(1) EARLY REDEMPTION CHARGES
Background

The Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC) has, at its 203rd meeting held on 14 December 2017, discussed on the issue of imposing early settlement charges pursuant to early redemption in the context of Islamic capital market (ICM) particularly in sukuk issuance/structuring based on `uqud mu`awadhat (contracts of exchange).

Issue

The issue in deliberation was on the permissibility of imposing early settlement charges in the form of additional amount that may be considered as redemption premium pursuant to early redemption.

Resolution

The SAC has resolved that the sukukholders may impose early settlement charges pursuant to early redemption up to the unearned profit within the deferred sale price subject to mutual agreement.

(2) INTER-COMPANY ADVANCES OF SUKUK PROCEEDS
Background

The Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC) has, at its 203rd meeting held on 14 December 2017, discussed on the issue of the proceeds raised from any issuance of sukuk that will be advanced to parent company and/or its subsidiaries or other party as inter-company advances.

Issue

The issue in deliberation was on whether inter-company advances of sukuk proceeds from the issuer to parent company, its subsidiaries, group of companies or other parties may be undertaken either through Shariah-compliant mode of financing or conventional loan with interest.

Resolution

The SAC has resolved that inter-company advances of sukuk proceeds from the issuer to the parent company, its subsidiaries, group of companies or other parties should be executed via Shariah-compliant mechanism only.