Guidelines for Islamic Modes of Finance, SBP

Accept any further funds on profit and loss sharing

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accept any further funds on Profit and Loss Sharing basis either for short term or long term from any source. The Client shall also not, without the prior written consent of the Institution, repay, earlier than the repayment schedule already agreed to, any other PLS Funds v) The Client shall not declare any dividend without the prior consent in writing of the Institution vi) The Client hereby covenants with the Institution that on the basis of past experience, data available with the Client and reasonable and prudent expectations about future plans of the Client, it is expected that after adding the Institution s Investment to the Client s investment, the projected pre-tax annual profit of the Client hereafter shall be ________ % p.a. (_______ percent per annum) of the total of investments of (a) the Client, (b) the Institution and (c) other PLS Funds. The aforesaid profit percentage is hereinafter referred to as the Projected Rate of Return of the Client. vii) It is hereby expressly agreed that the Client may avail the Institution s Investment as and when required, provided the outstanding amount of the Institution s Investment at any time shall not exceed the amount specified in clause 2 hereof. viii) The Client shall perform all acts and fulfill all legal requirements, which may at any time and from time to time be necessary to implement this Agreement. The Client shall also execute all documents and furnish all information which the Institution may at any time require from the Client. ix) The Client shall furnish to the Institution within one month of the end of each quarter of its accounting year, a report of its operations and statements of financial affairs and any other information in such form as may be devised by the Institution from time to time. x) Based on the Projected Rate of Return the Client shall pay at the end of each quarter of its accounting year to the Institution its share of profit worked out in accordance with the formula specified in Annexure-I. xi) Payments under sub clause (x) above shall be treated as provisional to be adjusted on final accounts being prepared for the whole accounting year in accordance with clause 5. 5. i) At the end of each accounting year of the Client, Financial Statements shall be prepared based on accounting policies consistently applied, in accordance with International Accounting and Settings/Administrator/D...idelines for Islamic Modes by SBP/musharaka/1.htm (3 of 7) [2/23/2008 11:57:15 PM]
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State Bank of Pakistan - The Central Bank Standards as applicable in Pakistan. Any change in accounting policies of the Client shall require prior written approval of the Institution. ii) Upon finalization of the annual Financial Statements in the manner provided in clause (i) above, the pre-tax net profits for that year shall be allocated among the Institution, Other PLS Funds and the Client on the basis of ratio of profit sharing stipulated in Annexure-II and subject to such conditions as contained therein. The amount so allocated is and shall be deemed to be the due share of profit of the Institution. All
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