeding | Means a case or proceeding or petition or resolution or arrangement for insolvency, bankruptcy, composition, rehabilitation, reorganisation, administration, winding-up, liquidation or other similar relief with respect to a party or its debts or assets or seek the appointment of a trustee, receiver, liquidator, conservator, custodian or other similar official of a party or any substantial part of its assets, under any bankruptcy, insolvency or other similar law or any banking, insurance, or similar law governing the operation of a party and any analogous proceeding in any jurisdiction to which a party is subject to. For avoidance of doubt, “Insolvency Proceeding” shall not include any contested proceeding until the outcome of the such proceeding is determined by court; |
| Master Agency Agreement | Means the Master Agency Agreement dated on the date specified in Section 3 of Appendix 1 made between the Principal and the Bank upon the terms and conditions therein contained and includes any variation, modification and supplement thereof; |
| Merchandise | Means goods and commodities that are acceptable to the Principal and the Bank and valued according to Sharī`ah as set out in Appendix 2 hereto. The “Merchandise” shall be goods and commodities other than gold, silver or currency(s) and it also excludes pork, alcoholic drinks, tobacco, narcotics, or any other items that are not acceptable to Sharī`ah, the Principal and the Bank; |
| Parties or Party | Means the parties or party to this Agreement; |
| Principal | Means the party whose name and particulars are set out in Section 1 of Appendix 1 and includes its successors in title and permitted assigns; |
| Principal’s Acceptance | Means the Principal’s acceptance of the Bank’s Offer to purchase the Merchandise from the Principal in the form set out in Appendix 7 herein or in such other form mutually agreed; |
| Purchase Order | Means the notice to be issued by the Principal to the Bank as its agent in the form set out in Appendix 4 herein or in such other form mutually agreed indicating the Principal’s wish to purchase the Merchandise under the Purchase Transaction; |
| Purchase Transactions | Means the purchases of the Merchandise by the Principal on a cash basis on terms and conditions set out in this Agreement, and “Purchase Transaction” shall refer to any one of them; |
| Sale Transactions | Means the purchases of the Merchandise from the Principal for a spot delivery date and a deferred cash consideration on terms and conditions set out in this Agreement, and “Sale Transaction” shall refer to any one of them; |
| Sharī`ah Principles | Means the Islamic principles of banking, trade and financing as adopted and approved by the Sharī`ah Advisory Council of Bank Negara Malaysia and the Sharī`ah Committee of the Bank; |
| Supplier | Means the third party, including but not limited to commodity trading houses, commodity brokers, industrial firms and/or their suppliers, from whom the Merchandise are purchased/to be purchased under the Purchase Transactions; and |
| Trade Transactions | Means collectively the Purchase Transactions and the Sale Transactions. |
1.2 Interpretation
The headings in this Agreement are inserted for convenience only and shall not be taken, read, and construed as essential parts of this Agreement.
i. References to clauses or schedules are to be construed as references to the clauses or schedules of this Agreement.
ii. All references to provisions of any legislation or statute include references to any amendments, any statutory modification and re-enactment thereof or regulations proclamations, bylaws, published rulings, statements of policy or guidelines issued under or in relation to that statute.
iii. References to this Agreement shall include all amendments and modifications to this Agreement as shall from time to time be in force.
iv. Words importing the singular number shall include the plural number and vice versa.
v. Where two or more persons or parties are included or comprised in any expression, agreements, covenants, terms, stipulations and undertakings expressed to be made by or on the part of such persons or parties shall be deemed to be made by and be binding upon such persons or parties jointly and severally.
vi. Words importing the masculine gender shall include the feminine and neuter gender and vice versa.
vii. A reference to a document includes any amendment or supplement to, or replacement or novation of that document.
viii. A reference to “date” or “time” is a reference to that date or time in Malaysia.
ix. Any reference to “law of Malaysia” shall be construed so as to include, without limitation, any act, ordinance, statutory or municipal, rule, regulation, ruling, decree, or order enacted, issued or decreed by the Parliament of Malaysia or any bureau, minister, instrument, agency, court, regulatory body, authority, legislative body, or department thereof (including, without limitation, Bank Negara Malaysia or any taxing, fiscal, or other monetary authority thereof) and Islamic law as administered by the courts of Malaysia.
x. Other parts of speech and grammatical forms of a word or phrase defined in this Agreement shall have a corresponding meaning.
1.3 Language
English is the governing language of this Agreement and shall prevail over any translations that shall be made of this Agreement. All correspondences, notices or other documents required or permitted hereunder may be drawn up in English and drawings and diagrams shall be annotated in English.
