ICD CORPORATE PREMIUM FUND (Registration No. LLP/00184/2015-(I))

Transcription

1 ICD CORPORATE PREMIUM FUND (Registration No. LLP/00184/2015-(I)) (a Labuan Islamic Limited Liability Partnership registered under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010) AMENDED AND RESTATED PRIVATE PLACEMENT MEMORANDUM in relation to the private placement of the open-ended investment fund with Limited Liability Partnership Units at USD1 each DESIGNATED PARTNER ICD FIXED INCOME LIMITED FUND MANAGER ISLAMIC CORPORATION FOR THE DEVELOPMENT OF THE PRIVATE SECTOR i

2 ICD CORPORATE PREMIUM FUND This Amended and Restated Private Placement Memorandum ( Memorandum ) is furnished on a confidential basis to qualified prospective investors for their consideration in connection with the private offering ( Offering ) of limited liability partnership units ( Units ) in the ICD Corporate Premium Fund (the Partnership or the Fund ). The Fund is a Labuan Islamic limited liability partnership established and registered on 19 November under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010, read together with the Labuan Islamic Financial Services and Securities Act Prospective investors should read and understand the contents of this Memorandum. Prospective investors should not treat the contents of this Memorandum as investment, tax or legal advice. Investors may be subject to taxation or reporting and filing requirements in their own jurisdictions with respect to the ownership, purchase or disposal of the Units. All prospective investors should seek advice or consult professional advisers and make their own investigations and evaluation of the investment of Units in the Partnership. There are certain risk factors which prospective investors should consider (see section 8 for Risk Factors ). RELIANCE ON THIS MEMORANDUM This Memorandum is not the sole document which prospective investors will rely upon to invest in the Units. The contents in this Memorandum are qualified by the Amended and Restated Islamic Limited Liability Partnership Agreement ( Partnership Agreement ) in relation to the Partnership and the investment in the Units. The Partnership Agreement is available for inspection by prospective investors upon written request to the Designated Partner. No person has been authorized to give any information or make any statement concerning the Partnership or the Offering of the Units other than as set forth in this Memorandum. Prospective investors should not rely upon such other information or statements given or made. The Designated Partner has taken reasonable care to ensure that the information stated herein is true and accurate in all respects. However, this responsibility is limited to taking reasonable care in ensuring that such information is to the best of the knowledge and belief of the Designated Partner, properly extracted or derived from information released by sources which are reliable. No independent verification of this information has been carried out. Future projections and estimates made in this Memorandum are based on assumptions and expectations regarding future events which represent the Designated Partner s own assessment and interpretation of information available to it as at the date of this Memorandum. There can be no assurance that actual results will be the same as the future projections or estimates made. No representation or warranty, express or implied, is made by the Partnership, the Designated Partner or the Fund Manager, or any affiliates of these entities as to the accuracy or completeness of the information in this Memorandum. Prospective investors must determine for themselves what reliance they should place on the information in this Memorandum. The information contained in this Memorandum is current as at The Partnership, the Designated Partner, the Fund Manager or any of their affiliates have no obligation to update this Memorandum. The delivery of this Memorandum after this date does not indicate that there has been no change in the Partnership since this date. i

3 Prospective investors should rely on their own evaluation to assess the merits and risks of the investment. Prospective investors who are in any doubt as to the action to be taken should consult their professional advisers immediately. DISTRIBUTION RESTRICTIONS This Memorandum is furnished on a confidential basis and each recipient, by accepting the receipt of this Memorandum, agrees not to distribute or reproduce this Memorandum or disclose any information in this Memorandum to others without the prior written consent of the Designated Partner. This Memorandum has been or will be lodged with the Labuan Financial Services Authority under the Labuan Islamic Financial Services and Securities Act 2010 but has not otherwise been registered as a prospectus or as any form of offering document in any other jurisdictions in connection with the Offering. This Memorandum does not constitute an offer, invitation or solicitation for the Offering in any jurisdiction where such Offering is not authorised or to any person whom it is unlawful to make such an offer, invitation or solicitation of the Offering. NOTICE TO RESIDENTS OF MALAYSIA No recognition from the Securities Commission of Malaysia has been applied for or will be obtained for the making available, offering for subscription or purchase, or issuing invitation to subscribe for or purchase, the Partnership Units under the Capital Markets and Services Act Accordingly, this Prospectus or any amendment or supplement hereto may not be distributed in Malaysia directly or indirectly for the purpose of any offer of the Partnership Units and no person may make available, offer for subscription or purchase, or issue invitation to subscribe for or purchase, any of the Partnership Units directly or indirectly to anyone in Malaysia, unless the making available, offering for subscription or purchase, or issuing invitation to subscribe for or purchase, the Partnership Units falls within any of the categories specified in Schedule 5 of the Capital Markets and Services Act No prospectus has been or will be registered with the Securities Commission of Malaysia under the Capital Markets and Services Act Accordingly, no person may issue, offer for subscription or purchase, make an invitation to subscribe for or purchase, any of the Partnership Units directly or indirectly to anyone in Malaysia, unless the issue, offer for subscription or purchase, or invitation to subscribe for or purchase, the Partnership Units is made to persons specified in the applicable categories of Schedule 5, and Schedule 6 or 7, as the case may be, of the Capital Markets and Services Act 2007 in which case this Prospectus will be deposited as an information memorandum and where necessary registered as a disclosure document with the Securities Commission of Malaysia under the Capital Markets and Services Act ii

