Perbadanan Kemajuan Negeri Selangor Notice of Extraordinary General Meeting of the Sukukholders

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1. PERBADANAN KEMAJUAN NEGERI SELANGOR (Incorporated under the Selangor State Development Corporation Enactment, I 964) ISLAMIC COMMERCIAL PAPERS ("ICPs") PROGRAMME OF up To RM300.0 MILLION IN NOMINAL VALUE ("ICP PROGRAMME") AND ISLAMIC MEDIUM TERM NOTES ("IMTNs") PROGRAMME OF up To RM700.0 MILLION IN NOMINAL VALUE ("IMTN PROGRAMME") SUBJECT To A JOINT LIMIT OF RM700.0 MILLION IN NOMINAL VALUE NOTICE OF EXTRAORDINARY GENERAL MEETING OF THE HOLDERS ("SUKUKHOLDERS") OF THE ICPS AND IMTNs (COLLECTIVELY, "SUKUK MURABAHAH") This notice is issued to the Sukukholders pursuant to paragraph 1.2 of Schedule I of the trust deed dated 19 March 2013 ("Trust Deed") entered into between Perbadanan Kernajuan Negeri Selangor ("Issuer") and MTrustee Berhad (formerly known as Am Trustee Berhad) (Company No. 163032-V) ("Trustee") in connection with the ICP Programme and the IMTN Programme (collectively, the "Sukuk Murabahah Programmes"). All capitalised terms when used herein shall (unless otherwise defined heroin) have the same meanings as in the Trust Deed, NOTICE Is HEREBY GIVEN for the convening of an Extraordinary General Meeting of the Sukukholders at De Palma Hotel, Section 19, Sheh A1am on Thursday, 26 January 2017 at 9:30 am or at any adjournment thereof, for the purpose of considering, and if thought fit, passing with or without modifications, the special resolutions set out below. For the purpose of convening the aforesaid Extraordinary General Meeting, the quorum for the meeting of the Sukukholders for passing a Special Resolution shall be at least two (2) persons being the Sukukholders present in person or by proxy and holding or representing in the aggregate of not less than fifty per cent (50%) in Nominal Value of the Sukuk Murabahah for the time being outstanding at the date of the meeting. A Special Resolution duly passed at any meetings of the Sukukholders shall be binding upon all the Sukukholders, whether or not they are present at the meeting. If within thirty (30) minutes after the time appointed for the meeting, a quorum is not present, the meeting shall stand adjourned to such day and time being not less than fourteen (14) days and not more than forty two (42) days thereafter and to such place as may be appointed by the Chairman. At such adjourned meeting, two (2) persons being the Sukukholders present in person or by proxy and holding and representing whatever the amount of the Nominal Value of the Sukuk Murabahah for the time being shall form a quorum. By Order of the Trustee for the Sukukholders MTrustee Be chad (formerly known as Am Trustee Berhad) Kuala Lumpur Date: 3 January 2017
2. PERBADANAN KEMAJUAN NEGERI SELANGOR (Incorporated under the Seiangor State Development Corporation Enactment, 1964) ("Issuer") ISLAMIC COMMERCIAL PAPERS ("ICPs") PROGRAMME OF up To RM300.0 MILLION IN NOMINAL VALUE ("ICP PROGRAMME") AND ISLAMIC MEDIUM TERM NOTES ("IMTNs") PROGRAMME OF up To RM700.0 MILLION IN NOMINAL VALUE ("IMTN PROGRAMME") SUBJECT To A JOINT LIMIT OF RM700.0 MILLION IN NOMINAL VALUE NOTICE OF EXTRAORDINARY GENERAL ("SUKUKHOLDERS") OF THE ICPS AND MURABAHAH") MEETING OF THE IMTNs (COLLECTIVELY, HOLDERS "SUKUK All capitalised terms when used herein shall (unless otherwise defined herein) have the same meanings as in the Trust Deed WHEREAS: I. Pursuant to a programme agreement dated I9 March 2013 ("Programme Agreement") entered into between the Issuer and Am Investment Bank Be mad (as the "Lead Arranger", the "Facility Agent" and "Lead Manager"), the Issuer has established the Sukuk Murabahah Programmes with the following programme sizes:(i) RM300,000,000,00 in the case of the ICP Programme ("ICPS Limit"); and 00 RM700,000,000.00 in the case of the IMTN Programme ("IMTNS Limit"); subject to a joint-limit of RM700,000,000.00 ("Overall Limit"). 2. The ICPs and the IMTNs issued pursuant to the Sukuk Murabahah Programmes are constituted by a trust deed dated 19 March 2013 ("Trust Deed") entered into between the Issuer and MTrustee Berhad (formerly known as Am Trustee Berhad) (Company No. I63032-V) ("Trustee"). 3. The Issuer is proposing to increase the IMTNS Limit by RMI, 000,000,000.00 from RM700,000,000.00 to RMI, 700,000,000.00 ("Revised IMTNS Limit"), thereby increasing the Overall Limit to RMI, 700,000,000.00 ("Revised Overall Limit") (the proposed Revised IMTNS Limit and the proposed Revised Overall Limit shall collectively be referred to as "Proposed Upsizing"). For clarity, there will be no change to the ICPs Limit and save for the changes envisaged in paragraph 4 below, all other terms and conditions of the Sukuk Murabahah Programmes remain unchanged. 4. In tandem with the Proposed Upsizing, the following changes are consequentially envisaged ("Consequential Revisions"):(i) Following preliminary consultation with the Securities Commission's Shariah Advisory Council ("SC's SAC"), taking into account the new resolutions passed by the SC's SAC on the Shariah principles of Murabahah, the Issuer proposes to revise the Islamic structure that is applicable for issuance of Sukuk Murabahah 2