2. DOCUMENTS
2.1 On execution of this Agreement, the Principal shall deliver to the Bank the following documents in form and substance satisfactory to the Bank, where applicable:
a. A certified true copy of the constitutional documents of the Principal;
b. A certified true copy of the resolution(s) of the Principal’s board of directors or equivalent management body approving the execution, delivery and performance of this Agreement and the documents and arrangements contemplated by it;
c. A list of signatories, with specimen signatures, of those persons authorised by the Principal to give instructions to the Bank; and
d. Any other relevant documents as requested by the Bank.
2.2 It is hereby expressly acknowledged and declared that the documents contained herein in this Clause 2.2 are inserted for the benefit of the Bank and may therefore be waived wholly or in part by the Bank at its sole and absolute discretion without prejudicing the Bank’s rights and such waiver shall not prejudice the Bank from insisting on the Principal’s compliance with any such waived requirement at any subsequent period as the Bank may think fit and necessary.
3. PURCHASE TRANSACTIONS
3.1 The Principal, pursuant to the Master Agency Agreement, has appointed the Bank to be its agent to purchase the Merchandise under the Purchase Transaction, subject to the terms and conditions of this Agreement in accordance with the guidelines detailed in Appendix 2 hereto.
3.2 The Parties may proceed to undertake the Purchase Transaction in accordance with the procedure set out in Appendix 3 hereto.
3.3 The Parties hereby agree that upon completion of the Purchase Transaction, the title, ownership, rights, and interests of the Merchandise shall immediately be transferred to the Principal, and the Bank shall immediately enable the Principal to take possession of the Merchandise.
3.4 Each Party acknowledges that the Merchandise composed in a Purchase Transaction shall be capable of physical delivery. The Principal may request for the physical delivery of the Merchandise provided that the Bank shall have received such instruction from the Principal in the Purchase Order and the Bank has received payment for the Merchandise. In the event the Bank does not receive payment for the Merchandise and/or instructions for physical delivery of the Merchandise, the Bank is expressly authorized by the Principal to dispose of the Merchandise at such time and in such manner as the Bank may decide and the Principal shall pay the Bank all losses, damage, costs and expenses incurred or sustained by the Bank as a result of the purchase of Merchandise under any Purchase Transaction as agent of the Principal or as a result of the Principal’s failure to comply with the Principal’s obligations to effect the payment of the Merchandise to the Supplier.
3.5 All costs associated with the physical delivery of the Merchandise as requested by the Principal in accordance with Clause 3.4 above, including but not limited to the delivery costs, storage costs and insurance, shall be borne by the Principal.
4. TAX
4.1 The Principal does not wish to enter into any Purchase Transaction in respect of which value added tax (“VAT”) or any other tax is payable and the Bank will not propose any purchase of this kind.
4.2 All sums payable by the Principal under any Purchase Transaction shall be deemed to be exclusive of VAT and any other tax levied in respect thereof and all sums payable to the Principal under any Sale Transaction shall be inclusive of VAT and any other tax levied in respect thereof.
4.3 For the purposes of the interpretation of this Clause 4, any reference to VAT or tax shall be a reference to value added tax charged under any United Kingdom VAT legislation or to any similar sales or turnover tax levied or imposed by the governments of the United Kingdom or Malaysia or government of any other jurisdiction where the Merchandise is traded.
5. SALE TRANSACTIONS
5.1 Unless the Principal decides to have the physical delivery of the Merchandise as set out in the Purchase Order and Provided that the Principal shall have received the Bank’s Confirmation, the Bank <∗∗∗may/will3> proceed to undertake any Sale Transaction whereby the Bank <∗∗∗may/will4> purchase the Merchandise from the Principal upon like terms (save as to price which shall be paid on deferred basis) as the Bank purchased such Merchandise on behalf of the Principal from the Supplier under the Purchase Transaction.
5.2 Each Sale Transaction shall be entered into by the Bank in accordance with the operational schedule in Appendix 3 hereto.
5.3 In respect of each Sale Transaction title, ownership, rights, and interests of the Merchandise shall pass to the Bank as purchaser thereof immediately following the passing of such title, ownership, rights and interests to the Principal under the relevant Purchase Transaction.
5.4 Subject to Clause 7.4, the Bank <∗∗∗may/will5> purchase the Merchandise from the Principal at a sale price and payable on the deferred payment date, as may be agreed between the Principal and the Bank and specified in the Principal’s Acceptance, on the basis that:
a. All payments to be made by the Bank as purchaser to the Principal pursuant to any Sale Transaction shall be made without any set-off or counterclaim, and in immediately available and transferable funds for good value on the due date thereof to the account of the Principal that the Principal shall from time to time notify the Bank; and
b. All payments to be made by the Bank as purchaser to the Principal shall be without deduction for and free from any present or future taxes, levies, imposts, duties, charges, fees, deductions, withholdings, restrictions, or conditions of any nature imposed, levied, collected, or assessed by any taxing authority unless the Bank is compelled by law to make any such deduction or withholding. In that event the Bank will ensure that such deduction or withholding does not exceed the minimum legal liability therefor and will pay to the appropriate authorities the amount deducted or withheld and supply a tax deduction certificate to the Principal.