4 Contents 1 Executive Summary Overview Investment Objective and Strategy Structure Life of the Partnership Investment Committee Investment Management Anti-Money Laundering Measures Key Features Outlook for the Year 2016 and Particulars of the Offering Subscription of Partnership Units and Minimum Contribution Subscription Agreement Initial Closing Subsequent Closings Distributions Investment Strategy and Investment Policies Investment Objectives Investment Criteria Targeted Investments Target Region Target Sector/Subsector Target Portfolio Structuring of Investments Mode of finance Investment Limits Shari ah Compliance Investment Management and Approval Process Corporate Structure of the Partnership Establishment of the Partnership Organisation of the Partnership Designated Partner Limited Partners Fund Manager Investment Committee Shari ah Committee Supervisory Board Summary of Principal Terms Performance Fees Risk Factors Market Risk Liquidity Risk Credit and Counterparty Risk Currency and Exchange Risk Profit Rate Risk Exposure Risk Legal and Regulatory Risk Political Risk Terrorist Attacks, Armed Conflicts or Increased Hostilities Epidemic Outbreaks, Natural Disasters and other Catastrophes Profit Rate Volatility Risk Tax Risk Risk Mitigation Directory iii

5 1 Executive Summary 1.1 Overview The ICD Corporate Premium Fund (Labuan) LLP (the Partnership or the Fund ) is a Labuan Islamic Limited Liability Partnership established and registered on 19 November 2015 under the Labuan Limited Partnerships and Limited Liability Partnerships Act The objective of the Partnership is to undertake the business of managing an Islamic investment fund. The Designated Partner of the Fund is ICD Fixed Income Limited ( Designated Partner ), a company incorporated under the Labuan Companies Act The Islamic Corporation for the Development of the Private Sector ( ICD ) acts as the Fund Manager of the Fund. 1.2 Investment Objective and Strategy The objectives of this Partnership shall be to achieve competitive, periodic returns by investing in viable corporate finance investments in conformity with the principles of Shari ah and the Investment Policy. To achieve its investment objectives, the Partnership may invest part or the whole of its deposited property directly or indirectly in member countries and in non-member countries of ICD in accordance with the Investment Policy and Shari ah principles. 1.3 Structure Prospective investors become Limited Partners of the Partnership by subscribing to partnership units ( Partnership Units or Units ) where the subscription price is fully payable at the relevant closing(s) of the Partnership. 1.4 Life of the Partnership The Partnership shall commence on the date of issuance of a certificate of registration by Labuan FSA and shall continue until in perpetuity or until the Partnership is dissolved or liquidated ( Term ) in accordance with the Amended and Restated Islamic Limited Liability Partnership Agreement, including any amendments and restatements thereto, entered into between the Designated Partner and the investors ( Partnership Agreement ). 1.5 Investment Committee The Investment Committee of the Partnership is composed of professionals with an excellent track record. They have international expertise with extensive experience in managing balance portfolio funds. The Investment Committee comprises of the following members: (a) (b) three representatives of ICD; and one independent expert to be appointed by the Fund Manager. The profiles of the four members of the Investment Committee are provided in section 6.6 of this Memorandum. 1.6 Investment Management The Fund will be managed by ICD in its capacity as Fund Manager. Please refer to section 6.5 of this Memorandum for the scope of duties of ICD. 1

6 1.7 Anti-Money Laundering Measures All investors are subject to the anti-money laundering measures aimed at the prevention of money laundering in accordance with the laws of Labuan and Malaysia which will require the verification of the identities of such investors prior to their admission into the Partnership. 2

7 2 Key Features The key features of the Partnership are set out in this section. Further details are contained in section 7 of this Memorandum. The Partnership or the Fund Designated Partner Fund Manager Shari ah Committee Supervisory Board Fund Administrator Term Investment Objective Target Sectors of investment ICD Corporate Premium Fund (Labuan) LLP, a Labuan Islamic limited liability partnership established and registered on 19 November 2015 under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010, read together with the Labuan Islamic Financial Services and Securities Act ICD Fixed Income Limited (Company No. LL09668), a company incorporated in Labuan with a registered address as Unit Level 13(A), Main Office Tower, Financial Park Labuan, Jalan Merdeka, Federal Territory of Labuan, Malaysia. The Islamic Corporation for the Development of the Private Sector, a multilateral financial institution established pursuant to its Articles of Agreement, with its address at P.O. BOX 54069, Jeddah Saudi Arabia. Means the Shari ah Committee appointed by the Supervisory Board under Clause 11.3 of the Partnership Agreement. Means the Supervisory Board of the Partnership more particularly described in Clause 11.4 of the Partnership Agreement. The Islamic Corporation for the Development of the Private Sector, a corporation established in the Kingdom of Saudi Arabia under the Islamic Development Bank. The Partnership shall commence on the date of issuance of certificate of registration by Labuan FSA. As the Fund is an open-ended fund, it shall continue until in perpetuity until the Partnership is dissolved or liquidated in accordance with the Partnership Agreement. The objectives of this Partnership shall be to achieve competitive, periodic returns by investing in viable corporate finance investments in conformity with the principles of Shari ah and the Investment Policy. Investments made by the Partnership are not restricted to any sectors or subsectors provided that all investments, including any restrictions on any exposures to any country or region, must be discussed and approved by the Investment Committee and in accordance with the Investment Policy of the Partnership. 3

