Bank Islam Malaysia Additional Tier-1 Capital Sukuk RM5 Billion - Principal Terms and Conditions

Transcription

1. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (A) CORPORATE INFORMATION OF ISSUER (1) Name : Bank Islam Malaysia Berhad (“Bank Islam” or “Issuer”) (2) Address : Registered address: 32nd Floor, Menara Bank Islam 22, Jalan Perak 50450 Kuala Lumpur (3) Date of incorporation: 1 March 1983 (4) Place of incorporation : Malaysia (5) Business/Company : Registration Number (Old) 98127-X (6) Business/Company : Registration Number (New) 198301002944 (7) Residence status : Resident Controlled Company (8) Place of listing : Bursa Malaysia (9) Date of listing : 8 October 2021 (10) Principal activities of : Issuer Islamic banking business and the provision of related services (11) Issued and paid-up : share capital The issued and paid-up share capital of the Issuer as at 31 May 2022 is RM3,645,042,908.77 comprising 2,155,269,114 ordinary shares. Printed on : 27/06/2022 12:00 Page 1 of 23
2. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (12) Structure of : shareholdings and names of shareholders or, in the case of a public company, names of all substantial shareholders (13) Board of directors The substantial shareholders and their shareholding in the Issuer as at 31 May 2022 are as follows: Names of substantial shareholders Lembaga Tabung Haji Employees Provident Fund Board Amanah Saham Bumiputera No. of ordinary shares held 1,040,534,000 283,163,901 142,986,100 : No. Name 1 Tan Sri Dr. Ismail Hj. Bakar 2 Mohamed Ridza Mohamed Abdulla 3 Datuk Nik Mohd Hasyudeen Yusoff 4 Dato’ Sri Khazali Ahmad 5 Azizan Ahmad 6 Mohd Yuzaidi Mohd Yusoff 7 Mashitah Haji Osman 8 Dato’ Sri Amrin Awaluddin 9 Mohd Asri Awang 10 Nuraini Ismail 11 Datuk Bazlan Osman Additional Notes: The board of directors of the Issuer as at 31 May 2022 (14) Disclosure of the following (i) : If the Issuer or : its board members have None Printed on : 27/06/2022 12:00 Page 2 of 23 % 48.28 13.14 6.63
3. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions been convicted or charged with any offence under any securities laws, corporation laws or other laws involving fraud or dishonesty in a court of law, or if any action has been initiated against the Issuer or its board members for breaches of the same, for the past ten years prior to the lodgement/ since incorporation (for Issuer incorporated less than ten years) (ii) If the Issuer has: been subjected to any action by the stock exchange for any breach of the listing requirements or rules issued by the stock exchange, for the past five years prior to the lodgement None (B) PARTIES TO THE TRANSACTION (a) Origination No. Roles Name of parties Printed on : 27/06/2022 12:00 Page 3 of 23
4. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions 1 Issuer Bank Islam Malaysia Berhad (“Bank Islam” or “Issuer”) 2 Principal Adviser Bank Islam Malaysia Berhad 3 Lead Arranger Bank Islam 4 Solicitors Messrs. Adnan Sundra & Low (acting for the Principal Adviser/Lead Arranger (“PA/LA”) (“Solicitors”) 5 Shariah Adviser Bank Islam ("Shariah Adviser") 6 Credit Rating Agency RAM Rating Services Berhad (“RAM Ratings” or “Credit Rating Agency”) 7 Sukuk Trustee Malaysian Trustees Berhad (“MTB”) 8 Facility Agent Bank Islam 9 Other-Responsible Party to Submit Post-Issuance Notice Bank Islam (in its capacity as the Principal Adviser) (b) At the point of distribution No. Roles Name of parties 1 Issuer Bank Islam 2 Lead Manager Bank Islam and/or such other financial institution(s) as may be appointed by the Issuer 3 Central Depository Bank Negara Malaysia ("BNM") 4 Paying Agent BNM 5 Facility Agent Bank Islam 6 Sukuk Trustee MTB Printed on : 27/06/2022 12:00 Page 4 of 23
5. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (c) After distribution No. Roles Name of parties 1 Issuer Bank Islam 2 Principal Adviser Bank Islam Malaysia Berhad 3 Facility Agent Bank Islam 4 Credit Rating Agency RAM Ratings 5 Sukuk Trustee MTB 6 Central Depository BNM 7 Paying Agent BNM 8 Shariah Adviser Shariah Adviser (C) DETAILS OF FACILITY/PROGRAMME (1) Name of facility : Issuance(s) of Additional Tier-1 capital sukuk wakalah (“Sukuk Wakalah”) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi Al-Istithmar ("Sukuk Wakalah Programme"). (2) One-time issue or programme : Programme (3) Shariah principles (for sukuk) : 1. Wakalah bi al-Istithmar 2. Murabahah (via Tawarruq arrangement) (4) Facility description : (for ringgitdenominated sukuk, to provide description as The Sukuk Wakalah is intended to qualify as Additional Tier-1 regulatory capital of the Issuer and shall comply with Bank Negara Malaysia’s (“BNM”) Capital Adequacy Framework for Islamic Banks (Capital Components) issued on 9 December 2020 (as amended from time to time) (“CAFIB”) with respect to the requirements of Additional Tier-1 capital instruments. Printed on : 27/06/2022 12:00 Page 5 of 23
6. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions cleared by the SC) The holders of the Sukuk Wakalah shall be referred to as the “Sukukholders”. Pursuant to the Sukuk Wakalah Programme, Bank Islam Malaysia Berhad as the Issuer may, from time to time, issue Sukuk Wakalah whereby the nominal value of outstanding Sukuk Wakalah shall not exceed RM5.0 billion at any one time. Each Tranche (as defined below) of the Sukuk Wakalah to be issued under the Sukuk Wakalah Programme may be issued in one or more Series (as defined below). A “Tranche” means, each issuance of the Sukuk Wakalah under the Sukuk Wakalah Programme; and “Series” means, issuance(s) under the relevant Tranche of Sukuk Wakalah (if more than one Series, all having the same issue date). Subject to the relevant regulatory approval being obtained (where relevant), the transaction documents in respect of the Sukuk Wakalah Programme (“Transaction Documents”) shall provide that consent by the Sukukholders will be deemed given upfront throughout the tenure of the Sukuk Wakalah Programme in respect of: (a) issuing Sukuk Wakalah based on the Shariah principles other than the Shariah principles mentioned under Shariah principles (for sukuk) above; or (b) amending the structure described herein so as to comply with any future requirements of the Shariah principles mentioned under Shariah principles (for sukuk) above; or (c) amending the structure of any Shariah principles mentioned under Shariah principles (for sukuk) above which may be adopted by the Issuer, so as to comply with any future requirements of those Shariah principles. For avoidance of doubt, any changes pursuant to items (a) to (c) above are subject to the prior endorsement of the Shariah Advisory Council (“SAC”) of the Securities Commission Malaysia (“SC”) and the Shariah Adviser, and such changes shall be further notified to the SC. The issuance of the Sukuk Wakalah shall be effected as follows: 1) Pursuant to a wakalah agreement (“Master Wakalah Agreement”) entered into between the Sukuk Trustee (acting on behalf of the Sukukholders) and the Issuer, the Sukuk Trustee shall appoint the Issuer to act as its agent (“Investment Wakeel”) to invest the Sukuk Proceeds (as defined herein) in Wakalah Investments (as defined herein). The Issuer shall issue the Sukuk Wakalah from time to time and the Sukukholders shall subscribe to the Sukuk Wakalah by paying the issue price (“Sukuk Proceeds”). 2) The Issuer, in its capacity as the Investment Wakeel, shall declare a trust over the identified assets which shall comprise the Sukuk Proceeds, the Wakalah Investments acquired using the Sukuk Proceeds and the rights, title, interest, entitlement and benefit in, to and under the relevant Transaction Documents for the benefit of the Sukukholders (“Trust Assets”). The Sukuk Wakalah shall represent the Sukukholders’ undivided and proportionate beneficial interest in the Trust Assets. The Investment Wakeel shall invest the Sukuk Proceeds received from the Sukukholders into the relevant investment portfolio which shall comprise: Printed on : 27/06/2022 12:00 Page 6 of 23
7. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (a) Shariah-compliant Business (as defined herein); and (b) Commodity Murabahah Investment (as defined herein). The investments described in items 2(a) and (b) above shall collectively be referred to as the “Wakalah Investments”. “Shariah-compliant Business” means the whole Shariah-compliant general business activities of the Issuer from time to time, which shall refer to the Islamic banking operations and/or general corporate purpose of the Issuer. The investment into the Shariah-compliant Business shall be based on proportionate basis via percentage (mal musha`). “Commodity Murabahah Investment” means Shariah-compliant commodities ("Commodities") purchased and sold under the Shariah principle of Murabahah (via a Tawarruq arrangement). Shariah-compliant Business Pursuant to an investment agreement between the Investment Wakeel and the Issuer, the Investment Wakeel shall invest part of the Sukuk Proceeds into the Shariah-compliant Business. The value of investment in the Shariah-compliant Business shall be at least 33% of the aggregate value of the Wakalah Investments, subject to the valuation principles set out in the Master Wakalah Agreement. For the avoidance of doubt, the above ratio of at least 33% of the value of the Wakalah Investments is only applicable at the point of initial investment for each Series of the Sukuk Wakalah, and does not need to be maintained throughout the tenure of the Sukuk Wakalah. However, the Investment Wakeel shall ensure that the Shariah-compliant Business shall at all times be a component of the Wakalah Investments. For avoidance of doubt, there will not be an overlap over the Wakalah Investments for each tranche under the Sukuk Wakalah Programme. Commodity Murabahah Investment The remaining balance of the Sukuk Proceeds shall be invested into the Commodity Murabahah Investment. The Commodity Murabahah Investment shall be effected as follows: (i) The Issuer as the buyer (“Buyer”) shall issue a purchase order (“Purchase Order”) to the Investment Wakeel and the Sukuk Trustee (both acting on behalf of the Sukukholders) with an irrevocable and unconditional undertaking to purchase the Commodities from the Investment Wakeel (acting on behalf of the Sukukholders) at the Deferred Sale Price (as defined herein). The issuance of Purchase Order by the Buyer to the Investment Wakeel and the Sukuk Trustee is pursuant to the commodity murabahah investment master agreement ("Commodity Murabahah Investment Master Agreement"). The parties to the Commodity Murabahah Investment Master Agreement are as below: a) The Issuer as the Buyer; b) The Issuer as the Investment Wakeel; Printed on : 27/06/2022 12:00 Page 7 of 23
8. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions c) The Facility Agent; and d) The Sukuk Trustee. (ii) Pursuant to the Purchase Order, the Investment Wakeel (on behalf of the Sukukholders), through the Facility Agent, will purchase, via the commodity trading participant (“CTP”), the Commodities on spot basis from a commodity supplier (“Commodity Supplier”) in a commodity trading platform as may be determined by the Issuer and acceptable to the Shariah Adviser, at a purchase price equivalent to the remaining balance of the Sukuk Proceeds in excess of the amount invested in the Shariah-compliant Business (“Commodity Purchase Price”). The Commodity Purchase Price shall be in line with the asset pricing requirements stipulated under the LOLA Guidelines. (iii) Upon acquiring the Commodities, the Investment Wakeel (on behalf of the Sukukholders), through the Facility Agent, will thereafter sell those Commodities to the Buyer for a price equivalent to the Commodity Purchase Price plus the profit margin (“Deferred Sale Price”) which shall be payable on deferred payment basis. For the avoidance of doubt, the Deferred Sale Price shall be an amount equal to the nominal value of the Sukuk Wakalah. The Deferred Sale Price shall be payable for a period of 99 years, and the Issuer shall be given the right to defer such payment upon request made by the Issuer or if required by BNM subject to the issuance notice of deferment. (iv) Upon the purchase of the Commodities, the Buyer or its agent (the Facility Agent) via the CTP, will immediately sell the Commodities to commodity buyer (other than the Commodity Supplier) in a commodity trading platform as may be determined by the Issuer and acceptable to the Shariah Adviser, on spot basis for cash, equivalent to the Commodity Purchase Price. 3) During the tenure of the Sukuk Wakalah, any income generated from the Wakalah Investments up to the Expected Periodic Distribution Amount (as defined herein) shall be distributed periodically in the form of periodic distributions (“Periodic Distributions”) based on the expected periodic distribution rate (“Periodic Distribution Rate”). The Periodic Distributions shall be made on each Periodic Distribution Date (as defined herein). Any returns from the Wakalah Investments in excess of the Expected Periodic Distribution Amount distributable under the Sukuk Wakalah shall be waived by the Sukukholders and retained by the Investment Wakeel as incentive fee for its services in managing the Wakalah Investments under the Master Wakalah Agreement. 4) The Issuer as the obligor (“Obligor”) shall grant a master purchase undertaking (“Purchase Undertaking”) to the Sukuk Trustee (for the benefit of the Sukukholders), in which the Obligor shall purchase the Sukukholders’ undivided and proportionate beneficial interest in the Shariah-compliant Business at the relevant Exercise Price (as defined herein) by entering into the sale agreement (“Sale Agreement”), upon a declaration of a Dissolution Event (as defined in the section entitled “Events of default or enforcement events, where applicable, including recourse available to investors”) ("Dissolution Declaration Date”) or the occurrence of the Capital Disqualification Event (as defined in item (k) of the section entitled “Other terms and conditions”) (as the case maybe). 5) The Sukuk Trustee (on behalf of the Sukukholders) shall issue a master sale Printed on : 27/06/2022 12:00 Page 8 of 23
9. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions undertaking (“Sale Undertaking”) to the Issuer, in respect of the Sukuk Wakalah, where the Sukuk Trustee (on behalf of the Sukukholders) shall sell the Sukukholders’ undivided and proportionate beneficial interest in the Shariahcompliant Business at the relevant Exercise Price upon redemption of the respective Sukuk Wakalah pursuant to the Call Option (as defined in the section entitled “Call option and details, if applicable”), Tax Redemption (as defined in the section entitled “Provision on early redemption, if applicable”) and Regulatory Redemption (as defined in the section entitled “Provision on early redemption, if applicable”) (in accordance to the terms as set out herein) by entering into the Sale Agreement. 6) Pursuant to the Purchase Undertaking or the Sale Undertaking, the proceeds from the Wakalah Investments which comprise the Deferred Sale Price, the Exercise Price and any returns generated from the Wakalah Investments shall be utilised to redeem the Sukuk Wakalah at the relevant Dissolution Distribution Amount (as defined in item (j) of the section entitled “Other terms and conditions”), subject to no disqualification of the Sukuk Wakalah as Additional Tier-1 capital of the Issuer. 7) The relevant trust in respect of the Trust Assets will be dissolved and the relevant Sukuk Wakalah held by the Sukukholders will be cancelled upon the occurrence of the following events: (i) full payment of all amounts due and payable under the Sukuk Wakalah; (ii) a write-off pursuant to Non-Viability Event (as defined in item (o) of the section entitled “Other terms and conditions”) in respect of the Sukuk Wakalah; or (iii) a write-off pursuant to Breach of CET-1 Capital Ratio (as defined in item (n) of the section entitled “Other terms and conditions”) in respect of the Sukuk Wakalah. 8) Any excess in respect of proceeds from the Wakalah Investments over or above the Dissolution Distribution Amount of the relevant Sukuk Wakalah shall be waived by the Sukukholders and retained by the Investment Wakeel as the incentive fee. The “Exercise Price” refers to the price for the purchase or sale of the Sukukholders’ undivided and proportionate interest in the Shariah-compliant Business under the relevant Sukuk Wakalah pursuant to exercise of the Purchase Undertaking or Sale Undertaking respectively, and shall be equal to the market or fair value of the Shariah-compliant Business at the Dissolution Declaration Date or Capital Disqualification Event date or relevant redemption date pursuant to the Call Option, Tax Redemption and Regulatory Redemption, which shall be determined based on the valuation principles as set out in the Master Wakalah Agreement. The “Expected Periodic Distribution Amount” refers to the expected periodic distribution amount based on the Periodic Distribution Rate payable on any relevant Periodic Distribution Date on nominal value of such Sukuk Wakalah on the basis of the actual number of days over three hundred and sixty five (365) days in the relevant period. The “Periodic Distribution Date” refers to the dates for the payment of Periodic Distributions which is a date falling semi-annually or such other period to be agreed between the Issuer and the Lead Manager prior to each issuance of the Sukuk Wakalah. Printed on : 27/06/2022 12:00 Page 9 of 23
10. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions A diagrammatical illustration and description on the transaction structure of the Sukuk Wakalah Programme is set out in Annexure. (5) Currency : Ringgit (6) Expected facility/ programme size : Up to MYR 5,000,000,000.00 (7) Option to upsize (for : programme) Yes Additional Notes: The Issuer shall have the option to upsize the Sukuk Wakalah Programme at any time and from time to time provided that the following conditions have been fulfilled: (i) The relevant regulatory approvals (including but not limited to the approval from BNM) where applicable, all necessary corporate authorisation and other consents have been obtained by the Issuer; (ii) such upsizing will not result in any adverse impact on the rating of the Sukuk Wakalah Programme; (iii) the Issuer has complied with the relevant requirements under the LOLA Guidelines in relation to such upsizing; (iv) such other terms and/or conditions as may be advised by solicitors to be appointed for such exercise (if any); and (v) if applicable, execution of the relevant documentation to evidence the upsizing of the Sukuk Wakalah Programme. The Trust Deed will provide that the Sukukholders have consented to any upsizing of the Sukuk Wakalah Programme limit from time to time. Accordingly, no further consent will be required from the Sukukholders or the Sukuk Trustee or any other party under the Sukuk Wakalah Programme for the Issuer to exercise the option to increase the limit of the Sukuk Wakalah Programme from time to time. (8) Tenure of facility/ programme : (9) Availability period for : debt/ sukuk programme Perpetual The Sukuk Wakalah are available for issuance upon the completion of the relevant Transaction Documents and fulfilment of all conditions precedent to the satisfaction of the Lead Arranger (“LA”) (unless otherwise waived or deferred by the LA) as set out in the relevant Transaction Documents, so long as the Sukuk Wakalah Programme subsists. The first issuance of the Sukuk Wakalah under the Sukuk Wakalah Programme shall be made within ninety (90) business days from the date of lodgement of the required information and documents in relation to the Sukuk Wakalah Programme Printed on : 27/06/2022 12:00 Page 10 of 23
11. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions with the SC (“Lodgement”) as required under the LOLA Guidelines. (10) Clearing and : settlement platform (11) Mode of issue : (12) Selling restrictions : BNM. Private/direct placement Bought deal Book building (i) At issuance: Part I of Schedule 6 of the Capital Markets & Services Act, 2007 (CMSA) Part I of Schedule 7 of the CMSA Read together with Schedule 9 of CMSA (ii) After issuance: Part I of Schedule 6 of the CMSA Read together with Schedule 9 of CMSA Additional Notes: Selling Restriction at Issuance: The Sukuk Wakalah under the Sukuk Wakalah Programme may only be offered, sold, transferred or otherwise disposed directly or indirectly to persons to whom an offer or invitation to subscribe the Sukuk Wakalah and to whom the Sukuk Wakalah may be made and to whom the Sukuk Wakalah are issued falling within Part 1 of Schedule 6 (or Section 229(1)(b)) of the Capital Markets and Services Act 2007 as amended from time to time (“CMSA”) and Part 1 of Schedule 7 (or Section 230(1)(b)) of the CMSA, to be read together with Schedule 9 (or Section 257(3)) of the CMSA. Selling Restrictions After Issuance: The Sukuk Wakalah under the Sukuk Wakalah Programme may only be offered, sold, transferred or otherwise disposed directly or indirectly to persons to whom an offer or invitation to purchase the Sukuk Wakalah falling within Part 1 of Schedule 6 (or Section 229(1)(b)) of the CMSA to be read together with Schedule 9 (or Section 257(3)) of the CMSA. (13) Tradability and transferability : Size in Ringgit which are tradable and transferable: MYR 5,000,000,000.00 Size in Ringgit which are non-tradable and non-transferable: Not applicable Size in Ringgit which are restricted transferability: Not applicable (14) Secured/combinatio : Unsecured Printed on : 27/06/2022 12:00 Page 11 of 23
12. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions n of unsecured and secured, if applicable (15) Details of guarantee, : if applicable Not guaranteed (16) Convertibility of : issuance and details of the convertability Non-convertible (17) Exchangeability of : issuance and details of the exchangeability Non-exchangeable (18) Call option and : details, if applicable Each Series of the Sukuk Wakalah issued under the Sukuk Wakalah Programme may have a call option (to be determined prior to the relevant issue date) (“Call Option”) to allow the Issuer, at its option, to redeem (in whole or in part) that Series of the Sukuk Wakalah on the Call Date (if applicable for the relevant Series) at the Dissolution Distribution Amount. “Call Date” means, any Periodic Distribution Date on or after the fifth (5th) anniversary of the issue date of that Series of the Sukuk Wakalah. (19) Put option and : details, if applicable No put option (20) Details of covenants : Positive Covenants Positive Covenants include but are not limited to: (i) the Issuer shall obtain and maintain in full force and effect all relevant and necessary authorisations, consents, rights, licenses, approvals and permits (governmental and otherwise) and will promptly obtain any further authorisations, consents, rights, licenses, approvals and permits (governmental and otherwise) which is or may become necessary to enable it: (a) to own its assets and to carry on and to operate its business; (b) to enter into or perform its obligations under the Transaction Documents to which it is a party; and (c) to ensure the legality, validity, enforceability, admissibility in evidence of its obligations or the priority or rights of the Sukukholders under the Transaction Documents; (ii) the Issuer shall execute all further documents and do all further acts and things as may be required at any time or times to give effect to the terms and conditions Printed on : 27/06/2022 12:00 Page 12 of 23
13. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions of the Sukuk Wakalah; (iii) the Issuer shall keep proper books and accounting records at all times and prepare its financial statements on a basis consistently applied in accordance with approved accounting standards in Malaysia and those financial statements shall give a true and fair view of the results of its operations for the period to which the financial statements are made, and provide the Sukuk Trustee and any person appointed by it (e.g. auditors) access to such books and accounts to the extent permitted by law; (iv) the Issuer shall promptly and at all times comply with all provisions and the terms and conditions of the Transaction Documents, perform and carry out all its obligations in accordance with the terms and conditions of the Transaction Documents and ensure that it shall immediately notify the Sukuk Trustee in the event that it is unable to fulfil or comply with any of the provisions of the Transaction Documents; (v) the Issuer shall ensure that conditions subsequent (if any) in relation to the issuance of any Series of the Sukuk Wakalah are complied with in accordance with the terms and conditions of such Series of the Sukuk Wakalah and that any request from the Issuer to add, extend, vary or otherwise modify any such conditions subsequent shall be subject to the approval of the Sukukholders of the relevant Series of the Sukuk Wakalah by way of extraordinary resolution; (vi) the Issuer shall exercise and cause to be exercised reasonable diligence in carrying out its business and affairs in a proper and efficient manner, in accordance with sound financial and commercial standards and in accordance with its Constitution; (vii) the Issuer shall comply with all applicable laws to which it may be subject for the purposes of or in connection with the transactions contemplated by the Sukuk Wakalah Programme, including the provisions of the CMSA, circulars, conditions or guidelines issued by the SC or any other relevant authority from time to time; (viii) the Issuer shall at all times maintain a paying agent, or its equivalent, who is based in Malaysia; (ix) the Issuer shall cause and procure the facility agent to notify the Sukuk Trustee if the paying agent does not receive payment from the Issuer on the due dates as required under the Trust Deed and the terms and conditions of the Sukuk Wakalah; (x) the Issuer will ensure that the provisions of the Information Memorandum do not contain any matter which is inconsistent with the provisions of the Trust Deed and the terms and conditions of the Sukuk Wakalah; and (xi) such other positive covenants as required under the Trust Deeds Guidelines or as may be advised by the Solicitors and mutually agreed between the PA/LA and the Issuer. Negative covenants No negative covenant Financial Covenants Printed on : 27/06/2022 12:00 Page 13 of 23
14. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions No financial covenant Information Covenants Information Covenants include but are not limited to: (i) The Issuer shall deliver to the Sukuk Trustee: (a) as soon as they become available (and in any event within one hundred and eighty (180) days after the end of each financial year) copies of its audited financial statements for that financial year; (b) as soon as they become available (and in any event within one hundred and twenty (120) days after the end of each half year of its financial year) copies of its unaudited half yearly financial statements for that period which are duly certified by any one of the directors; (c) at least on an annual basis, a certificate confirming (i) that it has complied with all its obligations under the Transaction Documents and the terms and conditions of the Sukuk Wakalah, (ii) and that there did not exist or had not existed, from the date the Sukuk Wakalah were issued or date of the previous certificate as the case may be, any Dissolution Event, and if such is not the case to specify the same; (d) any other account(s), report(s), notice(s), statement(s) or circular(s) issued to the Issuer’s shareholder(s) which are material and substantial to or necessary for the Sukukholders to make informed investment decisions within thirty (30) days after the same has been issued; and (e) any information which the Sukuk Trustee may from time to time reasonably require in order for the Sukuk Trustee to discharge their duties and obligations under the Transaction Documents, relating to the Issuer’s affairs to the extent permitted by law. (ii) The Issuer shall immediately notify the Sukuk Trustee in the event that the Issuer becomes aware of the following: (a) any Dissolution Event; (b) any circumstance that has occurred that would materially prejudice the Issuer; (c) any substantial change in the nature of the business of the Issuer; (d) any change in withholding tax position or tax jurisdiction of the Issuer; (e) any change in the condition of the Issuer and of any litigation or other proceedings of any nature whatsoever being threatened or initiated against the Issuer before any court or tribunal or administrative agency which have a Material Adverse Effect; (f) any change in the utilisation of proceeds raised from the issuance of the Sukuk Wakalah as set out in the relevant Transaction Documents; and (g) any other matter that may materially prejudice the interest of the Sukukholders; and (iii) Such other information covenants as required under the Trust Deeds Guidelines or as may be advised by the Solicitors and mutually agreed between the PA/LA and the Issuer. Printed on : 27/06/2022 12:00 Page 14 of 23
15. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions For the purposes of this Lodgement Form, the expression "Material Adverse Effect" means any material adverse effect on: (a) the business, prospects, condition (financial or otherwise) or results of the operations of the Issuer; (b) the ability of the Issuer to perform any of its obligations under any of the Transaction Documents to which it is a party; and/or (c) the rights of or benefits or remedies available to the Sukuk Trustee or any Sukukholders under any provision of the Transaction Documents. (21) Details of : designated account, if applicable (22) Name of credit rating: agency, credit rating and amount rated, if applicable (23) Conditions precedent : No designated account No. Credit rating Credit rating Final/ agency indicative rating Name of Class/ Series/ Tranche Amount rated 1 RAM Rating A3 Services Bhd (RAM) Not applicable MYR 5,000,000,0 00.00 Final rating Conditions precedent for the availability of the Sukuk Wakalah Programme and for issuance of any Series under the Sukuk Wakalah Programme include without limitation, the following: A. Conditions precedent to the availability of the Sukuk Wakalah Programme (i) Evidence that all relevant regulatory approvals / acknowledgements have been obtained, including but not limited to written approval from BNM, endorsement from the SAC of the SC in respect of the Sukuk Wakalah Programme and the acknowledgement by the SC on the Lodgement; (ii) Shariah Pronouncement from the Shariah Adviser in respect of the structure and mechanism of the Sukuk Wakalah and that the Transaction Documents being in compliance with Shariah; (iii) The Transaction Documents shall have been duly executed, and where applicable, stamped (unless otherwise exempted from stamp duty) and presented for registration (where applicable); (iv) Certified true copies of each of: (a) the certificate of incorporation of the Issuer; (b) the Constitution of the Issuer; and (c) the latest Forms 24, 44 and 49 (or the equivalent forms under the Companies Act 2016 (“Companies Act”)) of the Issuer; (v) Where applicable, certified true copy(ies) of the board resolutions from the Printed on : 27/06/2022 12:00 Page 15 of 23
16. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions Issuer authorising, amongst others, the issuance of the Sukuk Wakalah by the Issuer, the execution of the Transaction Documents to which it is a party and any other relevant agreements in relation to the issuance of the Sukuk Wakalah; (vi) List of the authorised signatories of the Issuer and their respective specimen signatures; (vii) Documentary evidence that the Sukuk Trustees’ Reimbursement Account has been opened and the deposit of Ringgit One Hundred Thousand (RM100,000.00) has been made therein; (viii) Copies of the results of the search made with the Companies Commission of Malaysia (“CCM”) on the Issuer; (ix) Copies of the results of the search made with the Insolvency Department of Malaysia at the time of such search revealing that the Issuer has not been woundup or in the absence of such search results, a statutory declaration by any director of the Issuer declaring that the Issuer has not been wound up; (x) Satisfactory evidence of payment or arrangement for payment of all relevant fees, costs and expenses relating to the Sukuk Wakalah Programme have been or will be made; (xi) Documentary evidence that a legal due diligence in relation to the Sukuk Wakalah Programme has been undertaken and conducted to the satisfaction of the PA/LA; (xii) Legal opinion from the Solicitors with respect to the legality, validity and enforceability of the Transaction Documents and confirmation that all conditions precedent set out in the relevant Transaction Document have been fulfilled unless otherwise waived by the LA; and (xiii) Such other conditions precedent as may be advised by the Solicitors and mutually agreed by the Issuer and the LA. B. Conditions precedent prior to each issuance of Sukuk Wakalah (i) Evidence that prior notification has been given to BNM for the issuance of Sukuk Wakalah; and (ii) Such other conditions precedent as may be reasonably required by the Lead Manager or advised by the solicitors, and mutually agreed by the Issuer and the Lead Manager. (24) Representations and : warranties Including but not limited to the following: (i) The Issuer is a company duly incorporated and validly existing under the laws of Malaysia and has the power and authority to carry out its business; (ii) The Issuer has the power to enter into, exercise its rights and perform its obligations under the Transaction Documents; (iii) The Issuer’s entry into, exercise of its rights and performance under the Transaction Documents do not and will not violate any existing law or agreements to which it is a party; (iv) The issuance of the Sukuk Wakalah has been duly authorised, and when Printed on : 27/06/2022 12:00 Page 16 of 23
17. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions issued and delivered pursuant to the Transaction Documents, will have been duly executed, authenticated, issued and delivered and will constitute valid and binding obligations of the Issuer enforceable in accordance with its terms; (v) The Issuer has all licenses, franchises, permits, authorisations, approvals, orders and other concessions of and from all governmental and regulatory officials and bodies that are necessary to own or lease its properties and conduct its business, other than where the failure to obtain such licenses, franchises, permits, authorisations, approvals, orders and other concessions would not have a Material Adverse Effect; (vi) The Transaction Documents create valid and binding obligations which are enforceable on and against the Issuer; (vii) All necessary actions, authorisations and consents required under the Transaction Documents have been taken, fulfilled and obtained and remain in full force and effect; (viii) No litigation or arbitration is current or, to the Issuer’s knowledge, is threatened, which if adversely determined would have a Material Adverse Effect; (ix) The audited financial statements of the Issuer are prepared in accordance with generally accepted accounting principles and standards and they fairly represent its financial position; (x) The financial statements and other information supplied are true and accurate in all material aspects and not misleading except that, when the warranted information is a forecast, the warranty will be to the effect that the forecast has been made on the basis of assumptions which were reasonable at the time when they were made and after due enquiry; (xi) No event has occurred which could constitute a Dissolution Event and/or which with the giving of notice or the lapse of time or fulfilment of the relevant requirement(s) as contemplated under the relevant Transaction Documents would constitute a Dissolution Event; (xii) No step has been taken by the Issuer, its creditors or any of its shareholders or any other person on its behalf nor have any legal proceedings or applications been started or threatened under Section 366 of the Companies Act; (xiii) There has been no change in the business or condition (financial or otherwise) of the Issuer or its subsidiaries (if any) since the date of its last audited financial statements which might have a Material Adverse Effect; and (xiv) Such other representations and warranties as may be advised by the Solicitors and to be mutually agreed between the PA/LA and the Issuer. Printed on : 27/06/2022 12:00 Page 17 of 23
18. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (25) Events of defaults or : enforcement events, where applicable, including recourse available to investors Dissolution Events The dissolution events ("Dissolution Events" and each a "Dissolution Event") are as follows: (i) Non-payment: the Issuer fails to pay any amount in respect of the Sukuk Wakalah when due and payable and such failure continues for a period of seven (7) business days. For the avoidance of doubt, no Periodic Distribution will be due and payable if such Periodic Distribution or part thereof has been cancelled or is deemed cancelled (in each case, in whole or in part) as described under ‘Limitation on Payment’ and accordingly, no failure of payment under the Sukuk Wakalah will have occurred or be deemed to have occurred in such circumstances; or (ii) Winding-Up: if: a) a court or an agency or regulatory authority in Malaysia having jurisdiction in respect of the same shall have instituted any proceeding or entered a decree or order for the appointment of a receiver or liquidator in any insolvency, rehabilitation, readjustment of debt, marshalling of assets and liabilities, or similar arrangements involving the Issuer or all or substantially all of its property, or for the winding up of or liquidation of its affairs and such proceeding, decree or order shall not have been vacated or shall have remained in force, undischarged or unstayed for a period of sixty (60) days; or b) the Issuer has filed a petition to take advantage of any insolvency statute. Upon the occurrence of Non-payment (as set out in item (i) above), subject to the terms of the Sukuk Wakalah, the Sukuk Trustee may or shall (if directed to do so by an extraordinary resolution of the Sukukholders) institute proceedings to enforce the payment obligations under the relevant Sukuk Wakalah and may institute proceedings in Malaysia for the winding up of the Issuer, provided that neither the Sukuk Trustee nor any of the Sukukholders shall have the right to accelerate payment of the relevant Sukuk Wakalah in the case of failure to pay any amount due and payable under the relevant Sukuk Wakalah or any non-performance of any condition, provision or covenant under the Trust Deed or the Sukuk Wakalah. Upon occurrence of Winding-up event (as set out in item (ii) above), subject to the terms of the Sukuk Wakalah, the Sukuk Trustee may or shall (if directed to do so by an extraordinary resolution of the Sukukholders) declare (by giving written notice to the Issuer) that the Sukuk Wakalah together with all other sums payable under the Sukuk Wakalah shall become and be immediately due and payable at its Dissolution Distribution Amount, whereupon such amounts shall become and be immediately due and payable. The Sukuk Trustee shall enforce its rights under the Transaction Documents, including but not limited to, requiring the Obligor to purchase the Shariah-compliant Business at the Exercise Price from the Sukuk Trustee pursuant to exercise of the Purchase Undertaking and enter into a Sale Agreement for such purchase, institute proceedings in Malaysia for the winding up of the Issuer and declare the Sukuk Wakalah due and payable i.e. pay the outstanding amounts of the Deferred Sale Price, Exercise Price and distribute any income generated from the Wakalah Investments. Any excess above the Dissolution Distribution Amount of the relevant Sukuk Wakalah shall be waived by the Sukukholders and retained by the Investment Wakeel as an incentive fee upon full redemption of the relevant Sukuk Printed on : 27/06/2022 12:00 Page 18 of 23
19. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions Wakalah. The occurrence of event (i) (Non-payment) in respect of one Series of the Sukuk Wakalah shall not trigger a Dissolution Event in respect of the other Series of the Sukuk Wakalah. Printed on : 27/06/2022 12:00 Page 19 of 23
20. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (26) Governing laws : Laws of Malaysia. (27) Provisions on buyback, if applicable : The Issuer or any of its subsidiaries or agent(s) of the Issuer may at any time purchase (subject to the prior approval of BNM where applicable but which approval shall not be required for a purchase done in the ordinary course of business) the Sukuk Wakalah at any price in the open market or by private treaty provided that no Non-Viability Event (as defined in item (o) of the section entitled “Other terms and conditions”) has occurred prior to the date of such purchase. If purchases are made by tender, such tender must (subject to any applicable rules and regulations) be made available to all the relevant Sukukholders of the relevant Series equally. All Sukuk Wakalah purchased by the Issuer or its subsidiaries or agent(s) of the Issuer (other than in the ordinary course of business) shall be cancelled and shall not be resold. All Sukuk Wakalah purchased by other related corporations (other than the Issuer’s subsidiaries) or any interested person of the Issuer, need not be cancelled but they will not entitle such related corporations or interested person of the Issuer to vote under the terms of the Sukuk Wakalah subject to any exceptions in the Trust Deeds Guidelines. For the avoidance of doubt, all Sukuk Wakalah held by related corporations and the interested person of the Issuer shall not be counted for the purposes of voting and for the purposes of forming a quorum subject to any exceptions in the Trust Deeds Guidelines. For the purpose of this clause, the term “ordinary course of business” includes those activities performed by the Issuer, any of its subsidiaries or agents or any related corporations of the Issuer for third parties and excludes those performed for the own account of the Issuer, the Issuer’s subsidiaries or agents or such related corporations. Third parties herein refer to the Issuer’s, the Issuer’s subsidiaries’ and/or related corporations’ clients. The term “related corporation” has the same meaning given to it in the Companies Act. (28) Provisions on early : redemption, if applicable (i) Early redemption pursuant to Call Option The Issuer may at its option, on a Call Date, and subject to the Redemption Conditions being satisfied, redeem in whole or in part, the Sukuk Wakalah at the Dissolution Distribution Amount. The optional redemption of one Series of the Sukuk Wakalah shall not trigger the redemption of other Series of the Sukuk Wakalah. (ii) Early redemption pursuant to the Regulatory Redemption The Sukuk Wakalah may be redeemed at the option of the Issuer in whole or in part, and subject to the Redemption Conditions being satisfied, at any time at the Dissolution Distribution Amount, if a Regulatory Event has occurred and is continuing. “Regulatory Event” means that, if there is more than an insubstantial risk, as Printed on : 27/06/2022 12:00 Page 20 of 23
21. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions determined by the Issuer, that: a) the Sukuk Wakalah or any Series of the Sukuk Wakalah (in whole or in part) will, either immediately or with the passage of time or upon either the giving of notice or fulfilment of a condition, no longer qualify as Additional Tier-1 Capital of the Issuer for the purposes of BNM’s capital adequacy requirements under any applicable regulations; or b) changes in law will make it unlawful to continue performing its obligations under the Sukuk Wakalah or any Series of Sukuk Wakalah. (iii) Early redemption pursuant to the Tax Redemption The Sukuk Wakalah may be redeemed at the option of the Issuer in whole or in part, and subject to the Redemption Conditions being satisfied, at any time at the Dissolution Distribution Amount, if a Tax Event has occurred and is continuing. “Tax Event” means that, if there is more than an insubstantial risk that: a) the Issuer has or will become obliged to pay any additional taxes, duties, assessments or government charges of whatever nature in relation to the Sukuk Wakalah; or b) the Issuer would no longer obtain tax deductions for the purposes of Malaysian corporation tax for any payment in respect of the Sukuk Wakalah, as a result of any change in, or amendment to, the laws or regulations of Malaysia or any political subdivision or any authority thereof or therein having power to tax (or any taxing authority of any tax jurisdiction in which the Issuer is a tax resident), or any change in the official application or interpretation of such laws or regulations, which change or amendment is announced and becomes effective on or after the issue date and such obligation cannot be avoided by the Issuer after taking reasonable measures available to it. For the avoidance of doubt, for the purpose of this clause, redemption in part of the Sukuk Wakalah may be carried out on a pro-rata basis or on selective basis (for instance in the case of purchase by the Issuer in the open market or by private treaty). “Redemption Conditions” means: (i) the Issuer is solvent at the time of any redemption of that Series of Sukuk Wakalah or part thereof and immediately thereafter; (ii) the Issuer has obtained the written approval of BNM prior to redemption of that Series of Sukuk Wakalah or part thereof; and (iii) in respect of a Call Option only, the Issuer: a) shall replace that Series of Sukuk Wakalah or part thereof to be redeemed with capital of the same or better quality and the replacement of this capital is done at conditions which are sustainable for the income capacity of the Issuer; or b) demonstrates to the satisfaction of BNM that its capital position is and can be sustained well above the minimum capital adequacy and capital buffer requirements as imposed by BNM after the redemption is exercised. Printed on : 27/06/2022 12:00 Page 21 of 23
22. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions (29) Voting : Voting by the Sukukholders under the Sukuk Wakalah Programme shall be carried out as follows: Prior to upsizing of the Sukuk Wakalah Programme: All matters (save in relation to the upsizing of the Sukuk Wakalah Programme) which require the Sukukholders’ consent under the Sukuk Wakalah Programme shall be carried out on a collective basis. Post upsizing of the Sukuk Wakalah Programme: All matters which require the Sukukholders’ consent under the Sukuk Wakalah Programme shall be carried out on a “per Series” basis. Sukukholders holding a requisite amount under each Series shall provide their consent for the relevant matters to be passed under the Sukuk Wakalah Programme and the consent from Sukukholders of all outstanding Series shall have been obtained for any such resolution to be carried. (30) Permitted investments, if applicable : No permitted investments (31) Ta‘widh (for ringgit- : denominated sukuk) In the event the Investment Wakeel breaches its fiduciary duty as an investment wakeel due to its failure to distribute any realised Periodic Distributions, and/or the Obligor/Issuer/Buyer delays the payment of any amounts due and payable to the Sukukholders under the Sale Agreement pursuant to exercise of the Purchase Undertaking, the Sale Undertaking and/or the Deferred Sale Price, the Investment Wakeel and/or the Obligor/Issuer/Buyer shall pay to the Sukuk Trustee (acting on behalf of the Sukukholders) ta`widh (compensation) on such delay in payments at the rate and in the manner prescribed by the SC’s SAC from time to time. (32) Ibra’ (for ringgit: denominated sukuk) The Sukukholders in subscribing to or purchasing the Sukuk Wakalah consent to grant an Ibra’ (if any) on the Deferred Sale Price under the Commodity Murabahah Investment if the Sukuk Wakalah are written-off (in whole or in part, as the case may be) in the event of occurrence of: (i) Non-Viability Event; or (ii) Breach of CET-1 Capital Ratio. The Ibra' in relation to the Sukuk Wakalah shall be as follows: (i) If the Sukuk Wakalah are written-off (in whole or in part) at the point of NonViability Event, the Sukukholders shall waive their rights to the payment of the outstanding Deferred Sale Price under the Commodity Murabahah Investment due from the Buyer, such amount corresponding to the aggregate principal amount and the Expected Periodic Distribution Amount under the Shariah Compliant Business of the Sukuk Wakalah required to be written off. (ii) If the Sukuk Wakalah are written-off pursuant to Breach of CET-1 Capital Ratio, the Sukukholders shall waive their rights to the aggregate amount of Sukuk Wakalah required to restore the Issuer’s and its consolidated CET-1 Capital Ratio Printed on : 27/06/2022 12:00 Page 22 of 23
23. Bank Islam Malaysia Berhad (Bank Islam or Issuer) Issuance(s) of Additional Tier-1 capital sukuk wakalah (Sukuk Wakalah) under a Sukuk Wakalah programme of up to RM5.0 billion in nominal value, based on the Shariah principle of Wakalah Bi AlIstithmar ("Sukuk Wakalah Programme"). Principal Terms and Conditions to at least 5.75% (or such other percentage as may be prescribed by the BNM CAFIB). If this is not possible, then the Sukukholders shall waive their right to the full nominal value of the Sukuk Wakalah. Ibra’ refers to an act of releasing absolutely or conditionally the Sukukholders’ rights and claims on any obligation against the Issuer which would result in the latter being discharged of its obligations or liabilities towards the former. The release may be either partial or in full. With respect to the Murabahah contract, Ibra’ refers to the release of rights on debts/amount due and payable under the said contract. (33) Kafalah (for ringgit- : denominated sukuk) Not applicable. (34) Waivers from : complying with Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework and other relevant guidelines of the SC obtained for the facility/programme, if any Not applicable. Printed on : 27/06/2022 12:00 Page 23 of 23
24. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER Other terms and conditions (a) Details of Utilisation of Proceeds : The proceeds from the Sukuk Wakalah Programme shall be utilised by the Issuer as follows: (i) to finance its general banking working capital requirements and/or other general corporate purposes including administrative expenses, future operating expenses and financing expenses which includes profit payments for existing or future Islamic financing facilities / sukuk programmes/issuances, repayment/redemption of existing or future Islamic financing facilities / sukuk programmes/issuances as well as fees and expenses incurred / to be incurred in relation to the existing or future Islamic financing facilities / sukuk programmes/issuances of the Issuer; and (ii) to defray fees and expenses relating to the Sukuk Wakalah Programme. Notes: (b) Identified Asset / Trust Assets : 1. Proceeds from any new issuance of Sukuk Wakalah under the Sukuk Wakalah Programme may be utilised to refinance / for redemption of any earlier issuance of Sukuk Wakalah under the Sukuk Wakalah Programme. 2. All utilisation of proceeds from issuance of Sukuk Wakalah under the Sukuk Wakalah Programme shall be for Shariah-compliant purposes only. Trust Asset The Trust Asset shall comprise: (i) the Sukuk Proceeds; (ii) the Wakalah Investments (comprising the Shariahcompliant Business and the Commodity Murabahah Investment); and (iii) the rights, title, interest, entitlement and benefit in, to and under the Transaction Documents. The “Commodities” in relation to the Commodity Murabahah Investment shall be Shariah-compliant commodities, which include but are not limited to crude palm oil or such other acceptable commodities (excluding ribawi items in the category of medium of exchange such as currency, gold and silver) which are provided through the commodity trading platform acceptable to the Shariah Adviser which will be 1
25. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER identified from time to time, at or around the time of issuance of the Sukuk Wakalah. However, if applicable, pursuant to the “Limitation on Payment” clause with respect to the Capital Disqualification Event, the following will be part of the identified assets under the Mudharabah transaction. Identified Assets/ Additional Identified Assets: Shariahcompliant Business of the Issuer. New Identified Assets: Any financial assets that belong to the Issuer which are not the previous identified assets that have been dissolved. (c) Issue Price : The Sukuk Wakalah shall be issued at par to the nominal value. The issue price of the Sukuk Wakalah shall be determined prior to each issuance of the Sukuk Wakalah, which shall be calculated in accordance with the “Participation Rules for Payments and Securities Services” and the “Operational Procedures for Securities Services” issued by BNM. (d) Purchase and selling price / rental : Commodity Purchase Price In relation to the Commodity Murabahah Investment, the Commodity Purchase Price shall be determined prior to each issuance of the Sukuk Wakalah and shall be priced equivalent to the remaining balance of the Sukuk Proceeds. Deferred Sale Price In relation to the Commodity Murabahah Investment, the Deferred Sale Price shall be determined prior to each issuance of the Sukuk Wakalah and shall comprise the Commodity Purchase Price plus the profit and shall be payable on a deferred payment basis. The Deferred Sale Price shall be equivalent to the nominal value of the Sukuk Wakalah. For the avoidance of doubt, the Deferred Sale Price for Sukuk Wakalah shall be payable for a period of 99 years, and the Issuer shall be given the right to defer such payment upon request made by the Issuer or if required by BNM subject to the issuance notice of deferment. (e) Tenure of the issue : Subject to the Call Option (where applicable), the tenure of the Sukuk Wakalah is perpetual. (f) Profit / coupon / rental rate (fixed or floating) : Subject to the section entitled “Limitation on Payment”, the Sukuk Wakalah confer a right to receive Periodic Distributions from (and including) the issue date at the applicable Periodic Distribution Rate payable on Periodic Distribution Date, out of 2
26. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER the Distributable Reserves (as defined in item (k) of the section entitled “Other terms and conditions”) of the Issuer. The Periodic Distribution Rate shall be determined prior to the issuance of each Series of the Sukuk Wakalah. The Periodic Distribution Rate applicable to each Series of the Sukuk Wakalah shall be: (i) (ii) in respect of the period from (and including) the issue date of that Series to (but excluding) the first Call Date of that Series, at either of the following (to be determined prior to issuance): a) a fixed rate per annum of the nominal value of that Series; or b) a floating rate, to be reset semi-annually or such other frequency to be determined prior to issuance, at a rate per annum i.e. at the Initial Spread for Floating Rate (as defined below) above the Relevant Floating Rate Benchmark (as defined below), of the nominal value of that Series; and in respect of the period from (and including) the first Call Date of that Series to (but excluding) the immediately following Reset Date (as defined below) of that Series and every equivalent period thereafter, at either of the following rate (to be determined prior to issuance): a) a fixed rate at the Relevant Reset Distribution Rate (as defined below) of the nominal value of that Series; or b) a floating rate, to be reset semi-annually or such other frequency to be determined prior to issuance, at a rate per annum, i.e. at the Initial Spread for Floating Rate above the Relevant Floating Rate Benchmark, of the nominal value of that Series. “Initial Spread for Fixed Rate” means the initial spread for fixed rate to be determined at the point of issuance of the relevant Series of the Sukuk Wakalah, where applicable, and expressed as a rate in per cent. per annum, being the initial spread above the profit rate swap rate in percent. per annum for the relevant Reference Period. The Initial Spread for Fixed Rate shall be calculated at the point of issuance and shall be applicable throughout the tenure of the relevant Sukuk Wakalah. 3
27. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER “Initial Spread for Floating Rate” means the initial spread for the floating rate to be determined at the point of issuance of the relevant Series of the Sukuk Wakalah, where applicable, and expressed as a rate in per cent. per annum, being the initial spread above the Relevant Floating Rate Benchmark. The Initial Spread for Floating Rate shall be calculated at the point of issuance and shall be applicable throughout the tenure of the relevant Sukuk Wakalah. “Reference Period” means, in relation to a Series of the Sukuk Wakalah, a period of time equal to that commencing on the issue date of that Series and ending on the date immediately before the first Call Date of that Series (“Initial Period”), and being a minimum period of five (5) years and shall also include every subsequent period of time after the first Call Date equivalent to the Initial Period. “Relevant Floating Rate Benchmark” means Kuala Lumpur Interbank Offered Rates (KLIBOR) for six-months (or such other relevant period) Ringgit deposits. “Relevant Reset Distribution Rate” means a fixed rate per annum equal to the relevant prevailing profit rate swap rate in per cent. per annum for the relevant Reference Period with respect to the relevant Reset Date plus the Initial Spread for Fixed Rate. The profit rate swap rate shall be determined and notified by the Facility Agent (or any other similar agency) to the Issuer and the Sukukholders as published by a recognised industry body or a relevant authority at or about the time prescribed by the recognised industry body or the relevant authority on the second (2nd) business day preceding the relevant Reset Date. “Reset Date” means each date falling on the first day of each Reference Period after the first Call Date of the relevant Series of the Sukuk Wakalah. Subject to the section entitled “Limitation on Payment”, Periodic Distribution will be payable on semi-annual basis or such other frequency to be determined prior to each issuance of the Sukuk Wakalah. (g) Profit / coupon / rental payment frequency : (h) Profit / coupon / rental payment basis : The Periodic Distribution shall be calculated based on the (i) : The Sukuk Wakalah will not be listed on Bursa Malaysia Listing status and types of listing, where applicable actual number of days over 365 days’ basis. Securities Berhad or any other stock exchanges. 4
28. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER (j) Dissolution Distribution Amount (k) Limitation on Payment : : Dissolution Distribution Amount shall mean: (i) upon the occurrence of a Dissolution Event, the aggregate of the nominal value of the relevant Sukuk Wakalah together with Periodic Distributions accrued and not cancelled but unpaid (if any) to (but excluding) the date of Dissolution Event; and (ii) upon early redemption (either pursuant to the exercise of a Call Option, Regulatory Redemption or Tax Redemption), the aggregate of the nominal value of the relevant Sukuk Wakalah together with Periodic Distributions accrued and not cancelled but unpaid (if any) to (but excluding) the redemption date. The payment of Periodic Distributions under the Sukuk Wakalah shall be at the Issuer’s sole and absolute discretion and is subject to: (i) such payment not resulting in a breach of the capital requirements applicable to the Issuer under the relevant BNM’s capital guidelines; (ii) the Issuer is solvent at the time of payment of the Periodic Distributions and the payment of the Periodic Distributions will not result in the Issuer becoming, or likely to become insolvent; and (iii) such payment being made from Distributable Reserves only. In the event that there is profit for distribution, and the Issuer decided not to distribute the profit pursuant to this paragraph, the Sukukholders hereby agree to waive (tanazul) their right to receive Periodic Distributions for such Periodic Distribution Date. If the Issuer is unable to meet any of the conditions (i), (ii) or (iii) above, the Issuer shall cancel the Periodic Distributions which would otherwise have been payable on such Periodic Distribution Date provided always in the case where conditions (i) and (ii) are met but the Distributable Reserves are insufficient to pay the Periodic Distributions in full, the Issuer may elect to pay a part of the Periodic Distributions up to the amount available from the Distributable Reserves and cancel the other part of the Periodic Distributions which would otherwise have been payable on such Periodic Distribution Date. Any such cancellation will not constitute or be deemed a default by the Issuer or constitute a Dissolution Event for any purpose whatsoever nor would it trigger a cross-default under any other outstanding Sukuk Wakalah issued under the Sukuk Wakalah Programme. 5
29. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER “Distributable Reserves” means at any time, the amounts for the time being available to the Issuer for distribution as a dividend as of the date of the Issuer's latest audited financial statements in compliance with Section 131 of the Companies Act (or its equivalent under any successor laws) provided that if the Issuer reasonably believes that the available amounts as of any Distribution Determination Date (as defined below) are lower than the available amounts as of the date of the Issuer's latest audited financial statements and are insufficient to pay the Periodic Distributions and for payments of any dividends or other distributions in respect of other liabilities or obligations of the Issuer which by their terms or by operation of law, rank pari passu with the Sukuk Wakalah, on the relevant Periodic Distribution Date, then two (2) directors of the Issuer shall provide a certificate to the Sukuk Trustee (acting on behalf of the Sukukholders), on or prior to the relevant Periodic Distribution Date, setting out the available amounts as of such Distribution Determination Date (which certificate of the two (2) directors will be binding absent of manifest error) and the Distributable Reserves as of such Distribution Determination Date for the purposes of such Periodic Distributions will mean the available amounts as set forth in such certificate. “Distribution Determination Date” means, with respect to any Periodic Distribution Date, the day falling two (2) business days prior to that Periodic Distribution Date. If the Issuer does not make a Periodic Distribution on the relevant Periodic Distribution Date (or if the Issuer elects to make a payment of a portion, but not all, of such Periodic Distribution), such non-payment or part-payment shall serve as evidence of the Issuer's exercise of its discretion to cancel such Periodic Distribution (or the portion of such Periodic Distribution not paid), and accordingly such Periodic Distribution (or the portion thereof not paid) shall not be due and/or accrued, and shall not be payable. If practicable, the Issuer shall provide notice of any cancellation of Periodic Distribution (in whole or in part) to the Sukukholders (via the Sukuk Trustee) on or prior to the relevant Periodic Distribution Date. If practicable, the Issuer shall endeavour to provide such notice at least five (5) business days prior to the relevant Periodic Distribution Date. Failure to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such cancellation of Periodic Distribution, or give the Sukukholder any rights as a result of such failure. Any such cancellation will not constitute or be deemed a default by the Issuer or constitute a Dissolution Event for any purpose whatsoever nor would it trigger a cross-default under 6
30. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER any other outstanding Sukuk Wakalah issued under the Sukuk Programme. Circumstances for Cumulative Periodic Distribution Notwithstanding the above, if (i) the Sukuk Wakalah or any Series thereof no longer qualify as Additional Tier-1 capital of the Issuer (“Capital Disqualification Event”) (in whole and not in part) for the purposes of BNM’s minimum capital adequacy requirements under any applicable regulations, and such disqualification has been confirmed by BNM in writing, and (ii) the Issuer is not in breach of BNM’s minimum capital adequacy ratio requirements applicable to the Issuer, any Periodic Distribution payable after the date of notification from BNM of such disqualification (“Disqualification Date”) may be deferred, in whole or in part, at the Issuer’s sole and absolute discretion but shall not be cancelled in accordance with the provisions of this paragraph. Any portion of the Periodic Distribution payable on a Periodic Distribution Date occurring after the Disqualification Date, but deferred at the Issuer’s sole and absolute discretion shall start to become cumulative and such deferred amount shall be entitled to earn profit at the Periodic Distribution Rate from (and including) the said Periodic Distribution Date (“Deferred Periodic Distribution Date”) up to the date of actual payment of such deferred Periodic Distribution. In such circumstances, the deferred Periodic Distribution, together with accrued amounts will become due and payable no later than ten (10) years from the Deferred Periodic Distribution Date, or upon redemption of the Sukuk Wakalah, whichever is earlier. For the avoidance of doubt, any Periodic Distribution payable prior to the Disqualification Date shall be paid or cancelled in accordance with this section entitled “Limitation on Payment”. Upon the occurrence of the Capital Disqualification Event, the Wakalah Investments shall be dissolved at a relevant dissolution distribution amount (“Dissolution Distribution Amount”) which shall be equal to 100% of the nominal value of the Sukuk Wakalah together with accrued but unpaid Periodic Distributions. For the avoidance of doubt, the dissolution of the Wakalah Investment shall not constitute the redemption of the Sukuk Wakalah. The Investment Wakeel shall distribute the relevant portion of the Dissolution Distribution Amount to pay for any accrued but unpaid Periodic Distributions prior to the Capital Disqualification Event. The Sukukholders irrevocably authorise the Investment Wakeel (as the “Mudharib”) to, in its sole discretion, invest the balance of the Dissolution Distribution Amount (which is equal to 100% of the nominal value of the Sukuk Wakalah) in identified assets of the Issuer 7
31. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER under the Mudharabah transaction (“Identified Assets”). Profits generated from the Identified Assets and Additional Identified Assets (where applicable) will be shared and distributed between the Sukukholders as the Rabb almal and the Issuer as the Mudharib according to a pre-agreed profit sharing ratio to be determined. The loss shall be borne solely by the Rabb al-mal. The Issuer shall distribute to the Sukukholders the profit generated from the Identified Assets (“Identified Asset Profit”) and Additional Identified Assets (“Additional Assets Profit”) in the form of Periodic Distribution on the Periodic Distribution Date. As agreed by the Sukukholders, the Issuer may at its sole discretion elect to make payment of all or some of the Expected Periodic Distribution Amount on the Periodic Distribution Date. If the Issuer does not make a Periodic Distribution on the relevant Periodic Distribution Date (or if the Issuer elects to make a payment of a portion, but not all, of such Periodic Distribution) after the Disqualification Date, such non-payment or part-payment shall serve as evidence of the Issuer’s exercise of its discretion to defer such Periodic Distribution (or the portion of such Periodic Distribution not paid). If practicable, the Issuer shall provide notice of the deferment of Periodic Distribution (in whole or in part) to the Sukukholders (via the Sukuk Trustee) on or prior to the relevant Periodic Distribution Date. If practicable, the Issuer shall endeavour to provide such notice at least five (5) business days prior to the relevant Periodic Distribution Date. Failure to provide such notice will not have any impact on the effectiveness of, or otherwise invalidate, any such deferment of Periodic Distribution, or give the Sukukholders any rights as a result of such failure. Any such deferment will not constitute or be deemed a default by the Issuer or constitute an Dissolution Event for any purpose whatsoever nor would it trigger a cross-default under any other outstanding Sukuk Wakalah issued under the Sukuk Wakalah Programme. Periodic Distribution on each Periodic Distribution Date a) If the Identified Assets Profit and Additional Identified Assets Profit (where applicable) are equal to or in excess of the relevant Expected Periodic Distribution Amount for the applicable Periodic Distribution period, 8
32. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER (i) Full Deferral: The Identified Assets Profit and Additional Identified Assets Profit (where applicable) up to such Expected Periodic Distribution Amount will be applied towards investing in Additional Identified Assets. (ii) Partial Deferral: The Identified Assets Profit and Additional Identified Assets Profit (where applicable) up to the Expected Periodic Distribution Amount which is not deferred will be distributed to the Sukukholders and the remaining will be applied towards investing in Additional Identified Assets. (iii) Non-Deferral: The Identified Assets Profit and Additional Identified Assets Profit (where applicable) up to such Expected Periodic Distribution Amount due and payable will be distributed to the Sukukholders. Any excess will be paid to the Investment Wakeel as an incentive fee. The Identified Assets and Additional Identified Assets are referring to the investment in the same Shariah-compliant Business of the Issuer. The term “Additional” is used to differentiate the amount to be invested i.e. normal value amount for Identified Assets and the amount of periodic distribution to be deferred in relation to cumulative periodic distribution for Additional Identified Assets. b) If the Identified Assets Profit and Additional Identified Assets Profit (where applicable) is insufficient to pay the relevant portion of the Expected Periodic Distribution Amount for the applicable distribution period, pursuant to a shortfall purchase undertaking granted upfront by the Obligor, the investment in the Identified Assets, (and additional Identified Assets, if applicable) and the Mudharabah venture will be dissolved and a relevant shortfall sale agreement shall be executed to effect the sale of Identified Assets (and Additional Identified Assets, if applicable) by the Investment Wakeel (on behalf of the Sukukholders) to the Obligor at the relevant exercise price. The relevant exercise price shall be an amount equal to the outstanding nominal value of the Sukuk Wakalah together with accrued but unpaid Periodic Distributions. (i) Full Deferral: The Investment Wakeel shall use the proceeds of the relevant exercise price to invest in another identified asset (“New Identified 9
33. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER Assets”), which shall not comprise the previous Identified Assets that have been dissolved. (ii) Partial Deferral: The Investment Wakeel shall use the proceeds of the relevant exercise price to distribute such Periodic Distributions which are not deferred and the remaining to be applied towards investing in New Identified Assets, which shall not comprise the previous Identified Assets that have been dissolved. (iii) Non-Deferral: The Investment Wakeel shall use the proceeds of the relevant exercise price to distribute the relevant portion of the Periodic Distributions and the remaining balance will be applied towards investing in New Identified Assets, which shall not comprise the previous Identified Assets that have been dissolved. The new Mudharabah venture will be created when the proceeds of the relevant exercise price are applied towards investment in the New Identified Assets. The accounting entries associated with the payment of the relevant exercise price pursuant to the shortfall purchase undertaking and investment in the New Identified Assets shall be made in the books of the Issuer as the Mudharib under the Mudharabah transaction. (l) Distribution Stopper : If, on any Periodic Distribution Date, payment of Periodic Distributions scheduled to be made on such date is not made by reason of the “Limitation on Payment” clause, the Issuer shall not: (i) declare or pay, any dividends or other distributions in respect of Junior Obligations (as defined herein) (or contribute any moneys to a sinking fund for the payment of any dividends or other distributions in respect of any such Junior Obligations); (ii) declare or pay, any dividends or other distributions in respect of Parity Obligations (as defined herein) the terms of which provide that the Issuer is not required to make payments of such dividends or other distributions in respect thereof (or contribute any moneys to a sinking fund for the payment of any dividends or other distributions in respect of any such Parity Obligations); (iii) redeem, reduce, cancel, buy-back or acquire, any Junior Obligations (or contribute any moneys to a sinking fund for the redemption, capital reduction, buyback or acquisition of any such Junior Obligations); or 10
34. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER (iv) redeem, reduce, cancel, buy-back or acquire, any Parity Obligations the terms of which provide that the Issuer is not required to redeem, reduce, cancel, buyback or acquire such Parity Obligations (or contribute any moneys to a sinking fund for the redemption, capital reduction, buy-back or acquisition of any such Parity Obligations), in each case, until (a) the next scheduled Periodic Distributions to be paid in respect of such number of consecutive Periodic Distribution periods as shall be equal to or exceed twelve (12) calendar months have been paid in full (or an amount equivalent thereto has been paid, or irrevocably set aside in a separately designated trust account for payment to the Sukukholders); or (b) the Issuer is permitted to do so by an extraordinary resolution of the Sukukholders. (m) No equity conversion : The Sukuk Wakalah shall not entitle the Sukukholders to receive any form of equity interest in the Issuer at any point in time and the Issuer is not obliged to allot or issue any shares to or for the account of the Sukukholders upon the occurrence of a Non-Viability Event or otherwise. The Sukukholders shall not be entitled to participate in any distributions or entitlements to the Issuer’s shareholders or to attend or vote at any general meeting of the Issuer. (n) Breach of CET-1 Capital Ratio : If the CET-1 Capital Ratio (as determined by the BNM CAFIB) of the Issuer, at the consolidated or entity level (whichever is applicable), falls below 5.125% (or such other percentage as may be prescribed by the BNM CAFIB), the Issuer shall, without the need for the consent of the Sukuk Trustee or the Sukukholders, write-off the Sukuk Wakalah (in whole or in part). Details of the Loss Absorption Mechanism are set out below. (o) Non-Viability Event : If a Non-Viability Event occurs, the Issuer shall irrevocably, without the need for the consent of the Sukuk Trustee or the Sukukholders, write-off the Sukuk Wakalah (in whole or in part) if so required by BNM and/or Malaysia Deposit Insurance Corporation (“PIDM”) at their full discretion. Such write-off shall not constitute a Dissolution Event, nor would it trigger a cross default under any other outstanding Sukuk Wakalah. A Non-Viability Event shall be deemed to have occurred on the day on which the Issuer received the notification from the Relevant Malaysia Authority (as defined below) or on the day the public announcement is made, as the case may be. Details of the Loss Absorption Mechanism are set out below. 11
35. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER Upon the occurrence of a Non-Viability Event, the Issuer is required to give notice to the Sukukholders (via the Sukuk Trustee) and the rating agency in accordance with the terms of the Sukuk Wakalah. “Non-Viability Event” means the earlier of the following: (p) Loss Absorption Mechanism : (i) BNM, jointly with PIDM, so long as the Issuer is a Member Institution (as defined in the Malaysia Deposit Insurance Corporation Act 2011), or BNM, if the Issuer is no longer a Member Institution (“Relevant Malaysian Authority”) notifying the Issuer in writing that the Relevant Malaysian Authority is of the opinion that a write-off or conversion into ordinary shares is necessary, without which the Issuer would cease to be viable; or (ii) the Relevant Malaysian Authority publicly announces that a decision has been made by BNM, PIDM or any other federal or state government in Malaysia, to provide a capital injection or equivalent support to the Issuer, without which the Issuer would cease to be viable. (i) Write-off mechanism in the case of a Breach of CET1 Capital Ratio Upon a breach of the CET-1 Capital Ratio, the aggregate amount of Sukuk Wakalah to be written-off must be at least the amount required to restore the Issuer’s and its consolidated CET-1 Capital Ratio to at least 5.75% (or such other percentage as may be prescribed by the BNM CAFIB). If this is not possible, then the full nominal value of the Sukuk Wakalah will be written-off. (ii) Write-off mechanism in the case of a Non-Viability Event Upon the occurrence of a Non-Viability Event, then as of the relevant write-off date: (i) the write-off shall reduce: a) the claim of the Sukuk Wakalah in liquidation. The Sukukholders will be automatically deemed to irrevocably waive their right to receive, and no longer have any rights against the Issuer with respect to, any payment of the aggregate nominal value of the Sukuk Wakalah written off; b) the amount paid when a call option is exercised; and 12
36. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER c) (ii) Periodic Distribution of the Sukuk Wakalah; and the write-off shall be permanent and the full or part (as the case may be) of the nominal value of the Sukuk Wakalah will automatically be written-off and the whole or part (as the case may be) of the Sukuk Wakalah will be cancelled. Each of the Sukukholders hereby irrevocably waives its right to receive payment of the nominal amount of the Sukuk Wakalah which are written off pursuant to the above, and also irrevocably waives its right to any Periodic Distribution (including Periodic Distributions accrued but unpaid up to the date of the occurrence of a Breach of CET-1 Capital Ratio or Non-Viability Event). The Sukukholders hereby waive (tanazul) their rights to receive capital invested and profit (if any) in or from the Shariah-compliant Business. In the case of write-off of full nominal value, the Sukukholders agree to waive their rights on the full/outstanding Deferred Sale Price under the Commodity Murabahah Investment and the Investment Wakeel on behalf of the Sukukholders agrees to transfer the Sukukholders’ interest in the Shariah-compliant Business to the Issuer with no consideration. Whilst in the case of write-off of partial nominal value, the Sukukholders agree to waive their rights on the Deferred Sale Price under the Commodity Murabahah Investment equivalent to the partial nominal value being written off and Sukukholders shall retain their interest in the Shariah-compliant Business. After write-off of partial nominal value, the remaining portion of the Series will remain as Sukuk Wakalah complying with the BNM CAFIB in relation to requirements of an Additional Tier-1 capital instrument. Such write-off shall not constitute a Dissolution Event, nor would it trigger a cross-default under any other outstanding Sukuk Wakalah. Please refer to the section entitled “Ibra’”. (q) Sukuk Trustees’ Reimbursement Account : The Sukuk Trustee shall open and maintain a Shariah- compliant bank account designated as "Sukuk Trustees’ Reimbursement Account for Sukukholders’ Actions" (as required under the Trust Deeds Guidelines), in which a sum of RM100,000.00 is to be deposited by the Issuer ("Sukuk Trustees’ Reimbursement Account") with an Islamic bank acceptable to the Issuer. The Sukuk Trustees’ Reimbursement 13
37. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER Account shall be operated by the Sukuk Trustee and the monies shall only be used strictly by the Sukuk Trustee in carrying out its duties in relation to the occurrence of dissolution events which are provided in the Trust Deed. The sum of RM100,000.00 in the Sukuk Trustees’ Reimbursement Account shall be maintained at all times throughout the tenure of the Sukuk Wakalah Programme. The Issuer hereby agrees that any claim it may have against the Sukuk Trustee or the Sukukholders howsoever arising shall not be set-off against the Sukuk Trustee’s claim to the credit balances in the Sukuk Trustees’ Reimbursement Account (which is a chose in action against the Issuer). (r) Transaction Documents : The documents for the establishment of the Sukuk Wakalah Programme are: (i) (ii) (iii) (iv) (v) Programme Agreement; Trust Deed; Securities Lodgement Form; The relevant Islamic transaction documents; and Such other relevant documentation which may be advised by the Solicitors. For each issuance, the documents are as below: (i) (ii) (iii) Subscription Agreement (where relevant); The relevant Islamic transaction documents; and Such other relevant documentation which may be advised by the Solicitors. All the documents and agreements referred to above are collectively referred to as the “Transaction Documents”. (s) Status : The Sukuk Wakalah will constitute direct, unconditional, unsecured and subordinated obligations of the Issuer ranking pari passu without any preference among themselves. In the event of the winding-up or liquidation of the Issuer, the claims of the Sukukholders against the Issuer in respect of the Sukuk Wakalah will be subordinated in right of payment to the claims of all Senior Creditors (as defined below, which includes but is not limited to, holders of Tier-2 Capital Instruments (as defined below)) and will rank senior to all Junior Obligations (as defined below). The Sukuk Wakalah will rank pari passu with Parity Obligations (as defined below). “Junior Obligations” means any ordinary share of the Issuer. “Parity Obligations” means the most junior class of preference shares and any security or other similar obligation issued, entered into or guaranteed by the Issuer that constitutes or could qualify as Additional Tier-1 capital of the 14
38. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER Issuer on an unconsolidated or consolidated basis, pursuant to the relevant requirements set out in the BNM CAFIB, or otherwise ranks or is expressed to rank, by its terms or by operation of law, pari passu with the Sukuk Wakalah. “Senior Creditors” means (i) creditors of the Issuer (including holders of any security or other similar obligation issued, entered into or guaranteed by the Issuer that constitutes Tier2 Capital Instruments) other than those whose claims rank or are expressed to rank, by its terms or by operation of law, pari passu or junior to the claims of the Sukukholders; and (ii) any class of the Issuer’s share capital (excluding the most junior class of preference shares and ordinary shares). “Tier-2 Capital Instruments” means any Tier-2 capital instrument issued by the Issuer, pursuant to the relevant requirements set out in the BNM CAFIB. (t) Form and Denomination : The Sukuk Wakalah shall be issued in accordance with: a) the “Participation Rules for Payments and Securities Services” issued by BNM, as amended or replaced from time to time; b) the “Operational Procedures for Securities Services” issued by BNM, as amended or replaced from time to time; and c) any procedures/ guidelines/ rules issued by the relevant authorities from time to time (as the same may be amended and/or substituted from time to time). Form The Sukuk Wakalah shall be represented by global certificate(s) to be deposited with BNM (or any form in replacement to global certificate) and may be exchanged for definitive bearer form only in certain limited circumstances. Denomination The denomination of the Sukuk Wakalah shall be RM1,000.00 or in multiples of RM1,000.00 at the time of issuance. (u) Taxation : All payments by the Issuer shall be made without any withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia, or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law, in which event the Issuer shall: 15
39. BANK ISLAM MALAYSIA BERHAD (“ISSUER”) PROPOSED ESTABLISHMENT OF A SUKUK WAKALAH PROGRAMME OF UP TO RM5.0 BILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLE OF WAKALAH BI AL-ISTITHMAR FOR THE ISSUANCES OF ADDITIONAL TIER-1 CAPITAL SUKUK WAKALAH THEREUNDER (v) Jurisdiction : (i) ensure that the withholding or deduction does not exceed the minimum legally required; (ii) ensure that the withholding tax declaration and submission requirement as required by law are complied with; (iii) forthwith pay such additional amount so that the payee would receive the full amount which the payee would have received if no such withholding or deductions are made; (iv) pay to the relevant taxation or other authorities, within the period for payment permitted by applicable law, the full amount of the deduction or withholding; and (v) furnish to the Sukuk Trustee, upon its request, an official receipt of the relevant taxation or other authorities involved for all amounts deducted or withheld as aforesaid. The Issuer shall unconditionally and irrevocably submit to the exclusive jurisdiction of the courts of Malaysia. 16