5.5 If any payment due from the Bank as purchaser under any Sale Transaction falls on a day which is not a Business Day, the payment shall be made on the next succeeding Business Day save where the next succeeding Business Day falls in the next calendar month in which event the payment shall be due and made on the day immediately preceding the Business Day.
5.6 Neither Party hereto shall be liable to the other in respect of a failure to make a delivery of the Merchandise or payment on the due date if such failure is caused (directly or indirectly) by an error or omission of an administrative or operational nature, and funds or the Merchandise (as the case may be) were available to such Party to enable it to make the relevant payment or delivery when due, provided that such error or omission is remedied within <∗∗∗three (3)> business days of receipt of a notice served by the nondefaulting party requiring the defaulting party to rectify such failure.
5.7 Each Party hereby acknowledges that in the event the Principal decides not to accept the Bank’s offer for any reason whatsoever, the Principal hereby agrees that all costs associated with the physical delivery or the safe-keeping of the Merchandise by the Bank, including but not limited to the delivery costs, storage costs and insurance, shall be borne by the Principal.
6. REPRESENTATIONS AND WARRANTIES
6.1 Each Party hereto warrants and represents to the other Party that:
a. It has the legal capacity to enter into this Agreement and each Trade Transaction;
b. Its execution of this Agreement and each document delivered by it under this Agreement is and will be duly authorised;
c. Its obligations under this Agreement and each Trade Transaction will constitute its legal, valid and binding obligations in accordance with their respective terms (subject to generally applicable insolvency laws and principles of equity) and will not violate the terms of any agreement to which it is a party and it has waived any immunity that may be available to it, including sovereign immunity, to the fullest extent practicable;
d. It has and will at all times maintain all authorisations, approvals, licences and consents required to enable it to lawfully perform its obligations under this Agreement and each Trade Transaction;
e. (Save as otherwise disclosed prior thereto or in the case of a Purchase Transaction), it shall enter into this Agreement and each Trade Transaction pursuant to this Agreement as principal and not as agent, or in any other capacity, fiduciary or otherwise; and
f. It is duly incorporated and validly existing under the laws of its incorporation and, if relevant under such laws, is in good standing and no Insolvency Proceeding has been threatened or commenced against it (which is not frivolous or vexatious).
6.2 In addition to Clause 6.1 above,
a. The Principal hereby represents and warrants to the Bank that the source(s) of funds paid to the Bank for the Bank’s purchase under a Purchase Transaction is lawful under the laws and regulations (including the foreign exchange administration laws and regulations) of the jurisdiction, binding upon or applicable on the Principal and the Principal will take all necessary actions to ensure that such laws or regulations will not be contravened and will be complied with at all times; and
b. In respect of each Sale Transaction, the Principal hereby represents and warrants to the Bank as purchaser of the Merchandise that:
i. The Principal has not created and shall not create any charge or encumbrance, and has not granted and shall not grant any third party rights, over its interest in the Merchandise which is the subject of a Sale Transaction; and
ii. The Principal shall not take any steps that may impair the quiet possession of the purchaser of the Merchandise after completion of the sale without due cause.
6.3 The representations and warranties set out in Clause 6.1 and Clause 6.2 shall be deemed repeated by the Principal on each date on which the Trade Transaction is executed under this Agreement.
6.4 The representations and warranties set out in Clause 6.1 shall be deemed repeated by the Bank on each date on which the Trade Transaction is executed under this Agreement.
7. TERMINATION
7.1 This Agreement shall remain in force until and unless either Party has given at least <∗∗∗twenty one (21)>days’ notice of termination in writing to the other Party.
7.2 Either Party hereto shall be entitled to terminate this Agreement forthwith by giving written notice to the other if:
a. The other Party hereto becomes subject to Insolvency Proceedings; or
b. The other Party hereto commits a breach of any of its obligations under this Agreement or any of its representations or warranties as stated in Clause 6 is false or incorrect in any material respect, and (if such breach shall be capable of remedy) shall not be remedied by such Party within <∗∗∗fourteen (14)> days of receipt of a notice served by the first mentioned Party requiring it to make good such breach; or
c. The other Party is, or is deemed for the purposes of any law to be, unable to pay its indebtedness as they fall due or insolvent.