8 Subscriptions Shari ah Guidelines Management Rights Investments Approval Process Distributions Redemption Assignment and Transfers Amendments to Partnership Agreement The investment by the Limited Partners to the Fund shall be through Partnership Units, representing limited liability partnership interests. Each Partnership Unit carries an initial subscription price of United States Dollars One only (USD1). The objectives of the Partnership shall be in compliance with Shari ah guidelines determined by the Shari ah Committee of the Partnership. Limited Partners shall have no right to take part in the management, control or operation of the Partnership and shall have no power or authority to act for or bind the Partnership. All investments must be compliant with the investment policy of the Fund and must be approved by the Investment Committee. Distributions, if any, shall be made to all Limited Partners by the Designated Partner, upon the advice of the Fund Manager and may be made in cash or in Partnership Units. All redemptions must be made via a redemption request which must be received 180 days before the first business days of each month by the Designated Partner by 4.00 p.m. Saudi Arabia time, or such other period of time as the Designated Partner may, acting reasonably, in its discretion determine. The sale, assignment, transfer, pledge, encumbrance, disposition or the parting of any Partnership Units by any Limited Partner shall only be effective and valid with the prior written consent of the Designated Partner. The Partnership Agreement may be amended in whole or in part by the Designated Partner with the written consent consisting of one or more documents in like form each signed by one or more of the Limited Partners and together representing at least seventyfive per cent (75%) of the total of all contributions of the Limited Partners to the Partnership. 4

9 3 Outlook for the Year 2016 and 2017 According to July 2016 projections by the International Monetary Fund (IMF), world economy is expected to grow 3.1% in 2016 the same lackluster pace as last year. Global growth will accelerate only very modestly to 3.4% in 2017 and remain below 4% for the rest of the decade. Compared to , this is a very disappointing outlook with the growth rate across advanced as well as emerging market and developing economies running at only about two-thirds of the pre-crisis pace. The latest downward revision to global growth was triggered by the uncertainty related to Brexit. On June 23, the United Kingdom voted in favor of leaving the European Union, an economic and political partnership that transformed most of Europe into a single market with a free movement of goods, services, capital and people. The outlook worsens for advanced economies. Growth forecasts by IMF are down by 0.1 percentage points in 2016 and 0.2 percentage points in This is mainly due to significantly weakening demand in US and UK. These two countries experienced the largest downward revision in forecasted growth among advanced economies. Economic Outlook in ICD Member Countries Economic growth in the member countries slowed to 3.4% in 2015 from 3.9% in This slowdown was driven by the deceleration among the oil exporters (from 3.4% to 2%) as well as the non-oil commodity exporting countries of the Sub-Saharan Africa where growth declined to 3.4% in 2015 from 5.9% in Based on the IMF s projections, growth in the member countries should remain largely unchanged in 2016 before accelerating to 4% in 2017 as the economies of the commodity exporting countries begin to stabilize. The outlook of inflation in the member countries will remain higher than that of the developing countries in the medium term. The current account balances in the member countries is forecasted to remain negative in 2016 at an average of 5.1% of GDP, and then improve gradually starting from The average fiscal balance turned into negative reaching -4.5% of GDP by the end of 2015 and it is estimated to worsen further to -6.4% of GDP in This negative trend is forecasted to continue but at a mild manageable level until The CIS member countries are an exception to the improving growth prospects relative to According to the IMF projections, the growth in the CIT economies will slow to 1.3% in 2016 from 3.1% last year (mainly due to a forecast recession in Azerbaijan and a stagnation in Kazakhstan) before recovering to 2.4% in This year s slowdown has been brought on by the effects of low oil prices, a spillover impact of last year s recession in Russia, shrinking capital inflows, and a negative confidence impact of the large currency adjustments by the region s largest economies. Real GDP of the member countries in Asia is forecasted to grow at an unchanged rate of 4.8 in 2016 before accelerating to 5.3% in Meanwhile, economic growth in the member countries in Sub-Saharan Africa is expected to slow from 3.4% in 2015 to 3.2% in 2016 and then rebound to 4.2% in In the MENA region, growth is projected to accelerate this year to 3.1% from 2.6% in 2015 and then remains unchanged in However, this masks a large divergence between the region s net oil exporters and importers. The exporters are expected to see much weaker growth this year before recovering in 2017, while the importers, who benefitted from lower oil prices this year, will have to look for other sources of 5

