SHARIAH PRONOUNCEMENT

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1 SHARIAH PRONOUNCEMENT In the name of Allah, the Most Gracious, the Most Merciful All praise is due to Allah, the Cherisher of the world, and peace and blessing upon The Prophet of Allah, on his family and all his companions CAHAYA CAPITAL LTD EXCHANGEABLE TRUST CERTIFICATES OF UP TO USD750.0 MILLION IN NOMINAL VALUE BASED ON THE SHARIAH PRINCIPLES OF MUDHARABAH AND MURABAHAH ( CERTIFICATES OR SUKUK ) CIMB Islamic Bank as the Shariah Adviser ( the Shariah Adviser ) has reviewed the structure and mechanism to be entered into in respect of the Sukuk by Cahaya Capital Ltd. (the SPV Issuer or the Issuer ) to ensure compliance with Shariah. Except where defined herein, defined terms used in this Shariah Pronouncement have the meanings given to them in the Conditions of Certificates in connection with the Sukuk. 1. STRUCTURE AND MECHANISM The detailed descriptions of the sukuk structure and its mechanics are as outlined below: The SPV Issuer shall issue Sukuk to the Sukukholders in return for subscription of the Sukuk by payment of subscription proceeds ( Proceeds ). The Sukuk shall represent the Sukukholders proportionate beneficial ownership and interest in the Shariah compliant investments of the SPV Issuer. On the Issue Date, the SPV Issuer (in its capacity as Rab Al Mal) shall enter into a Mudharabah Agreement with Khazanah (as the Mudharib), and pursuant thereto, the latter shall utilize at least 51% of the Proceeds (the Mudarabah Capital ) to purchase assets by way of transfer beneficial ownership in a portfolio of Shariah compliant tangible assets (the Assets ) from Khazanah and/or any of its wholly owned subsidiaries. The Assets can be in the form of Shariah compliant shares or any other Shariah compliant tangible asset. The Mudharib shall be entitled to a share of profit based on a pre-agreed profit sharing ratio. Loss, if any shall be borne by the Rab Al Mal. The remaining Proceeds (up to 49%) shall be utilized by the SPV Issuer to enter into a commodity murabahah investment ( Commodity Murabahah Investment ) whereby the SPV Issuer shall purchase Shariah compliant commodities from the relevant commodity broker (Broker 1) through an authorized agent at cost price ( Purchase Price ) and subsequently sell to Khazanah (as Buyer) at cost price plus profit (the Deferred Sale Price ) payable upon Maturity or a Dissolution Event. Khazanah shall subsequently sell the commodities to a commodity broker (Broker 2) through an authorized agent on spot basis for an amount equal to the Purchase Price of the commodities. The Mudharib shall ensure the Shariah compliance of the Mudharabah Capital with the asset tangibility requirement and may from time to time include/substitute the existing Assets with any other form of future Shariah-compliant assets. The tangibility ratio can reach a minimum of 33 percent of the aggregate outstanding nominal value

2 of the Sukuk before any substitution/ injection of tangible assets would be required. The Mudharib shall appoint a Shariah Adviser to ensure Shariah compliance of the Assets on the Issue Date and from time to time during the Sukuk tenor. The Mudharib shall follow the screening criteria similar to Dow Jones Islamic Market Indexes ( DJIM Financial Ratios ) or the financial ratios of the FTSE Shariah Global Equity Index Series (the FTSE Financial Ratios ). 1.1 Maturity and other Dissolution Events At Maturity or in case of a Dissolution Event, the Exercise Price (as defined below) plus the outstanding Deferred Sale Price received from Khazanah in respect of the Commodity Murabaha Investment, shall be paid by the SPV Issuer to the Sukukholders up to the outstanding amounts due under the Sukuk (the Redemption Amount ). At the earlier of, Maturity or in case of a Dissolution Event, given the Assets are sold by Khazanah and/or wholly owned subsidiaries to the SPV Issuer on the Issuance Date and the Purchase Undertaking is provided by Khazanah, the exercise price under the Purchase Undertaking granted by Khazanah to the SPV Issuer shall be the fair market value of the Assets at Maturity or on such Dissolution Date, as the case maybe ( Exercise Price ). At the Maturity or in a case of a Dissolution Event, Khazanah shall acquire the Assets from the SPV Issuer pursuant to the Purchase Undertaking. Any amount in excess of the Redemption Amount (generated by the Assets) shall be retained by the Mudarib as incentive fee. 1.2 Exchange Mechanism The terms of the Sukuk shall include an Exchange Right i.e. the right of the Sukukholders to exchange the Sukuk for an agreed number of Shares (physical settlement) or the average VWAP of such Shares (cash settlement). On exercise of the Exchange Right by a Sukukholder, there shall be a pro rata dissolution of the Assets and the SPV Issuer shall distribute either the agreed number of Shares (physical settlement) or the average VWAP of such Shares (cash settlement) received from Khazanah to the Sukukholders. Under the Purchase Undertaking and upon receipt of an Exchange Notice, Khazanah shall acquire the proportionate number of Assets and redeem a proportionate amount of the Commodity Murabahah Investment in exchange either for Shares or the relevant cash payment (if Khazanah exercises its right under the Cash Settlement Purchase Right Deed) in order to enable the SPV Issuer to satisfy its obligations to the Sukukholders under the Exchange Right. The Exchange Right shall be for an agreed period (the Exchange Period ) before the maturity of the Sukuk, and upon the discharge of the SPV Issuer s obligations under the Exchange Right, the exchanged Sukuk shall be cancelled. 2