7.3 Termination of this Agreement will be without prejudice to any rights or obligations of a Party accrued up to the date of termination and the completion of any Trade Transaction already executed, whichever is the later.
7.4 Following any termination of this Agreement under the provisions hereof, each Party hereto may set off any obligation owed under this Agreement against any other obligation (whether or not matured) owed between the Parties hereto, regardless of place of payment, booking branch or currency of the obligation. Written notice is to be given to the other Party after such setting off.
8. NOTICES
8.1 Any notice to be given in relation to this Agreement shall, except where communication by telephone is expressly agreed and contemplated, be given in writing. All mail and notices may be given by such modes and subject to such additional terms and conditions as may be agreed between the Parties at their respective addresses, telephone/facsimile/telex and e-mail addresses set out in Section 4 of Appendix 1 and will be deemed to be received:
a. If in writing and delivered in person or by courier on the date it is delivered;
b. If sent by telex, on the date the recipient’s answerback is received;
c. If sent by facsimile transmission, on the date that transmission is received by the recipient in legible form and confirmed by a transmission report generated by the sender’s facsimile machine;
d. If sent by ordinary or registered mail, (unless there is evidence of earlier receipt) <∗∗∗three (3)> days after posting;
e. If sent by electronic messaging system (which shall include e-mail exchanges), on the date that electronic message is received, unless the date of that delivery or that receipt as applicable is not a Business Day or that communication is delivered or received as applicable after the close of business on a Business Day, in which case that communication shall be deemed given on the first following day that is a Business Day.
8.2
a. Each Party (“Recipient”) is authorized, but not obliged, to rely upon and act on all instructions and correspondences (“Instructions”) from the other Party (“Sender”) communicated by telephone or transmitted by facsimile or other electronic mode of communication as may be mutually agreed upon by the Parties.
b. The Sender releases the Recipient that has relied upon or acted on the Instructions from the Sender and indemnifies and holds the Recipient harmless from and against all actions, suits, proceedings, costs (including legal costs), claims, demands, charges, expenses, losses, and liabilities however arising (unless due to the gross negligence or willful default of the Recipient) in consequence of, or in any way related to:
i. The Recipient having acted in good faith in accordance with the Sender’s Instruction, notwithstanding that such instruction(s), as above have been initiated or transmitted in error or fraudulently altered, misunderstood or distorted in the lines of communication or transmission;
ii. The Recipient having refrained from acting in accordance with the Sender’s Instruction by reason of failure of either actual transmission thereof to the Recipient or receipt by the Recipient for whatever reason, whether connected to the fault or failure or other cause connected to the sending or receiving machine or otherwise; or
iii. The Sender’s failure to forward all original copies of Instruction to the Recipient within such period as the Recipient may specify.
8.3 The Bank and the Principal shall be entitled to record all telephone conversations and instructions received from the other Party and such recordings and transcripts thereof shall be used by the Parties as evidence in any dispute. Each Party’s recordings shall be and remain the sole property of such Party.
9. MISCELLANEOUS
9.1 The contents of this Agreement and the transactions contemplated by this Agreement shall be kept confidential by the Parties hereto during the currency of this Agreement and after it shall terminate, save to the extent that any such matter shall become a matter of public knowledge other than through the fault of either Party hereto and save as required by an order of court of competent jurisdiction or competent administrative authority. The foregoing prohibition shall not apply to disclosures (i) made to the legal or financial or any other professional advisors and service providers of any Party or its Affiliates; (ii) required by law or by any regulatory supervisory, governmental or quasi-governmental authorities or court or tribunal with jurisdiction over the Party or its Affiliates; (iii) made in connection with the enforcement of this Agreement; (iv) made to the Affiliates and the group of companies of either Party and parties providing processing services for the Trade Transactions of either Party; (v) made to any actual or potential participant or sub-participant in relation to any of the Party’s rights and/or obligations under any agreement between the Parties, or assignee, novatee, or transferee (any agent or adviser of any of the foregoing); and (vi) made to any rating agency or any insurer or insurance broker of, or direct or indirect provider of credit protection to any Party or its Affiliates on a need to know basis. For the purpose of this Clause, “Affiliates” are companies controlled by a Party or any company that (i) controls the Party or (ii) is under common control with the Party.
9.2 Unless in the event of reconstruction, amalgamation or merger in the constitution of the Parties or sanctioned by court order, this Agreement and the Parties’ respective rights and obligations hereunder shall not be assignable or transferable except with the prior written consent of the other Party.
9.3 This Agreement is intended to be Sharī`ah-compliant. Both the Bank and the Principal hereby agree and acknowledge that their respective rights and obligations under this Agreement are intended to be subject to and in conformity with the Sharī`ah Principles. Both Parties further agree acknowledge and undertake that no proceeds from the sale of the Merchandise or any transactions contemplated by this Agreement shall be invested and/or utilised in any non-Sharī`ah compliant securities or financial instruments.