10 recovery. Namely, in the oil-exporting GCC countries, growth is expected to slow to 1.8% in 2016 as a number of the GCC countries begin to undergo a necessary fiscal retrenchment. The GCC member countries fiscal deficits are expected to reach 10% of GDP on average this year. 6

11 4 Particulars of the Offering 4.1 Subscription of Partnership Units and Minimum Contribution The investment by the Limited Partners to the Partnership shall be through Partnership Units, representing limited liability partnership interests. The minimum contribution shall be United States Dollars Five Million (USD5,000,000) for each Limited Partner, unless such requirement is waived in writing at the sole discretion of the Fund Manager. Any additional subscription by any Limited Partner will be a minimum of United States Dollars One Million (USD1,000,000). 4.2 Subscription Agreement Investors may subscribe to the Units by being admitted as a Limited Partner of the Partnership and executing the necessary documentation. 4.3 Initial Closing The initial closing of the Fund shall occur on: (a) (b) (c) three months from the date of registration of the Partnership as evidenced in the certificate of registration of a Labuan limited liability partnership issued by the Labuan Financial Services Authority; the date when the Fund has received Contributions of United States Dollars Seventy Four Million (USD74,000,000); or the date as the Designated Partner may, acting reasonably, in its discretion determine in writing, (the Initial Closing ). 4.4 Subsequent Closings Subsequent closings may be held for the admission of any additional Limited Partners or for the additional subscription by any existing Limited Partner. 4.5 Distributions The Designated Partner may declare and pay interim dividends, whether in cash or in Partnership Units, at least once a year out of the net income of the Fund. The amount available for distribution in respect of the financial year will be declared by the Designated Partner, upon the advice of the Fund Manager. All Limited Partners who are registered at the date of closure of the Register, at the date of the declaration, will be entitled to their share of the dividends declared. 7

12 5 Investment Strategy and Investment Policies 5.1 Investment Objectives As stated above, the investment objective of the Partnership is to achieve competitive, periodic returns by investing in viable and socially responsible investments in conformity with the principles of Shari ah and the investment policy. The Partnership targets to achieve a minimum of 12-Months LIBOR bps per annum return on the invested capital contributions ( Target Return ). There are, however, no assurances that the Target Return will be achieved. Please refer to section 8 of this Memorandum for detailed discussion on the risk factors involved in the investments. 5.2 Investment Criteria The Fund Manager will only invest in investments which meet the following criteria: (a) (b) (c) investments should contribute to a portfolio weighted average return above 12-Months LIBOR bps to the Partnership; investments are to be aligned with sector driven strategy that falls within the value-chain of activities of the sectors devised by the Partnership s strategy. The Partnership consistently scans the Organisation of Islamic Conference (OIC) market and conducts research on profitable sectors, hence, allocation can change but subject to approval from the Investment Committee. invested amount in the proposed investment must be lower than the sector ceiling margin where ceiling margin is: ceiling cumulative invested projects in (sector) (d) (e) If a project is deemed considerably interesting, the Investment Committee can raise the ceiling by a maximum of 50% with consent from the Supervisory Board. invested amount in the proposed project is lower than country ceiling margin where ceiling margin is: ceiling cumulative invested projects in (country) If project deems considerably interesting, Investment Committee can raise the ceiling by a maximum of 50% with consent from the Supervisory Board. If the host country is outside of typical risk profile, specific guarantees for risk customers (promissory note, or letter of guarantee), consider noncommercial risk insurance for risky clientele. (f) invested amount in the proposed project is lower than non-icd Member countries ceiling margin where ceiling margin is: ceiling cumulative invested projects in (non-icd Member countries) If project deems considerably interesting, Investment Committee can raise the ceiling by a maximum of 50% with consent from the Supervisory Board. If the host country is outside of typical risk profile, specific guarantees for risk customers (promissory note, or letter of guarantee), consider noncommercial risk insurance for risky clientele. (g) if the country falls outside of the typical risk profile, only invest if noncommercial risk insurance or appropriate guarantees are in place. Appropriate due diligence conducted to prevent unrecoverable losses in principal or amount invested; 8

