In all societies, there is some group of owner’s funds and cash savings who don’t have any desire or ability to invest directly in profitable economic activities. On the other hand, many entrepreneurs with knowledge, experience and potential do not have the financial resources required for investment. Money and capital markets with using a variety of financial instruments, play a significant intermediary role between these two groups.

The main goals of Central Asset Management company are establishment and management SPVs, in order to facilitate the implementation of intermediary actions".

The Administrative procedure for issuance of IjaraSukuk

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  • Monday, 13 June 2016 08:47

The originator refers to one of the institutions that have permissions to give consultancy on offerings in order to determine the method of financing. The necessary measures include:

1. Signing a consultancy contract to design the financing method and to offer securities (Form Gh-1)

2. Preparing a justification report of indirect financing through issuance of IjaraSukuk by the consultant based on the forms identified by the organization (Form G-1).

3. Review of the justification report by the originator's auditor so to provide a feedback of the following issues:

Observation of rules and regulations

Conditions of the asset

Future financial information

4. Negotiation with the following entities and obtaining acceptance by them according to the organization's forms (Form Gh S-1):

Guarantor

Sale agent

Underwriter

Market maker

5. Negotiation with the seller of the asset and receiving his acceptance with regard to sale of the asset according to the organization's forms (Form Gh S-2), if the originator and the seller are not the same:

Step two:

The Consultant, as the representative of the originator, refers to SEO to obtain the principal agreement on indirect financing through the issuance of IjaraSukuk. The necessary measures, in order, include:

1. Provision of the following documentation in order to obtain the principal agreement on indirect financing through issuance of IjaraSukuk.

2. The received request will be reviewed by the SEO and if no documentation is missing, will provide a response within 30 days.

3. In case of principal agreement of the SEO, the consultant will take the next measures as the representative of the originator.

Step three:

The consultant refers to Central Asset Management Corporation to determine the issuer and to carry out the necessary measures as follows:

1. Identification and introduction of issuer by the Central Asset Management Corporation based on the principal agreement of SEO,

2. The consultant will prepare the following documentation based on the forms designed by the SEO and will take the necessary steps for the contracts to be signed by both parties.

3. After signing the contracts subject to the above paragraph and conformation of acceptance of the payment agent of the fees related to IjaraSukuk by the CSDI (public joint stock), the consultant will prepare the following contracts based on the forms designed by the SEO and will have them signed by both parties.

4. After steps 2 and 3, the consultant must prepare the contract of guarantee of payment of Ijara amounts (according to Form Gh- 6) and have them signed by both parties.

Step Four:

After obtaining the signatures for the contracts, the consultant, as the representative of the issuer, refers to the SEO to gain the permit of issuance of IajaraSukuk:

1. Providing the documentation required for obtaining the issuance permit to the SEO

2. If the presented documentation accords with the issued principal agreement and the designed forms, SEO will issue the permit of issuance of IjaraSukuk.

Step Five:

After obtaining the permit, the issuer and the consultant embarks on issuing IjaraSukuk within the permitted time frame, observing the related rules and regulation:

1. Offering IjaraSukuk through the sale agent within the specified timeframe

2. Presentation of the request for extending the deadline for selling IjaraSukuk if necessary and through the consultant while observing the rules and regulations,

3. If the entire IjaraSukukare not sold in due time and the possible extended period, the underwriter must pay the underwriting [the period for application of commitment on a daily basis as per the underwriting contract] amount in due time and purchase the remainder of the Sukuk.

4. The outcome of offering and selling the IjaraSukuk need to be reported to the SEO within 15 days, using the specified form (Form H1, and electronic file listing the purchasers of the Sukuk and according to the forms provided by the CSDI) by the consultant.

5. The SEO will investigate the outcome of offering and if accurate, it will issue the confirmation of the end of the process.

6. If offering is not approved, the issuer must, through the sale agent, return the investors' funds within 15 days of the date given by the SEO.

Step Six:

After the issuance of the conformation of the end of process of the SEO, the consultant has to take the following measures:

1. The consultant must have the contract of sale of asset by the seller to the issuer, that is prepared according to the forms designed by the organization, signed by both parties and sent a copy of the original contract to the SEO.

2. The SEO will review the contract in order to make sure it complies with the form, and will announce the result to the consultant.

3. While the steps for transferring the assets to the issuer are taking place, according to the content of the contract and related rules and regulations, the SEO will issue the confirmation of withdrawal of funds from the account of the issuer and payment to the seller.

4. When the assets are transferred to the issuer, the consultant must have the contract of lease of asset by the originator signed by the issuer and originator and send a copy of the original contract to the SEO.


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