9.4 The illegality, invalidity, or unenforceability of any provision of this Agreement under the laws of any jurisdiction or under any Sharī`ah Principles shall not affect the validity or enforceability of any other provision of this Agreement or other agreements and/or documents to be entered into pursuant hereto.
9.5 If the fulfillment of the terms and conditions of this Agreement is rendered impossible due to force majeure events, that is, extraordinary and unforeseen circumstances which are beyond the affected Party’s reasonable control, each Party shall not be liable to the other Party for any delay in performance of its obligation under the Trade Transaction but shall not be released from the obligations under this Agreement. The Party affected by such events shall promptly inform the other Party in writing of the circumstances and shall use all reasonable endeavours to comply with its obligations or provide alternate performance reasonably acceptable to the other Party. In the event such incapacitation continues for a period of <∗∗∗fourteen (14)> days from the date of the first such force majeure event, the Parties shall have the right to terminate the Trade Transaction fully or in part after making mutually agreeable reasonable settlements. For the avoidance of doubt, force majeure events shall include war, hostilities, any state of riots, civil commotion, earthquake, flood, fire, tempest and any other natural disaster or any event beyond the reasonable control of the Parties.
9.6 Subject to Clause 9.3, this Agreement shall be governed by and construed in accordance with the laws of Malaysia and each of the Parties hereto irrevocably agrees that the Courts of Malaysia shall have exclusive jurisdiction for the purpose of any proceedings arising out of or in connection with this Agreement, and, for such purposes, irrevocably submits to the jurisdiction of such courts.
9.7 Notwithstanding the provisions of this Agreement, the Parties hereto recognise and agree that the principle of the payment of interest is repugnant to Sharī`ah Principles and accordingly, to the extent that laws of Malaysia would but for the provisions of Clause 9.6 above impose whether by contract or by statute any obligation to pay interest, the Parties hereto hereby irrevocably, unconditionally and expressly waive and reject any entitlement to recover interest from each other.
9.8 This Agreement may be executed in counterparts, each of which when executed and delivered shall constitute an original, but all the counterparts together shall be deemed to constitute one and the same instrument.
9.9 It is agreed and acknowledged that this Agreement and each Trade Transaction is not intended to be, and shall not be, governed by any recognized exchanges on which the Merchandise is traded (as the same may be supplemented or amended from time to time).
9.10 Time wherever mentioned shall be of the essence.
9.11 The Parties hereto hereby agree that they shall also be subject to the additional terms and conditions as stipulated in Appendix 8.
AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.
Principal |
Signed by: |
for and on behalf of: |
<∗∗∗> |
(Company No.) |
as its authorised signatory: |
in the presence of: |
BANK |
Signed by: |
for and on behalf of: |
<∗∗∗> |
(Company No. ) |
as its authorised signatory: |
in the presence of: |
APPENDIX 1
(Which shall be read, taken, and construed as an integral part of this Agreement.)
| Section | Item | Particulars |
| 1. | Principal | Name:
Company No.:
Registered Office:
Business Address: |
| 2. | Bank | Name:
Company No.:
Registered Office:
Business Address: |
| 3. | Master Agency Agreement | Date: |
| 4. | Address for Notices and other Communication | Bank
Address:
For Attention of:
Telephone No.:
Fascimile No.:
E-mail Address:
Telex No.:
Principal
Address:
For Attention of:
Telephone No.:
Fascimile No.:
E-mail Address:
Telex No.: |
APPENDIX 2
(Which shall be read, taken, and construed as an integral part of this Agreement.)
Guidelines
No Purchase Transaction may be entered into by the Bank or its agents, on behalf of the Principal without the Principal’s express confirmation in accordance with Paragraph 3 of Appendix 3 herein. The Purchase Transaction shall adhere to the following guidelines:
Eligible Instruments
A. The Bank may purchase for the Principal’s account commodities evidenced by such documents or certificate of ownership from the Supplier (“the Merchandise”). Ownership of the Merchandise shall be evidenced to the Principal by indicia documents of title made out in the name of the Principal or the Bank (as its agent) or by crediting and debiting a commodity account.
b. The Merchandise purchased should be items that are acceptable to the Principal and the Bank and valued according to Sharī`ah Principles. No Trade Transaction can be made in any Merchandise that consists of pork, alcoholic drinks, tobacco, narcotics, gold, silver, or any other items that are not acceptable to the Principal and the Bank.
Maturity
Merchandise may be sold to the Bank as purchaser on deferred payment term for such period as mutually agreed by the Principal and the Bank.