13 (h) maturity period should be kept low, corporate finance projects should generally have a maturity of less than 3.0 years; (i) (j) (k) the grace or gestation periods for corporate finance should be set to a minimum and below 90 days; for corporate finance set maximum realisation of first re-payment be less than or equal to one year; and Equity investments can only be dividend-yielding. 5.3 Targeted Investments The Partnership intends to achieve its objective by investing in Shari ah compliant investments and financing products globally, including but not limited to, commodity murabaha, syndicated commodity murabaha, murabaha, instalment sale, leasing or ijarah, dividend yielding equity, musharaka, restricted and unrestricted wakala agreements and sukuk. All investments must be certified by the Shari ah Committee to be compliant with the Shari ah guidelines of the Partnership. 5.4 Target Region Investments made by the Partnership may be in any country or region of the world provided that all investments, including any restrictions on any exposures to any sector or subsector, must comply with the Fund s Investment Policy. 5.5 Target Sector/Subsector Investments made by the Partnership are not restricted to any sectors or subsectors provided that all investments, including any restrictions on any exposures to any country or region, must be in compliance with the Investment Policy. The Partnership will invest in a diversified weighted sector-driven portfolio on Islamic sectors of interest to provide the optimum reward-risk ratio for the investors. The sector allocation would be revised on a yearly basis to reflect the most recent developments in the market and segment. The sectors of focus will be reviewed annually with the objective of identifying the sectors that are critical to development, has a high growth potential and in alignment with the Fund Manager s core competencies. 5.6 Target Portfolio The targeted portfolio allocation is as follows: (a) (b) Corporate Finance and sukuk 75-85%; and Equity (Dividend-yielding) %; and (c) Liquidity placed in short term 5-10 %. 5.7 Structuring of Investments The Partnership is carrying on a Labuan non-trading activity and is not chargeable to tax in accordance with the Labuan Business Activity Tax Act Nevertheless, the Designated Partner will give due consideration to the relevant foreign exchange administration policies, repatriation, restrictions of cross border investments with the view of maximising individual return on investments. 5.8 Mode of finance The Partnership will continue providing the following modes of finance to projects: (a) (b) (c) Commodity Murabaha; Murabaha; Instalment sale; 9

14 (d) (e) (f) (g) Leasing or Ijarah; Restricted and unrestricted Wakala; Equity / Musharaka; and any other Shari ah compliant investment and financing product. 5.9 Investment Limits To devise a sound allocation for the Partnership, the Investment Committee will approve ceilings that is a limit or cap on total amounts invested at a country level or sector level. The objective is to create an optimised and well-diversified Partnership portfolio with appropriate weightage that maximizes reward for investors at a low-to-medium risk level. The Fund Manager has developed a formula to calculate the maximum investment commitment for each country and each sector and/or a deeper-level of granularity such as sectors within a country. The methodology for creating a formula for a ceiling is as follows: (a) the ceiling for a country requires studying the following factors: (i) (ii) (iii) (iv) (v) social, and political factor; economic, gross domestic product growth, inflation; trade balance; foreign direct investment; ratings (ease of doing business, credit rating etc) can be aligned with formula; (b) (c) sector ceilings or limits can be quantified based on sectors absorptive capacity i.e. supply-demand and profitability of the sector; ceilings or limits will be reviewed on semi-annual basis. However, should a deal appear lucrative to the Investment Committee and meets the risk appetite of the Partnership, the Investment Committee can get approval from the Supervisory Board to raise the ceiling. The ceilings can be raised or dropped for a country based on: (i) (ii) (iii) credit rating changes; political improvements; economic (currency stability). The following diagrams represent the ceilings imposed by the Fund Manager, which is subject to revision on a regular basis to reflect market changes: 10

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16 5.10 Shari ah Compliance The Partnership has been established to accord with the Shari ah guidelines. The Shari ah Committee of the Partnership shall oversee and advise the Partnership on whether the Partnership s operations, investments, financing activities or any act carried out by the Partnership is compliant with the Shari ah guidelines. The Shari ah Committee shall issue an annual Shari ah compliance pronouncement for the Partnership, subject to the Partnership s operations being compliant with Shari ah guidelines Investment Management and Approval Process The investment procedures applied by the Partnership are as follows: Management of Investment The Fund Manager shall manage the investments of the Fund and oversee the day-today investment activities of the Partnership. Meetings of the Investment Committee The Investment Committee of the Partnership shall meet at least once a month, however, it shall not be obliged to meet physically in all cases and proposals and votes may be considered and sent by , facsimile or by courier to the relevant party. The Investment Committee shall be responsible for reviewing and monitoring the investment process and approving all investments and divestments of the Partnership. Review by Shari ah Committee The investment universe of the Fund or any new investment structures or products undertaken by the Fund must first be approved by the Shari ah Committee. Identification and Evaluation of Investment Opportunities The sourcing and execution of investment and divestment for the Fund shall be conducted by the Fund Manager, who will identify suitable counterparties with potential investment opportunities for the Fund. The Fund Manager will then carry out the due diligence process on the proposed investments. Review by Investment Committee and the Fund Manager The Investment Committee shall review and consider the proposals provided by the Designated Partner and make such recommendations with respect to the investment proposals within seven (7) calendar days of despatch of the proposal by the Designated Partner by majority vote of those voting. The Fund Manager shall advise the Investment Committee of the investments to be made for the Fund based on the objectives of the Partnership and the Investment Policies. The Fund Manager shall carry out comprehensive due-diligence including financial analysis, financial reviews, audit and such other research and analysis in relation to the proposed investments to evaluate and analyse the investment opportunities. The Fund Manager shall determine the expected returns, appropriate exit strategy and the size of each investment. The Investment Committee shall then undertake a comprehensive review on the proposals based on the concept paper or report presented by the Fund Manager. Approval by Investment Committee 12