3. under the Sukuk Murabahah Programmes from the Shariah principle of Murabahah to the Shariah principle of Murabahah (via a Tawarruq arrangement). In brief, Murabahah (via a Tawarruq arrangement) is a tripartite arrangement involving a sale and purchase of Shariah-compliant commodities (excluding ribawi items in the category of medium of eXchange such as currency, gold and silver). To elaborate further, the proposed revision to the Islamic principles of the Sukuk Murabahah Programmes would be reflective of the current market practice in the Malaysian Islamic capital markets. In line with the requirements under the Securities Commission's Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework ("LOLA Guidelines"), the Issuer intends to seek the endorsement from the SC's SAC in respect of the proposed revision of the aforesaid Islamic structure. (ii) Upon the implementation of the Proposed Upsizing, all matters/resolutions which require the Sukukholders' consenVapproval shall be carried out on a 'per series' basis. This is to comply with the provisions of the LOLA Guidelines. The defined term "Series" shall mean, in relation to any Sukuk Murabahah. such Sukuk Murabahah sharing the same Issue Date, the same Issue Request, the same Series number, the same Tenure and the same terms and conditions. 5. The Proposed Upsizing is intended to allow the Issuer to finance, amongst others, its ongoing projects and future projects. Detailed justifications are set out in Appendix I hereto. 6. The Issuer is required to obtain the prior written approval from the Ministry of Finance Malaysia ("MOF") for the Issuer to incur indebtedness under the Sukuk Murabahah Programmes following the Proposed Upsizing pursuant to Section 13 of the Enactment and Section 14(I)(d) of the Incorporation (State Legislatures Competency) Act 1962 ("MOF Approval"). The Issuer has submitted their application for the MOF Approval to MOF on 31 May 2016. As at the date of this notice to the Sukukholders, the MOF Approval is still pending. 7. The Issuer has obtained the following in connection with the Proposed Upsizing and the Consequential Revisions:co a confirmation from the Rating Agency confirming that the Proposed Upsizing and Consequential Revisions have no impact on the credit rating of the Sukuk Murabahah Programmes as attached in Appendix 2; and (ii) a pronouncement from the Shariah Adviser confirming that the Sukuk Murabahah Programmes are in compliance with Shariah principles following the proposed implementation of the Proposed Upsizing and Consequential Revisions as attached in Appendix 3. 3
4. IT Is HEREBY RESOLVED As FOLLOWS :. (1) SPECIAL RESOLUTION I THAT, subject to the MOF Approval having been obtained, approval be and is hereby given for the IMTNS Limit to be increased to the Revised IMTNS Limit thereby increasing the Overall Limit to the Revised Overall Limit and for the Issuer to carry out the Consequential Revisions as contemplated in the Recitals above, (2) SPECIAL RESOLUTION 2 THAT subject to the passing of Special Resolution I, approval be and is hereby given to the Issuer and members of the Issuer to do all such acts and things as may be necessary to give effect to the resolutions passed hereinabove including but not limited to the necessary amendments to the principal terms and conditions and all the relevant legal documents in relation to the Sukuk Murabahah Programmes. (3) SPECIAL RESOLUTION 3 THAT subject to the passing of Special Resolution I , approval be and is hereby given to the Trustee and/or the Facility Agent where necessary, to do all such acts, deeds and things (including the giving of consents(if required)) and to execute, sign and deliver all such documents and/or agreements (including amending the Trust Deed, the Programme Agreement, the Agency Agreement and all other relevant Transaction Documents or required)) as may be necessary to give effect to and complete the matters referred to in the Special Resolutions herein with full power to assent to any conditions, modifications, variations and/or amendments as may be required or as the