Currency
The proceeds from any Trade Transaction will be in Ringgit Malaysia or such other currencies as the Parties hereto may agree from time to time. The Bank on best effort basis is hereby authorised to effect any necessary conversions at that Bank’s own rate of exchange then prevailing on the day the Bank purchases the Merchandise from the Supplier and the Principal hereby agrees to hold harmless the Bank from and against any loss suffered as a result of any discrepancy on the rate of exchange used for such conversion.
APPENDIX 3
(Which shall be read, taken, and construed as an integral part of this Agreement.)
Trade Transactions
1. The Principal will communicate with the Bank on a recorded line or any other equivalent mode of communication the amount desired to be transacted and the payment period. The Principal will provide the details of its account into which the deferred sale proceeds are to be deposited into.
2. The Bank will advise the Principal on a recorded line or any other equivalent mode of communication the details of the proposed Purchase Transaction which may be entered into by the Principal.
3. Upon the Principal’s acceptance of the details of the proposed Purchase Transaction, the Principal shall, on a Business Day:
a. send to the Bank a Purchase Order in form set out in Appendix 4 hereto (“Purchase Order”); and
b. deposit into the account of the Bank such funds as may be necessary for the Bank to complete the agreed purchase on behalf of the Principal and to enable the Bank to effect payment of the relevant purchase price due on such purchase date as set out in the Bank’s Confirmation.
4. Following the Bank’s receipt of the Purchase Order and the Bank’s confirmation that the funds have been transferred into the account of the Bank in accordance with Paragraph 3 above, the Bank will purchase the Merchandise held under such documentary evidence or certificate of ownership from the Supplier on the purchase date as set out in the Purchase Order or on the next Business Day following such purchase date.
5. On acquisition of the Merchandise, the Bank will send to the Principal by facsimile message the Bank’s Confirmation in the form set out in Appendix 5 hereto (“Bank’s Confirmation”).
6. The Bank <∗∗∗may/will6> subsequently thereafter offer to purchase the same from the Principal by way of offer by the Bank to the Principal in the form set out in Appendix 6 hereto (“Bank’s Offer”).
7. Subject to Paragraph 8 below, the Principal <∗∗∗may/will> sell the Merchandise to the Bank in form set out in Appendix 7 hereto (“Principal’s Acceptance”).
8. For Parties with tested telex/SWIFT: the Purchase Order, the Bank’s Confirmation, the Bank’s Offer and the Principal’s Acceptance may be sent via tested telex/authenticated SWIFT message.
9. It is agreed and acknowledged that the Parties hereto intend to be legally bound by the terms of each Trade Transaction from the moment they agree to those terms on any mode of communication. A confirmation(s) (as referred to in Paragraphs 5 and 7 above) shall be entered into as soon as practicable in the form set out in the Appendixes to this Agreement and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic system, in each case thereby evidencing a binding agreement.
APPENDIX 4
(Which shall be read, taken, and construed as an integral part of this Agreement.)
THE PURCHASE ORDER
(by facsimile or tested telex or authenticated SWIFT message)
From: <∗∗∗The Principal>
To: <∗∗∗BANK> (“the Bank”)
Date: <∗∗∗>
Re: The Purchase Order Ref No.: <∗∗∗>
We refer to the respective Master Agency Agreement and the Corporate Murabahah Master Agreement between ourselves and the Bank dated <∗∗∗> (collectively, “the MasterAgreement”). Terms defined in the Master Agreement shall have the same meaning herein.
We hereby instruct you as our agent to purchase the Merchandise on our behalf in accordance with the provisions of the Master Agreement on the following terms:
a Merchandise:
b Quantity:
c Unit Price:
d Purchase Price:
e Purchase Date:
We hereby confirm that we have deposited the Purchase Price amount into your account no. <∗∗∗>, and accordingly, we hereby authorize you to utilise the foregoing sum to pay to the relevant Supplier mentioning Reference <∗∗∗>.
Upon completion of the purchase of the Merchandise, we wish ∗:
(1) to have the Merchandise physically delivered to us or any third party other than the Bank.
(2) to sell the Merchandise to the Bank upon our receipt of the Bank’s Offer.
In acting as our agent, we hereby agree to pay you an agency fee of Ringgit Malaysia <∗∗∗> (RM<∗∗∗>) only.
Yours faithfully,
<∗∗∗The Principal>
_______________________
Duly Authorised Signatory
Name: __________
Title: __________
∗ To insert (
) where applicable.