17 The Investment Committee shall then decide on whether the Fund is to make an investment in each of the proposals and decide on the amount to be invested in each investment in line with the Investment Policies. The Designated Partner acting through the Fund Manager shall then implement the proposals based on the approval granted by the Investment Committee. Monitoring of Investments The Fund Manager will monitor the investments made by the Partnership. The Fund Manager shall make necessary recommendations to the Investment Committee where applicable. The Supervisory Board will monitor and review the progress of the Partnership s investments, and then report to the Limited Partners on the performance of the Partnership. 13

18 6 Corporate Structure of the Partnership 6.1 Establishment of the Partnership The ICD Corporate Premium Fund (Labuan) LLP was established under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010, read together with the Labuan Islamic Financial Services and Securities Act The capital of the Partnership will consist of the investments contributed from the Limited Partners. The term of the Partnership commence on the issuance of the certification of registration by the Labuan FSA and shall continue in perpetuity until the Partnership is dissolved under the Partnership Agreement. 6.2 Organisation of the Partnership ICD Fixed Income Limited (Designated Partner) Limited Partners ICD Corporate Premium Fund (Labuan) LLP (Fund) The Islamic Corporation for the Development of the Private Sector (Fund Manager) 6.3 Designated Partner The Designated Partner of the Partnership is ICD Fixed Income Limited. It was incorporated in 2013 in the Federal Territory of Labuan, Malaysia. The Designated Partner shall be responsible for the administration, operation and management of the investment business and affairs of the Partnership and shall have the power and authority to do all things necessary to carry out the purposes of the Partnership subject to the Partnership Agreement and the principles of Shari ah. 6.4 Limited Partners Investors in the Fund will acquire limited liability partnership interests in the Fund. They will not participate in the management of the Fund. The Limited Partners shall be limited liability partners within the meaning of the laws of Labuan. Other than as provided under the laws of Labuan, any other applicable law or as expressly provided under the Partnership Agreement, in the event that the Partnership is unable to pay its debts, liabilities or obligations, the liability of each Limited Partner shall be limited to the amount of its contributions. 14

19 Unless as otherwise stated in the Partnership Agreement, the Limited Partners shall have no right to take part in the management, control or operation of the Partnership and shall have no power or authority to act for or bind the Partnership under any agreement with third parties. Any violation of this requirement shall constitute one of the circumstances for withdrawal from the Partnership. 6.5 Fund Manager The Fund Manager, or investment manager of the Fund is ICD. The Fund Manager shall exercise and carry on its duties as Fund Manager with reasonable care, skill and diligence with the expertise, knowledge, skill and experience which may reasonably be expected of an investment manager. The duties of the Fund Manager include: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) advising the Partnership of the investments to be made for the Partnership subject to the objectives of the Partnership and the Investment Policy of the Partnership; identifying and analysing suitable investments, where appropriate; undertaking comprehensive due diligence on the proposed investments; monitoring and managing the investments once such investments are made; making recommendations regarding the acquisition and disposition of investments; making and divesting investments subject to the approval of the Investment Committee and Shari ah Committee; overseeing the whole investment process including the preparation of any form of proposals to the Investment Committee or Shari ah Committee; monitoring of the financial performance of the Partnership and of its portfolio investment; maintaining the books and records for the Partnership in accordance with the accounting standards of the Partnership; coordinating with the tax advisors and other professionals engaged on behalf of the Partnership; attending Partnership meetings or any other meetings which may be held from time to time where the presence of the Designated Partner is necessary; providing office facilities, staff and equipment to facilitate the business of the Partnership; opening, maintaining and closing of bank accounts and custodian accounts of the Partnership; drawing cheques, transferring and receiving payments, on behalf of the Partnership, made by Limited Partners and other monies arising from the investments of the Partnership; disbursing payments or expenses payable by the Partnership in accordance with this Agreement; executing any agreements or performing any acts or deeds as it is necessary in relation to the business of the Partnership in accordance with the objectives of the Partnership and any other policies which may be laid down by the Partnership; 15

20 (q) (r) conducting any valuations of the Partnership (directly or through third party agents) and to submit such valuation reports or information on the valuations in accordance with this Agreement; and doing all such other things as may appear to the Fund Manager to be incidental to any or all of the above or as may be requested by the Designated Partner. 6.6 Investment Committee The Designated Partner has established an investment committee ( Investment Committee ) which shall comprise of five (5) members. The following are the members of the Investment Committee: (a) Mr. Khaled Al-Aboodi CEO & General Manager, ICD Years of Experience: Previous Experience: 25+ years Economics & Finance. Alternative Governor for Saudi Arabia for the World Bank/IFC, and Senior Economist at Saudi Arabia Public Fund. Education: King Saudi University (BA Economics), Northeastern University (MS Economics). (b) Ms. Nida Raza Director, Advisory & Asset Management, ICD Years of Experience: Previous Experience: Education: 16 of professional advisory and investment banking experience worked at JP Morgan, KeyBank, Standard Chartered, Millennium Finance & Bank Alkhair prior to EY First Class BSc(Hons) in Physics & Space Science from UCL & MSc in International Securities Investment & Banking from ICMA Center in the UK (c) Mr. Basel Haj-Issa Director, Direct Investment and Financing Department, ICD Years of Experience: Previous Experience: Education: Over 20 years of international exposure in Islamic Banking (commercial, Investment, and development) in the MENA, and GCC CEO positions in an Islamic Investment Bank and an Islamic Commercial Bank, & Director Financial Institutions Development Dept. Masters of Business Administration (MBA) & a Bachelor of Science (Mathematics) From Marshall University, Huntington, West Virginia, USA 16