Trustee and/or the Facility Agent may in their discretion deem fit or expedient for the benefit of the Sukukholders, and subject to compliance with Shariah. AND FURTHER RESOLVED THAT, the Trustee and/or the Facility Agent shall not be liable or held responsible to the Sukukholders for any acts or omission in order to give effect to the powers and authorities conferred on the Trustee and/or the Facility Agent under the Special Resolutions herein, provided that in so acting or omitting to act, the Trustee and/or the Facility Agent, as the case may be, have acted with reasonable care and diligence required of a trustee and/or facility agent in similar circumstances, and the Sukukholders shall fully indemnify and keep indemnified the Trustee and/or the Facility Agent against all proceedings, claims and demands to which the Trustee and/or the Facility Agent may thereby become liable and all costs, charges, expenses, losses and damages which may thereby be incurred or suffered by the Trustee and/or the Facility Agent. 4
5. APPENDIX I I . O FINANCING PROJECTS Currently, PKNS requires funds for the purposes of financing its existing and future planned projects. These projects would require adequate financing to ensure they run smoothly and are completed within the agreed completion period. Based on PKNS's five-year plan (2017"2021 ), PKNS is estimating its overall developments cost at RM 7.74 billion with 106 new projects worth RM 6.42 billion to be executed as below: Schedule I 2017 No of Project 2018 RM'000 No of Project 2019 RM'000 No of Project 2020 RM'000 No of Project 2021 RM'000 No of Project RM'000 NEW PROJECT ^!^ o 3 403,700 3 492,000 D o 200,000 2 283,000 o o a 130,000 48,631 2 34,736 o o o o o o 4 199,000 o o o o ,77,405 3 248,631 11 920,436 3 492,000 a 130,000 82,950 3 124,390 4 179,410 o o 4 124,100 2 74,400 Shah A1am 2 80,300 Bukit Cerakah o o A1am Nusantara 3 52,105 2 45,000 6 2 Bandar Sultan SUIeiman Total o ^i KOIa Puteri 42,900 3 115,500 2 88,000 o o Be main Jaya 3 118,030 4 104,344 3 82,933 o o Mainpu Milik 6 793,628 2 418,330 4 372,944 2 146,745 4 386,210 Others 3 26,012 o o 4 44,764 13,433 o o Total ,S 1,063,520 12 762,564 17 768.05, 3 160,178 11 594,910 181,500 8 407,200 2 30,600 Antara Gapi 10,200 ^!! Seiangor Cyber Valley 109,771 6,300 Bangi o o 4 186,400 o o 2 58,500 3 118,500 Total I 109,771 5 367,900 B 407,200 4 89, ,00 4 124,800 22 1,350,696 20 1,379,095 36 2,095,687 to 741,278 18 849.7,0 GRAND TOTAL Note: Based on estimated project development cost
6. 2 .0 ACQUISITION OF LAND BANKS The proceeds raised from the Sukuk Murabahah Programmes upon the implementation of the Proposed Upsizing will also be used to increase PKNS's land bank, Such increase in land bank is necessary in order to support PKNS's future development projects and lower its land cost considering the increase in land prices over time. For the year 2017, PKNS had budgeted RM50.0 million for purchase of land. 3.0 CAPITAL INJECTON/INVESTMENT The Proposed Upsizing will also provide additional capital injections into the subsidiaries of PKNS. The additional capital injection in 2017 is as per Schedule 2 below. Schedule 2 ,., . ,-it ',*I'. *NX*-4 . 14 I) ;*;^-;;*i; ^:bin^any:if-;;^;^:^It DatumCorporation -.. -. . .*- -....- . t *';;S:,, *::*,.<, ' Pi. I 67.0 %'#!,;;t, - - - ,;;- ^;ip, r!3'^_^.^:,;" *' ; , ,I ,.*.' , '..* Issuance of Redeemable Preference Shares ("RPS") to finance the development of Datum International Sdn Bhd (DC1) Jelatek. 2) Selgate Corporation 40.0 Issuance of ordinary share to finance the construction of hospital Rawang. 18.0 Issuance of Cumulative Redeemable Preference Shares Sdn Bhd 3) De Palma Management & Services Sdn Bhd ("CRPS") to finance the improvement and renovation of (DPMS) DePalma Hotel chains. 4) Central Spectrum Sdn Bhd ("CSSB") 225.0 Proposed acquisition of shares of CSSB from Kumpulan Hananah Selan or Berhad "KHSB" *Note: The above is subject to final is atibn of negotiation between transaction parties and the approval of the members of PKNS. 4.0 AFFORDABLE HOUSING PKNS plans to build and is presently constructing 31,000 affordable homes to be completed by 2030. As affordable housing tends to eat into the cost of subsidies at approximately RM30-RM50 thousand per unit, PKNS would have to spend between RMI. 5 billion to RMI. 8 billion in subsidies for the construction of these homes. Over the course of 5 years (2015-2019) PKNS and its group have planned to launch up to 8,716 units of affordable houses, bearing the subsidized value of up to RM408.7 million. Given the above, PKNS would require adequate financing to ensure that its housing programme runs smoothly as planned.