) where applicable.APPENDIX 5
(Which shall be read, taken, and construed as an integral part of this Agreement)
THE BANK’S CONFIRMATION
(by facsimile or tested telex or authenticated SWIFT message)
From: <∗∗∗BANK> (“the Bank”)
To: <∗∗∗The Principal>
Date: <∗∗∗>
Re: The Bank’s Confirmation Ref No.: <∗∗∗>
We refer to the Corporate Murabahah Master Agreement between the Principal and our goodselves dated <∗∗∗> (“the Master Agreement”). Terms defined in the Master Agreement shall have the same meaning herein.
We also refer to the Purchase Order dated <∗∗∗> (Ref No.: <∗∗∗>).
This is to confirm that the Bank has at your specific request entered into the following Purchase Transaction as per the following details as your agent on your behalf:
a. Deal Date:
b. Ref. Number:
c. Origin:
d. Merchandise:
e. Quantity:
f. Unit Price:
g. Supplier’s Name:
h. Purchase Price:
i. Purchase Date:
∗We will utilize the funds paid by you into our account no. <∗∗∗> to pay the Purchase Price amount to the relevant Supplier mentioning Reference <∗∗∗>.
In acting as your agent, we hereby agree to accept an agency fee of Ringgit Malaysia <∗∗∗> (RM<∗∗∗>) only.
∗amend/complete as appropriate
Yours faithfully,
<∗∗∗BANK>
___________________________________
Duly Authorised Signatory
Name: __________
Title: __________
APPENDIX 6
(Which shall be read, taken, and construed as an integral part of this Agreement.)
THE BANK’S OFFER
(by facsimile and tested telex or authenticated SWIFT message)
From: <∗∗∗BANK> (“the Bank”)
To: <∗∗∗The Principal>
Date: <∗∗∗>
Re: The Bank’s Offer Ref No.: <∗∗∗>
We refer to the Corporate Murabahah Master Agreement between the Principal and our goodselves dated <∗∗∗> (“the Master Agreement”). Terms defined in the Master Agreement shall have the same meaning herein.
We hereby offer to purchase the Merchandise from you on the following terms:
a. Deal Date:
b. Ref Number:
c. Merchandise and Origin:
d. Quantity:
e. Unit Price:
f. Total Purchase Price:
g. Supplier’s Name:
h. Purchaser’s Name:
i. Purchase Date:
j. Deferred Sale Price:
k. Deferred Payment Date:
l. Profit Margin:
m. <∗∗∗m. Location7:>
If you accept our offer, we hereby purchase the Merchandise and unconditionally and irrevocably undertake to pay the Deferred Sale Price to you on the Deferred Payment Date.
Yours faithfully,
<∗∗∗BANK>
___________________________________
Duly Authorised Signatory
Name: __________
Title: __________
APPENDIX 7
(Which shall be read, taken, and construed as an integral part of this Agreement.)
THE PRINCIPAL’S ACCEPTANCE
(by facsimile and tested telex or authenticated SWIFT message)
From: <∗∗∗The Principal>
To: <∗∗∗BANK> (“the Bank”)
Date: <∗∗∗>
Re: Principal’s Acceptance Ref No.: <∗∗∗>
We refer to the Corporate Murabahah Master Agreement between ourselves and the Bank dated <∗∗∗> (“the Master Agreement”). Terms defined in the Master Agreement shall have the same meaning herein.
We hereby acknowledge that you have entered into the Purchase Transaction referred to in the Bank’s Confirmation on our behalf as our agent pursuant to the terms of the Master Agreement.
We also refer to the Bank’s Offer dated <∗∗∗> (Ref No.:<∗∗∗>) by which you have offered to purchase the Merchandise on the following terms:
a. Deal Date:
b. Ref Number:
c. Merchandise and Origin:
d. Quantity:
e. Unit Price:
f. Total Purchase Price:
g. Supplier’s Name:
h. Purchaser’s Name:
i. Purchase Date:
j. Deferred Sale Price:
k. Deferred Payment Date:
l. Profit Margin:
m. <∗∗∗m. Location:8>
We hereby sell the abovementioned Merchandise to you with the same terms specified in the Bank’s Offer abovementioned.
∗Subject to the terms of the Master Agreement, please pay all sums realised for the purchase of the Merchandise to <∗∗∗insert account details>.
∗amend/complete as appropriate
Yours faithfully,
<∗∗∗The Principal>
_____________________________________
Duly Authorised Signatory
Name: __________
Title: _________
APPENDIX 8
(Which shall be read, taken, and construed as an integral part of this Agreement.)
OTHER TERMS AND CONDITIONS
1 <∗∗∗EARLY SETTLEMENT
1.1 Subject to the provisions of Sharī`ah law, the Principal may, at any time prior to the deferred payment date, request the Bank to make early settlement of the sale price of the Merchandise to the Principal in full.