3 2. IMPORTANT HIGHLIGHTS 2.1. Shariah Compliance Covenant: No breach of the Shariah compliance criteria of the Assets as set out in paragraphs 2.2 (A) and 2.2 (B) below. The value of the Assets shall not fall below 33 percent of the aggregate outstanding nominal value of the Sukuk at all times throughout the tenure of the Sukuk Shariah Compliant Criteria of the Assets: With respect to a company which shares are comprised in the Assets, such company which satisfy the following tests: A. Business Activtity Test, ie. not involved in the following non-shariah Compliant businesses: Alcohol Tobacco Pork-related products Conventional financial services (banking, insurance, etc.) Weapons and defence; and Entertainment (hotels, casinos/gambling, cinema, pornography, music, etc.) B. Financial Ratio Test DJIM Financial Ratios FTSE Financial Ratios All of the following must less than 33%: Total debt divided by the trailing 24-month capitalization The sum of a company s cash and interest-bearing securities divided by trailing 24-month average market capitalization Accounts receivables divided by the trailing 24-month average market capitalization or Debt is less than 33% of total asset Cash and interest bearing items are less than 33% of total assets Account receivable and cash are less than 50% of total assets. Total interest and non compliant activities income should not exceed 5% of total revenue. 2.3 Exchangeable Sukuk features: It refers to sukuk which give the investors the right (but not the obligation) to exchange the Sukuk with an agreed number of shares in a company at a pre-determined exchange price, but the exchange of Sukuk into shares can also involve other third party shares held by the Issuer. 3

4 2.4 Utilization of Proceeds: For Khazanah additional working capital and for other general corporate purposes relating to its principal business activities which are Shariah-compliant. 2.5 Underlying Asset: Shariah-compliant shares in one or more companies, whether listed or not listed on any stock exchange, identified by the Mudharib in its discretion and approved by the Shariah Board as Shariah-compliant from time to time throughout the term of the Sukuk, and as approved by the Shariah Board as Shariah-compliant on the Closing Date, and in all cases satisfy the Business Activity Test and the Financial Ratio Test. 2.6 Isqat Haq: On the Issue date, the Issuer shall use at least 51% of the Sukuk proceeds to acquire Shariah-compliant Shares. The value of the Shariah-compliant Shares will be at the market value based on agreed valuation calculated based on the Valuation Principles. 3. APPROVAL 3.1. The Shariah Adviser is of the view that, given the prevailing circumstances and the jurisdiction under which the Issuer of the Sukuk Programmes is established, the structure and mechanism as set out above are acceptable within the principles of Shariah, subject to satisfactory documentation and proper execution of the same In arriving at the decision, the Shariah Adviser also took into consideration of the following issues: (i) The legal constraints under which the Sukuk Programmes is being developed; (ii) The need to develop the Islamic finance industry, particularly in respect of the issuance of Islamic securities; (iii) The need to facilitate the increasing need of corporates and financiers to mobilise funds according to Shariah principles; and The prevailing conditions and affairs of the Ummah and the need to remove them from the shackles of riba. And He knows best. 4

5 Endorsement by the Chairman of the Shariah Committee of CIMB Islamic Bank Berhad I, Dr. Shafaai Musa, hereby confirm that all members of the Shariah committee have been consulted and made aware of all Shariah issues in relation to this proposal DR SHAFAAI MUSA Acting Chairman Shariah Committee CIMB Islamic Bank Berhad Date: 30 May

SHARIAH PRONOUNCEMENT

SHARIAH PRONOUNCEMENT In the name of Allah, the Most Gracious, the Most Merciful All praise is due to Allah, the Cherisher of the world, and peace and blessing upon The Prophet of Allah, on his family