7. APPENDIX 2 RAM Rating Services Be mad 's Letter dated 22 December 2016
8. A RATINGS CONF ^DENT^AL Our Ref: 1548/RAM/2016 22 December 201.6 Puan Hajah Nor Azlina binti Am ran Timbalan Pengurus Besar Perbadanan Kernajuan Negeri Selangor Tingkat 9, Menara HPAic Laman Sen Business Park No. 7 Persiaran Sukan Seksyen 13,40100 Shah A1am Selangor Darul Ehsan Dear Puan Nor Azlina upszzTNG AND VAR, :ATTON OF TERMS FOR PERBADANAN KE, 11AJUAN NEGER:r SELANGOR's (PKNs) rSLAMrc COMMERcrAL PAPERS PROGRAMME OF up To RM300 MrLLTON (20, .312020) AND ISLAMIC MED^UM. TERM NOTES PROGRAMME OF Up To RM700 Mi:LLTON (201,312033) wrTH A JoinT LiMTT OF RM700 MILLION We refer to the email dated 20 December 201.6 from Aminvestment Bank Be chad, regarding PKNS' intention to increase the programme limit from RM700 million to RMI. 7 billion and to amend the terms of the above programme, including revising the tenure of the programme from 20 years to 25 years. We hereby confirm that the proposed upsizing and variations to the terms of the programme will not, by themselves, affect the AA3/Stable/PI ratings of the programme. Please contact us should you require any clarification, Thank you. Yours sincerely ,^^^^^. Foo SU Yin Denise The an Chief Executive Officer Deputy Chief Executive Officer RAM Rating Services Berhad 17635BB. Tj Suite 20.01, Level20 The Gardens South Tower T +60376281000I Mld Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia F +60327111701 +603 22991000 E rainratlnqs@rain. coin. my WWW. rain. coin. my
9. APPENDIX 3 Shariah Pronouncement dated 30 December 2016
10. Oilt ^., 0791{of 4'041, of(BC, ^;, f SHARIAH PRONOUNCEMENT e^^Jii CF, ^J!I ^I a"' All praise is due to Allah, the Cherish or of the world, and peace and blessing be upon the Prophet of Allah, on his 1:3mi!y and all hi^ companions PERBADANAN KEMAJUAN NEGERI SELANGOR ("PKNS" or the "lSSUER") PROPOSED ISSUANCE OF ISLAMIC COMMERCIAL PAPERS ("ICP") AND ISLAMIC MEDIUM TERM NOTES ("IMTN") ("SUKUK MURABAHAH") FOLLOWING THE PROPOSED INCREASE IN THE PROGRAMME SIZE OF THE FOLLOWING EXISTING PROGRAMMES ESTABLISHED BY PKNS WHICH ARE As FOLLOWS: (1) ICP PROGRAMME OF up To Rin300.0 MILLION IN NOMINAL VALUE; AND (11) IMTN PROGRAMME OF up To RMI. 7 BILLION IN NOMINAL VALUE (FROM THE INITIAL PROGRAMME SIZE OF RM700.0 MILLION)(To BE upsiZED To RMI. 7 BILLION) SUBJECT To A REVISED JOINT LIMIT OF RMI. 7 BILLION IN NOMINAL VALUE (FROM THE INITIAL JOINT LIMIT OF RM700.0 MILLION) ("upsizED suKUK inuRABAHAH PROGRAMMES") I, Datuk Dr Mohd Daud Bakar as the independent Shariah Adviser for Aminvestment Bank Berhad for the abovesaid existing RM300.0 million ICP Programme and RM700.0 million IMTN Programme ("Sukuk Murabahah Programmes") by PKNS, have reviewed the proposed structure and mechanism to be entered into in respect thereto to ensure Shariah compliance The defined terms used in this Shariah Pronouncement have the same meanings as contained in the details of Upsized Sukuk Murabahah Programmes in the pre-lodgement pack. ,. STRUCTURE OF TRANSACTION 1.1 . The Sukuk Murabahah Programmes comprise of Sukuk Murabahah to be issued from time to time under the Shariah principle of Murabahah (via Tawarniq arrangement) which are the approved Shariah concepts and principles to be applied for the purpose of structuring, documenting and trading of Sukuk, as specified under the Securities Commission Malaysia's ("SC") Guidelines On Unlisted Capital Market Products under the Lodge and Launch Framework issued on 9 March 2015, updated and effective on 15 June 2015 ("LOLA Guidelines"). as may be replaced, substituted, amended and revised from time to time, Level33 Mengro Binjo; No. 2, Jolon Binjoi Off Jolon Ampong 50450 Kuolo Lumpur Moloysio : +60178726667 HIP Tel Fox : +6032/8/8228 : +6032/8i 8219 Ernoil in doud@Qinoniecidvisors. coin
11. PERBADANAN KEMAJUAN NEGERISELANGOR Proposed Issuance of Islamic Commercial Papers and Islamic Medium Term Notes following the proposed increase in the programme size of the following existing programmes established by PKNS which are as follows : (i) ICP Programme of up to RM300.0 Million in nominal value; and (ii) IMTN Programme of up to RMI. 7 Billion Million in nominal (from the initial programme size of RM700.0 million) ito be upsized to RMI. 7 Billion) 4.2. The Sukuk Trustee, on behalf of the Sukukholders, and PKNS will enter into an agency agreement ("Service Agency Agreement), pursuant to which PKNS On such capacity, the "Purchase Agent') is appointed as the agent of the Sukukholders for the purchase and sale of certain Shariah-compliant Commodities which would exclude ribawi items in the category of medium of eXchange such as currency, gold and silver ("Commodities"). 