1.2 Upon receipt of an early settlement request from the Principal, the Bank may elect, in its sole discretion, whether to make such early settlement, and in any event, notify the Principal of its decision within <∗∗∗seven (7)> Business Days from its receipt of such early settlement request, failing which such early settlement request shall be deemed to have been rejected by the Bank.
1.3 In the event the Bank agrees to make early settlement of the sale price of the Merchandise to the Principal, the Bank shall agree on the amount of early settlement to be paid by the Bank, whereby such amount shall be calculated in such manner as may be agreed between the Parties9.>
2 <∗∗∗COMPENSATION (TA`WIDH)
2.1 Any payment due to a Party (“Affected Party”) under this Agreement which is not paid on the due date by the other Party (“Paying Party”) shall be a late payment. It is expressly agreed by the Parties that in addition to the payments then due and payable, the Paying Party shall pay (in addition to the payments then due and payable) a compensation on late payments, which shall be calculated based on the compensation rate of one percent (1%) per annum of the overdue payment or by any other method approved by the Sharī`ah Advisory Council of Bank Negara Malaysia from time to time.
2.2 Any payment due to a Party (“Affected Party”) under this Agreement which is not paid on the due date by the other Party (“Paying Party”) shall be a late payment. If any of the payment shall be required to be recovered by the Affected Party from the Paying Party through any process of law or otherwise, the Paying Party shall pay (in addition to the payments then due and payable) all actual fees and expenses properly incurred in respect of such collection or recovery process, including the Bank’s solicitors’ fees (on a solicitor and client basis).10 Provided that the actual fees and expenses shall not exceed the amount of the compensation rate as approved by the Sharī`ah Advisory Council of Bank Negara Malaysia from time to time.
10.7. LIST OF THE TOP COMMON AUDIT SHORTCOMINGS IN SHARĪ`AH NON-COMPLIANCE
| No. | Shortcoming | Risk Implication |
| 1. | Incorrect T&C executed for Islamic Savings account. | The T&Cs executed are not relevant to the type of account opened and this could lead to disputes on hibah or profit to be paid to the accountholders. |
| 2. | Wakalah agreement not obtained for Islamic Deposit Accounts opened under Murabahah Contract. | The transaction is considered non-Sharī`ah compliant. |
| 3. | Wakalah Agreements for the products not given to the customers as evidence of customers’ acceptance. | Any non-compliance with Sharī`ah principles with regards to “Akad,” its documentations and execution, would render the contract between the Bank and customer to be incomplete. |
| 4. | Bank Branch had used the sample Bank’s Asset Certificate (BAC) obtained from the system instead of the original BAC supplied by the bank when performing the “Akad” for financing accounts. | The contracts are considered non-Sharī`ah-compliant. |
| 5. | There were no indications that the T&C for Murabahah Deposit Accounts were accepted by the customer during the opening of MDA-i accounts as the signed T&C were not kept by Branch. | Non-compliance with Sharī`ah principles with regards to “Akad” in the documentations and execution of Islamic products. |
| 6. | The Bank Investment Certificate was not made available to customers during the signing of Letter of Offer in order to facilitate the “Akad” process. | |
| 7. | Bank Branch used conventional Fixed Deposit Application Form for opening of Islamic Term Deposit accounts. | Any non-compliance with Sharī`ah with regard to “Akad,” its documentations and execution may render the contract between the Bank and customer to be disputed. |
| 8. | Profit Sharing Ratio (PSR) not stamped on the opening account documents to evidence that it was communicated to the customers. | Conduct of transactions is not consistent with Sharī`ah principles. |
| 9. | Bank Branch did not print copies of the “T&C Governing Banking” to be given to customers during the opening of account. | Inadequate awareness of the Sharī`ah Compliance may negate the Bank’s efforts in complying with Sharī`ah compliance. |
| 10. | Bank Branch did not notify the customers on the “T&C Governing Banking Accounts for Islamic Banking” during the opening of Islamic Savings accounts. | The transactions are considered as non Sharī`ah compliant. |
| 11. | Conventional terms used in the letter offer for Islamic Financing, that is, BLR instead of BFR. | The terms used are not consistent with the Sharī`ah principles. |
1 To delete where appropriate subject to the requirements of the Bank.
2 Subject to the requirement of the Bank.
3 Subject to the requirement of the Bank.
4 Subject to the requirement of the Bank.
5 Subject to the requirement of the Bank.
6 Subject to the requirement of the Bank.
7 May be deleted subject to the requirement of the Bank.
8 May be deleted subject to the requirement of the Bank.
9 The Bank has the option to delete Clause 1 or to amend the said Clause subject to the requirement of the Bank.
10 The Bank has the option to delete either Clause 2.1 or Clause 2.2 or to amend the said Clause subject to the requirement of the Bank.
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