21 (d) Mr. Tahir M. Al-Dabbagh, Independent Expert from ICD Member Countries Group Board Member - M.Y. Naghi & Bros. Group/ Chairman Roots Group Arabia/ Chairman KSB Capital/ Board Member in Various Companies & Private Businesses. Years of Experience: Previous Experience: Education: 30+ years Banking & Finance. CEO - Board Member, Saudi Hollandi Capital Chairman, SHC Invest Mutual Funds Board Gen. Manager (WA), Saudi Hollandi Bank Various Senior Posts in Banking Sector BS Degree in Political Science (with) Business Administration), Central Michigan University, U.S.A The Investment Committee shall be responsible for, among other things: (a) (b) (c) (d) (e) (f) reviewing proposed investments and making recommendations with respect to investment proposals; monitoring the investment process and making recommendations where applicable; approving all investments and divestments; performance review of the Partnership; responding to shorter-term changes flagged by the Fund Manager such as rises in variable interest rates, minimising exposure to specific index as a result of changes to the market; and risk management functions such as ensuring the pricing, maturity, structure and amount invested in a project is in congruence with the risk taken. The quorum for any meeting of the Investment Committee shall be three (3) members of the Investment Committee. Decisions made by the Investment Committee on a proposed investment or divestment shall be by a majority vote of those voting. 6.7 Shari ah Committee The Shari ah Committee of the Partnership shall have the following duties and obligations: (a) (b) (c) (d) (e) (f) establish, confirm and approve the Shari ah Guidelines of the Partnership (the Shari ah Guidelines ) and amend such guidelines as may be required from time to time; confirming the compliance of the Partnership s investments and accounting standards with Shari ah Guidelines; review and approve the documentation of all investments; advise the Partnership on whether the investments, activities or any act carried out by the Partnership is Shari ah compliant; provide the Partnership with a yearly Shari ah compliance audit report of investments and transactions; and issuance of the annual Shari ah compliance pronouncement for the Partnership. 17

22 6.8 Supervisory Board (a) The Designated Partner shall establish, appoint, administer and maintain at all times during the Partnership, a Supervisory Board to act in a consultative role to the Partnership. (b) (c) The Supervisory Board shall comprise of three (3) members, consisting of a chairman and two (2) other members. The Principal Sponsor shall appoint the chairman and one members and the remaining member shall be an independent director to be appointed by the Designated Partner. The Supervisory Board shall be responsible for: (i) (ii) (iii) (iv) (v) (vi) establishing and/or approving policies and objectives of the Partnership; approving the overall strategic direction and business plan of the Partnership; monitoring and generally reviewing the Partnership s, Designated Partner s and Fund Manager s overall performance and progress of the Partnership's Investments acting at all times in good faith; approving the annual budget of the Partnership and ensuring the availability of adequate financial resources for the operations of the Partnership; accounting and/or reporting to the Limited Partners on the performance of the Partnership; approving dividend distribution to Limited Partners; (vii) considering and, if it thinks appropriate, approve the recommendations of the Designated Partner with respect to any revision to the Investment Policy which is sought by the Designated Partner; (viii) considering and, if it thinks appropriate, approve the recommendations of the Designated Partner with respect to the first Auditors and any change of the Auditors; (ix) considering and, if it thinks appropriate, approve the recommendations of the Designated Partner with respect to the appointment of the Partnership's bankers by the Designated Partner; (x) considering and, if it thinks appropriate, approve the recommendations of the Designated Partner (upon advice of the Fund Manager) with respect to the choice of Administrator and the Custodian and any replacement thereof; (xi) (xii) monitoring the compliance by the Designated Partner with the Investment Policy and Shari ah principles; and reviewing and advising on any conflicts of interest or potential conflicts of interest between the Partnership on the one hand, and any other persons, including without limitation, the Designated Partner and the Fund Manager (and any affiliates of the Designated Partner), the Limited Partners, any advisor or consultant retained by the Partnership, or any of their respective affiliates on the other hand which conflicts or potential conflicts shall be drawn to the attention of the Supervisory Board by the Designated Partner as soon as practicable after the Designated Partner becomes aware of them. 18