1.3, The Purchase Agent will then enter into a facility agency agreement ("Facility Agency Agreement') to appoint the Facility Agent as the sub-agent of the Sukukholders (in such capacity, the "Sub-Purchase Agent') for the purchase and sale of the Commodities under the Sukuk Murabahah Programmes. I. 4. Pursuant to a commodity Murabahah master agreement ("Commodity Mumbahah Master Agreement'), to be entered into between PKNS (in such capacity, the "Purchaser') and the Sub-Purchase Agent, prior to the date on which the relevant series of the Sukuk Murabahah is issued, the Purchaser shall issue a purchase order ("Purchase Order') in relation to the said series to the Purchase Agent and Sub-Purchase Agent. In the Purchase Order to be issued by the Purchaser, the Purchaser will request the Purchase Agent and the SubPurchase Agent to purchase the Commodities, The Purchaser will irrevocably undertake to purchase the Commodities from the Sukukholders via the Sub-Purchase Agent at the deferred sale price willch shall be equivalent to the Purchase Price (as defined below) of the Sukuk Murabahah plus the aggregate profit margin, payable on a deferred payment basis ("Deferred Sale Price") which will be determined prior to the sale of the Commodities to the Purchaser and subject to Ibra' (as defined herein) if any. 1.5. Based on the Purchase Order, the Sub-Purchase Agent (PUTSuant to a commodity trading participant purchase agreement ("CTP Purchase Agreement') entered into between the SubPurchase Agent and the commodity trading participant ("CTP")), will appoint the CTP to purchase the Commodities from commodity supplier(s) ("Commodity Supplier') in the Bursa Suq A1-Sita' commodity market on a spot basis at a purchase price ("Purchase Price") which shall be an amount equivalent to the Sukuk Murabahah proceeds. The beneficial ownership of the Commodities purchased by Sub-Purchase Agent via CTP shall be passed from the commodity. supplier(s) to the GTP, held for the benefit of the Sukukholders. The Purchase Price of the Commodities shall be in accordance with the asset pricing requirements stipulated under the LOLA Guidelines. 4.6. PKNS (acting as the Issuer) shall then issue Sukuk Mutebahah to the Sukukholders to evidence the Sukukholders' ownership of the Commodities and subsequently once the Commodities are sold to the Purchaser, to evidence the Sukukholders' entiUement to receive the Deferred Sale Price. The proceeds received from the Sukukhdders shall be used to pay for the Purchase Price of the Commodities. 1.7. Thereafter, pursuant to the undertaking under the Purchase Order by the Purchaser, the SubPurchase Agent (acting on behalf of the Purchase Agent for the Sukukholders) shall sell the Commodities to the Purchaser under a sale and purchase agreement ("Sale and Purchase Agreement') at the Deferred Sale Price. 1.8. Upon completion of such purchase by the Purchaser, the Purchaser (pursuant to a commodity trading participant sale agreement ("CTP Sale Agreement') entered into between the Purchaser and the CTP) shall appoint the GTP to sell the Commodities to Bursa Malaysia Islamic Services Sdn. Bhd. C'BMIS") on a spot basis. The CTP Sale Agreement will provide for the CTP to directly sell the Commodities to BMIS upon notice by the Sub-Purchase Agent that the Sale and Purchase Agreement has been completed and executed and receipt of sale instruction from the Purchaser. For the avoidance of doubt, the sale to BMIS shall be in Page 2 of 6
12. PERBADANAN KEMAJUAN NEGERI SELANGOR Proposed Issuance of Islamic Commercial Papers and Islamic Medium Term Notes following the proposed increase in the programme size of the following existing programmes established by PKNS which are as follows : (1) ICP Programme of up to RM300.0 Million in nominal value; and (ii) IMTN Programme of up to RMI. 7 Billion Million in nominal (from the initial programme size of RM700.0 million) (to be upsized to RMI. 7 Billion) consideration of an amount equal to the Purchase Price. The beneficial ownership of the Commodities shall pass from the GTP (acting on behalf of the Purchaser) to BMIS: I. 9. The Sukuk Murabahah maybe issued with or without periodic profit payments ("Periodic Profit Payments"). For Sukuk Murabahah with Periodic Profit Payments, PKNS shall make Periodic Profit Payments forming part of the Deferred Sale Price to the Sukukholders during the tenure of the Sukuk Murabahah. The Periodic Profit Payments shall be calculated based on the profit rate to be agreed prior to each issuance of the Sukuk Murabahah and shall be payable semi-annually (in arrears) or such other frequency as may be agreed between the Issuer and the Lead Arranger. The Periodic Profit Payment(s) shall