Guidelines for Islamic Modes of Finance, SBP

All quarterly payments made by the client to the

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deemed to be the due share of profit of the Institution. All quarterly payments made by the Client to the Institution shall be deducted from the final payment to be made to the Institution. iii) In the event of annual Financial Statements of the Client, showing a loss the same shall be shares by the Institution, the Client and other PLS funds in proportion to their respective shares in the Musharaka Capital. The amount of such loss shall be either paid by the respective parties into the Musharaka Capital or shall be deducted from the Musharaka Capital at the option of the respective party. 6. The Client shall submit to the Institution its audited Financial Statements within four months from the end of its accounting year duly audited by a firm of auditors approved by the Institution. 7. At the expiry of this Musharaka Agreement or its earlier termination as provided for in this Agreement, the Client shall redeem the Institution s Investment and any unpaid share of Institution s profit. 8. Where the Musharaka under this Agreement is for a period of _____ years, the Institution shall have the right to convert into the shares of the Client the full amount of its investment outstanding at the time of such conversion. Such conversion shall, be at the Market* Value of the shares of the Client. Where Institution s entitlement under the above valuation results in a fraction of a share, fractions of half or more shall be taken as one and fractions of less than half shall be ignored. Provided that the Institution shall exercise its right under this clause only if the Client has achieved, during any three previous years of the currency of this Agreement, an average profit of less than 2/3rd of the mutually agreed Projected Rate of Profit. Provided further that whenever the Institution decides to sell the shares acquired by it under this clause, the existing shareholders of the Client (other than the Institution), shall have the first right of refusal to purchase the same at a price at which the Institution wishes to sell them. 9. The Client shall issue the letters of allotment of shares as mentioned hereinabove within thirty days of demand by the Institution and these shares may be of any class of shares of the Client as mutually agreed and the Institution shall have equal rights as enjoyed by other share holders holding shares of the same class including right of voting, transferring, subscription for right issue, bonus issue, dividends etc., under the law governing joint stock companies. 10. Subject only to the express terms of this Agreement, management and control shall primarily vested in the Client and the Client shall be responsible for the management and control of the business except when option under clause 8 or 9 above has been exercised. Provided that the Institution shall have the option in its sole discretion to nominate one or more persons on the Board of Directors of the Client.
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