23 7 Summary of Principal Terms The following is a summary of the principal terms of the Partnership Agreement. The summary is qualified by reference to the Partnership Agreement which is available to a prospective investor upon request to the Designated Partner. The Partnership Agreement takes precedence over this summary. Fund Overview Fund Domicile Target Region ICD Corporate Premium Fund. The Fund is a Labuan Islamic limited liability partnership established to carry on investment activities. Labuan. ICD member countries with possible investment in nonmember countries as per the assigned investment ceilings. Fund Objective (a) To achieve competitive, periodic returns for investors in select viable shari ah compliant corporate finance investments. Target Investors Target Investments (b) To participate in the economic development of the member countries of ICD through the pooling of the savings of institutional and individual investors, and to invest these savings in productive projects in the said member countries. Institutional investors and high net worth individuals. Shari ah compliant commodity Murabaha, Murabaha, Instalment Sale, Leasing or Ijarah, restricted and unrestricted Wakala agreements, sukuk, equity or Musharaka, and any other Sharia h compliant investment and financing product. All transactions undertaken by the Fund will be structured in compliance with the Shari ah principles as stipulated by the Shari ah Committee of the Fund. Investment Limits (a) Investment Limits /Exposures (i) Country exposure 20% (ii) Regional exposure 50% (iii) Sector 35% (iv) Amount in a single transaction 15% (v) Liquidity maintenance 10% (b) Limits on Mode of Finance (i) Commodity Murabaha 75% (ii) Murabaha 40% (iii) Instalment sale 40% (iv) Leasing / Ijaraha 20% (v) Wakala 20% (vi) Sukuk 20% (vii) Musharaka 25% 19

24 Target Returns (Net) Structure Designated Partner Limited Partners Fund Manager Investment procedure and decisions Minimum Commitment (viii) Equity or Musharaka 10% The target return on investments of the Fund is a minimum of 12-Months LIBOR bps per annum net return on invested capital contributions. The Fund is structured as a Labuan Islamic limited liability partnership under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 and the Labuan Limited Partnerships and Limited Liability Partnerships Regulations ICD Fixed Income Limited, as the Designated Partner, enters into the Partnership Agreement with investors, who are Limited Partners, which the agreement governs the rights and obligations of the parties. Investors will invest in the Fund through subscription for partnership units in the Islamic limited liability partnership. Investors are able to redeem their units in accordance with the terms of the said agreement. ICD Fixed Income Limited will act as the Designated Partner of the Fund and as such shall be answerable for the doing of all acts, matters and things, as are required to be done by the Fund under the Labuan Limited Partnerships and Limited Liability Partnerships Act The Investors to the Fund. ICD will act, directly or indirectly through a wholly owned entity, as a fund manager of the Fund. The Fund Manager shall also act as a custodian and administrator and will maintain the shareholders register and accounts of the Fund. The Fund Manager will identify suitable counterparties with potential investment opportunities for the Fund and will carry out due diligence on proposed investments; the Fund Manager will also monitor the ongoing performance of investments. An Investment Committee will be established for the Fund by the Designated Partner, which will comprise suitably qualified officers of ICD and an independent expert from ICD s member countries. The Investment Committee of the Fund will approve and monitor all investment decisions, and monitor the Fund s portfolio. The minimum initial commitment of any investor will be United States Dollars Five Million (USD5,000,000), unless such requirement is waived in writing at the sole discretion of the Fund Manager. Any additional commitment by an investor will be United States Dollars One Million (USD 1,000,000). The projected target returns are subject to a number of assumptions, a change of any of which could adversely affect returns. In addition, the Fund s ability to achieve such results will be subject to market conditions and a number of other factors (which will be referred to in the Fund s Prospectus) many of which are outside the control of the Fund Manager. Because of such uncertainties, actual results could be lower than the targeted returns and such difference could be material. Accordingly, investors should not place undue reliance on such projected returns. 20

25 Closing Subscriptions / Redemptions Cut Off Time For Receiving Subscription/ Redemption Applications Unit Price Term Transferability of Interests The Fund will be a perpetual open ended fund. An initial closing of the Fund will occur in the third month from the date of registration of the Partnership or the date when the Fund has received contributions of USD 74,000,000, or on such other date as the Designated Partner may in its discretion determine (acting reasonably) ( Initial Closing or Initial Closing Date ). Subscription or redemption requests for Partnership Units in the Fund will be accepted monthly and effected monthly. In order to subscribe to Partnership Units in the Fund, Investors shall complete the subscription agreement and deliver it to the Designated Partner with the documents as specified in the Subscription Agreement at the address of the Designated Partner as specified herein. Acceptance of the subscription will be at the discretion of the Designated Partner. Investors shall also be required to execute a subscription agreement. In order to partially or fully redeem the principal amount, Investors shall fill in the attached Redemption Request and deliver it to the Designated Partner at the address specified herein. Subscriptions should be received by the Designated Partner before 4:00 p.m. Saudi Arabia time fifteen (15) days before the first business day of each month, or such other period of time as the Designated Partner may, acting reasonably, in its discretion determine. All redemptions must be made via a redemption request which must be received 180 days before the first business day of each month. The request must also be received by the Designated Partner by 4.00p.m. Saudi Arabia time, or such other period of time as the Designated Partner may, acting reasonably, in its discretion determine. The Partnership Units of the Fund will have a fixed price of US Dollar One (USD1). As it is an open-ended Fund, the Fund will exist perpetually or until the Partnership is dissolved or liquidated. Interests in the Fund may only be transferred between Limited Partners and/or to third parties with the prior written approval of the Designated Partner in its discretion (acting reasonably) and subject to applicable laws of Labuan. 21