be calculated on the basis of actual number of days elapsed and actual days (actual dayslactuai days). For Sukuk Murabahah without Periodic Profit Payments, PKNS shall make a one-off lump sum payment on the maturity date which shall be equivalent to the Deferred Sale Price, to the Sukukholder(s). Each such payment shall reduce the Issuer's payment obligation in respect of the Deferred Sale Price payable on the Commodities to the extent of such payment actually made. Upon the respective maturity dates of the Sukuk Murabahah or upon the declaration of an event of default ("Event of Default'), the Purchaser shall pay all amounts outstanding in respect of the Deferred Sale Price of the Sukuk Murabahah (subject to Ibra' if any) upon which such Sukuk Murabahah shall be cancelled. 2. Shariah Conformi 2.1. Utilisation of the Proceeds. The proceeds raised from the Sukuk Murabahah Programmes shall be utilised to part-finance PKNS' Shariah-compliant general working capital requirements and/or general investments from time to time. The utilization of proceeds under the Sukuk Murabahah Programmes are in accordance to paragraph 2.20 Utilisation of proceeds, under Section B, Part 3 of the LOLA Guidelines which states that for sukuk, the issuer must ensure that the proceeds from the sukuk issuance are utilised for Shariah-compliant purposes only, 2.2. ' Identified Assets. Shariah-compliant commodities (exduding ribawi items in the category of medium of eXchange such as currency, gold and silver) which will be identified at or around the time of issuance of the Sukuk Murabahah as approved by the Shariah Adviser. 2.3. Commodity Mumbahah ("Tawarruq"). Commodity Murabahah, or Tarerruq refers to the process of purchasing a commodity for a deferred price determined through Murabahah (markup sale), and selling it to a third party for a spot price so as to obtain cash. Permissibility of Tawarruq can be traced in the general text of the A1-Quran that permits sale transaction (A1Quran, 2:275). The AAOIFI Shariah Standard has also approved this transaction (Refer to AAOIFl, Shariah Standards for Islamic Financial Institutions 4432H-2010, Shari'a Standards No. 30: Tarerruq, page 530 Appendix B; Basis of Shariah Rulings, mentioned that majority of the fuqaha subscribe to the permissibili^, of Tawarruq except Ibn Taymiyah and Ibn Qayyim who consider Tawarruq as prohibited or worthy of aversion). Page 3 of 6
13. PERBADANAN KEMAJUAN NEGER ! SELANGOR Proposed Issuance of Islamic Commercial Papers and Islamic Medium Term Notes following the proposed increase In the programme size of the following existing programmes established by PKNS which are as follows: (1) ICP Programme of up to RM300.0 Million in nominal value; and (ii) IMTN Programme of up to RMI. 7 Billion Million in nominal (from the initial programme size of RM700.0 million) (to be upsized to RM, 7 Billion) 2.4. Ibra. Ibra' refers to an act of releasing absolutely or conditionally the Sukukhdders' 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. An Ibra' may be granted at the absolute discretion of the Sukukholders. The Sukukholders in subscribing or purchasing the Sukuk Murabahah consent to grant an Ibra', if the Sukuk Murabahah is redeemed upon the dedaration of an Event of Default. Upon the declaration of an Event of Default, the Ibra' shall be the unearned profit due to the Sukukholders and calculated from the date of the declaration of an Event of Default up to the Sukuk Murabahah's respective maturity dates. The SAC of SC, at its 16'' meeting on 45 May 2014, resolved to update the resolution on Ibra' comprising the scope and definition of Ibra' and its application in Islamic Capital Markets ("ICM") transactions. (Refer Resolutions of the SAC of SC, 2012-2014 on Ibra', page 12-13), which stated amongst others: (a) Ibra' may be applied in 'uqud inu'awadhat (contracts of eXchange) including Murabahah and Musa\Reinah; (b) In ICM transaction, Ibra' may be applied in early redemption situation as per the following details: i) Sukukholders may offer Ibra' to the issuer based on the application made by the issuer for early redemption of sukuk upon occurrence of any event of default, call option, regulatory redemption, tax redemption etc. it) The formula for the computation of early settlement may be stated as a guide to the Issuer. un The Ibra' clause and the formula for the computation of early settlement may be stated in the main agreement of sukuk which is based on 'uqud inu'awadhat. However, the Ibra' clause in the main agreement shall be separated from the part related to the price of the transacted assets. Ibra' clause shall only be stated under the section for mode of payment or settlement in the said agreement. 2.5. Ta'widh (Compensation). In the event of delay in payment of the Deferred Sale Price under the Sukuk Murabahah, the Issuer shall pay to Sukukholders Ta'widh (compensation) on such overdue amounts at the rate and manner prescribed by the SAC of the SC from time to time. Ta'widh is permissible under Sukuk Bai' Bithaman Ajil, Sukuk Murabahah, Sukuk 1st sria' and Sukuk liarah only in the event of delay in payment of any financial obligation, Therefore. in the event of any delay in payments of the Deferred Sale Price, the Issuer shall pay the compensation on such overdue amounts at the rate arxi manner prescribed by the SAC from time to time in accordance with Shariah Section C, Chapter 4, Sub-paragraph 4.10. LOLA Guidelines. Any compensation referred to above which is paid to the Sukukho!ders, can be treated and/or utilised by the Sukukholders at their absolute discretion in accordance with or determined to/by their respective Shariah requirements, which may include donation to any registered charitable organization or any charitable purposes. Page 4 of 6
14. PERBADANAN KEMAJUAN NEGERI SELANGOR Proposed Issuance of Islamic Commercial Papers and Islamic Medium Term Notes following the proposed Increase in the programme size of the following existing programmes established by PKNS which are as follows : in ICP Programme of up to RM300.0 Million in nominal value; and (in IMTN Programme of up to RM, .7 Billion Million in nominal (from the initial programme size of RM700.0 million) (to be upsized to RM, .7 Billion) 2.6. Purchase Order. The Purchase Order which is issued by the Issuer is necessary to initiate the issuance of the Sukuk Murabahah and to manage the risk that could be exposed to the Sukukholders. The Purchase Order is based on Wa'ad Mulzim, an undertaking or unilateral binding promise by the Issuer to purchase the Identified Assets, once the Identified Assets are purchased from the vendors/suppliers at a certain fixed sale price. This is an arrangement which is approved by the AAOIFI Shariah Standard on Murabahah to protect the risk from the Sukukholders because otherwise, the client may decline from purchasing the Identified Assets which have already been bought from the vendors/suppliers. The AAOIFI Shariah Standard in allowing the practice of giving Purchase Order reads: "..... It is permissible to prepare a single set of documentation to incftide both the customer'S stated wish that the institution should buy the item from the supplier and a promise to buy the item from the institution, which the customer signs. ,." (Refer to AAOIFl, Shari'a Standards for Islamic Financial Institutions 1432H-2010, Shari'a Standard No. 8, Murabaha to the Purchase Orderer, p. 115, item 21113). The AAOIFI Shariah Standard also allows this practice and makes it binding. As such it cannot be revised except with the consent of both parties. The AAOIFI Shariah Standard in this matter reads: 'It ^^ permissible for the inst^Iution and the customer, after the latter has given a promise but before the execution of the Murabahah, to agree to revise the terms of the promise whether with respect to the deferment of payment, the mark-up or other terms. The ferns of the promise cannot be revised unless both parties agree to revise the promise, as the right to do so cannot be given exclusively to one of them" (Refer to AAOIFl, Sharia Standards for Islamic Financial Institutions 1432H-2010, Shari'a Standard No. 8, Murabaha to the Purchase Orderer, p. 117, Item 21314). The SAC of SC, at its *183" meeting on 31 March 2016, has deliberated on several issues and resolved to update the resolution on the definitions, binding effect, permissibility and implication in relation to wa'd (promise) and inure'adah (bilateral promise). The new resolutions stated amongst others the permissibilily of wa'd inulzim is based on the view of fuqaha' that re'd witich is attached to conditions is binding. The types of conditions in dude a particular action, date/ time and situation. The binding ness of wa'd shall take effect at the time when the re'd is expressed. 2.7 Appointrnent of. the Facility Agent as the Sub-Agent of the Sukukholders. The appointment of the Facility Agent as the Sub-Purchase Agent of the Sukukholders (Sub- Purchase Agent) for the purchase and sale of the Commodities shall be based on Shariah principle of Wakalah (agency). The Sukukholders (as principal agent) shall give consent to the Purchase Agent to appoint the Facility Agent (as SubPurchase Agent). The agent must have the consent from the principal to appoint a sub-agent which is consistent with the AAOIFl Shariah Standard that reads " The agent has no right to appoint a sub-agent except wi!h the permission of the prinoj:, al. .." (Refer to AAOIF!, Sharia Standards for Islamic Financial Institutions 1432H-2010, Sheri'a Standard No. 23, Agency and the Act of an Uricommissioned Agent, p. 419, item 6/4) The appointment of the Facility Agent is to facilitate internal process, whereby the Facility Agent will act on behalf of the Sukukholders to transact on the commodity trading due to their expertise in dealing with the commodity trading. It is permissible to appoint sub agent with specific task and contract as according to Hanafis, multiple agents can be appointed by the principal agent to perform various task according to their expertise myahbah al-Zuhaylial-Fiqh al-Islami re adjliatuh, vd. 5, Damsyiq: Dar al-Fikr, p. 121). Page 5 of 6
15. . PERBADANAN KEMAJUAN NEGERI SELANGOR Proposed Issuance of Islamic Commercial Papers and Islamic Medium Term Notes following the proposed increase in the programme size of the following existing programmes established by PKNS which are as follows: (i) ICP Programme of up to RM300.0 Million in nominal value; and tit) IMTN Programme of up to RM, .7 Billion Million in nominal (from the initial programme size of RM700.0 million) (to be upsized to RMI. 7 Billion) 3. ^^! This Shariah Pronouncement provided herein is only on the transaction structure after our perusal of the terms and conditions of this Sukuk Murabahah Programmes. Accordingly, having reviewed the structure and mechanism as documented above, the Shariah considerations contained therein, I hereby confirm that the above proposed Upsized Sukuk Mulebahah Programmes is in compliance with the Shariah principles, as well as the relevant guidelines formulated by the SC to regulate the issuance of Sukuk Murabahah and is an allowable Sukuk under Shariah, subject to satisfactory documentation. Yours faithfu DATUK DR MOHD DAUD BAKAR 30 December 2016 .. Page 6 of 6
16. FORM OF PROXY * 11We (:F',, 11 name rind NRIC No. I Con!pully No. II'nsspor! No. in block letter. $) ^'!1/1 odd, ,ess in block lei!e, s) being a Sukuldiolder of the Islamic coininercial papers programine of up to RM300.0 million in nominal value and Islamic medium term notes prograinme of up to 1<^1700.0 million in nominal value subject to a joint-limit of RM700.0 million in noininal value by Perbadanan Kernajuan Negeri SGIangor, hereby appoint .,........,..............................................,..,.....,.............,.................,.............,..,..,...............,.......,......,........,....,..,... ipt, 11 riding in block lei!GP:s and NR/C No? (:F',, 11 add, ,ess in block letter. .$, I or failing InnVlier (Full Home in block letters cold NRIC No) IFz, 11 add, ,ess ill block lei/e, :s) or failing hiin/net, the Chairman of the meeting as my/our* proxy to vote for Ine/us* on my/our* bellalf at the meeting of Sukuldiolders to be Ileld at De Palma Hotel, Section 19* SIIali A1ain on Thursday, 26 January 2016 at 9:30 am and at any adjournment thereof in respect of my/our 1101dings in tlie Inariner indicated below: SPECl^L RESOLUTIONS FOR A GIIINST 11887'/11N SPECIAL RESOLUTION I PROPOSED INCREASE IN THE ISSUE SIZE OF THE SUKUK MURABAHA}{ PROGRAMMES SPECIAL RESOLUTION 2 PROPOSED AUTHORISATION OF THE ISSUER OR ITS MEMBERS SPECIAL RESOLUTION 3 PROPOSED AUTHORISATION OF THE TRUSTEE Planse I, adjcn!c 11/@ I'm, Mer I', I I'llicl, yotr un^11 yoi, r voies 31/01, !d be cost, Trilli mr 'X" 171 file rippropri@re spaces ribove. Unless tornig, ', Ism, dioJis ore spec!!led Ihereiii. 11/@ proxy will\, ore or ribsini, 11'0, ,I volt, Ig us fukiie Jiniiks/if Nominal Value of Sukuk Held Signature(s)/Common Seal of Sukukholder Dated this. .,........... day of .....,................ 20 17
17. Notes :- (4) Evei, ., Silk!, kholder is entitled to upporni u proxy 10 onend and yore in his PIQce. A prov need not be o SIIk!, kho!der of the ICP Programme and/or IMTN PI. ogrQmme. inIe, ,e a Silkz!kholde, , appoin/s more Ihrrn one PI, 0;:^)?, the appoint, "ent shall be mydftd unless he ,$pec!/ies the pi'opor!ions of his holdings to be 1.8pi. esenJed by each p, 'o:0. ,. (14) The proxy for. in shall be signed by the SI, kt, kho/der o1. his ono1. Mey duly Qt!tho, .ised in w, 'it^^g or, 41'the Silktikho!del' is a corporalion, ei!heI' execi, !ed unde, ' its common seal or tind@I. the hand ofqn qdicer or attoi'ney duly authorised in VPI. iting. din Tile prov 16nii shall be deposited a! Mrit, s, ee Be, ,had d'or, ,tier, !y known QS Am 71.11stee Being of) 's ,. egiste, ,ed q^'ice at Level 15, Mend, n Am F1, ^!, No. I I'll"n 1913, 46300 Feinlihg Jaya, Seiango, , noi less that forty eighi ,48) hoju. s 640, 'e the time of holding the 4101'ementioned meeting o1' any a4i'o11, 'ninen! the, 'eq/: