PROSPECTUS TO THE ISSUE HDFC MUDARABAH SUKUK ISSUE NO.1

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3 PROSPECTUS TO THE ISSUE HDFC MUDARABAH SUKUK ISSUE NO.1 Public offer of 100,000 Sukuk of Maldivian Rufiyaa (MVR) 500 per sukuk, to the total value of MVR 50,000,000 (Fifty million), with a semi-annual profit share in the ratio 65:35 Issue date of the prospectus 11/09/2013 Opening date for application/subscription 01/10/2013 Closing date for subscription 27/11/2013 ISSUER/OFFEROR Housing Development Finance Corporation Plc. HDFC Plc. [incorporated as a state owned enterprise on 28 January 2004 by a Presidential Decree under the Companies Act, Law No: 10/96,registered as a public company on the 9th of February 2006 and privatized with the signing of a shareholders agreement for privatization between the GOM (49%), IFC (18%), ADB (18%) and HDFC-Investments Ltd.-India (15%) on July 23, 2008 and incorporated in the Republic of Maldives as a Privatized Company- Registration Number C-2009/021] Issuer s Contact Information: Registered Address: 4th Floor, H.Mialani, Sosun Magu, Male', Rep. Of Maldives. Telephone: / / Fax: info@hdfc.com.mv SHARIAH ADVISOR Aishath Muneeza LEGAL COUNSEL Mazlan & Murad Law Associates 1 st Floor G. Swan Lane, Dharmavantha Magu, Male, 20-04, Maldives BANKERS Maldives Islamic Bank Bank of Maldives AUDITORS KPMG H. Mialani, 2nd Floor, Sosun Magu, Male, Maldives

4 HDFC Plc. PROSPECTUS TO THE ISSUE HDFC MUDARABAH SUKUK Issue no.1 Published: September 2013 Housing Development Finance Corporation Plc. 4th Floor, H. Mialani Sosun Magu Male, Republic of Maldives Tel: Fax:

5 HDFC MUDARABAH SUKUK Issue No. 01 About this document This Issue Prospectus has been drawn up in accordance with the laws of Maldives. The main aim of this Prospectus is to provide all the information necessary for the investors to make the right decision regarding this Sukuk Issue. Each investor must study this Prospectus carefully in order to decide whether it is appropriate to invest in it by taking into consideration all the factors relating to the status and circumstances. It is solely the responsibility of the Issuer to include any essential and accurate information or data in this Prospectus. If any investor is in doubt about the contents of this document he/she should consult a person licensed under the Securities Act who specializes in advising on the acquisition of shares and other securities. HDFC Plc, September

6 PROSPECTUS 2 Housing Development Finance Corporation Plc

7 HDFC MUDARABAH SUKUK Issue No. 01 Content 1. Introduction Presentation of Financial Information Law & Exclusive Jurisdiction Absolute Responsibility Responsibility Statement Report by the directors to confirm due inquiry Notice to investors About the prospectus Details of the Sukuk offered Mudaraba Sukuk Structure Terms & Conditions Representation and Warrants Participation in Profits Loss Taxation Management and Control General Covenants of Mudarib Transfers Limited Recourse Negative Pledge Termination Meeting of Sukuk Holders Force Majeure Eligible participants Procedure for application Subscription List Mode of payment Dematerialized offering Allotment Acceptance and refunds Payment of Money at Redemption Rejection of applications Underwriting and issue costs Paying Agent HDFC Plc, September

8 PROSPECTUS Content 11. The Project Security Listing Rights of the Sukuk holder The Issuer HDFC Plc Company Overview Board, Advisory Committees and Senior Management Managing Director s Report HDFC s Corporate Governance Inspection of documents Risk Factors Material outstanding indebtedness in relation to the issue Litigation and disputes Details of shareholding in the company Staff Details Disclosure of material contracts & conflict of interest of directors Annexes Annex - 1. Legal due diligence Annex - 2. Accountant s report Annex - 3. Extract of Articles of Association Annex - 4. Performance Guarantee Letter by HDFC Annex - 5. Audited financial statements for the year ended Annex - 6. Extract of Corporate Governance Code Annex - 7. Declaration of Shariah Advisor & Endorsement of HDFC Shariah Committee Annex - 8. Glossary of Islamic Financial Terms 4 Housing Development Finance Corporation Plc

9 HDFC MUDARABAH SUKUK Issue No. 01 PROSPECTUS TO THE ISSUE HDFC MUDARABAH SUKUK ISSUE NO.1 1. Introduction We, at HDFC Plc. Maldives believe that safe and secure housing is the no.1 priority for the progressive Maldivian society. Therefore, we wish to offer you an investment opportunity to share in our mission to make every Maldivian s dream home a reality through innovative housing finance products. Housing Development Finance Corporation (HDFC) Plc. was established as a specialized Housing Finance Company in the Maldives in 2004 under state ownership and privatized in July 2008 through a Public Private Partnership with a joint foreign investment of 51% shares held by International Finance Corporation (IFC) of the World Bank Group, Asian Development Bank (ADB) and HDFC Investments of India. HDFC Plc. is the only specialized Housing Finance Institution in the Republic of Maldives. HDFC Plc, September

10 PROSPECTUS 1.1 Presentation of Financial Information The only sources of Company-specific financial information used in this Prospectus are audited financial statements of the Company prepared in accordance with the Companies Act (10/96) and International Financial Reporting Standards except for the financial years 31 December 2007 and 31 December 2008, which were prepared with a modification of the requirements of IAS 39 - Financial Instrument: Recognition and measurement in respect of loan loss provisioning by MMA s circular No- GM-9/96 dated 25 April 1996 on Credit Risk Grading System and Loss Provision Requirements. The financial statements for years ended December 31, 2004 to 2008 were audited by Ernst & Young Chartered Accountants and by Pricewaterhouse- Coopers Chartered Accountants for years ended December 31, Law and Exclusive Jurisdiction This Prospectus and the Sukuk shall be governed by and construed in accordance with the laws and regulations of the Maldives. Each of the parties hereto irrevocably agrees that the courts in the Maldives shall have exclusive jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Prospectus and the Sukuk, and for such purposes irrevocably submits to the jurisdiction of such courts. However, before going to the Court, the dispute shall be first taken to an arbitration proceeding. 1.3 Absolute Responsibility Approval to issue these securities has been obtained from the Registrar of Companies as required by the companies Act (10/96) and the Securities Act (2/2006). Further HDFC has also obtained consent from the Capital Market Development Authority (CMDA) to issue these securities. However, neither the Registrar of the Companies nor the Capital Market Development Authority takes any responsibility for the accuracy of any statement made thereof or for the financial soundness of the Company or the value of securities concerned. HDFC Plc. takes absolute responsibility for the accuracy of the information disclosed in the document. 6 Housing Development Finance Corporation Plc

11 HDFC MUDARABAH SUKUK Issue No Responsibility Statement HDFC Plc, September

12 PROSPECTUS 3. Report by the directors to confirm due inquiry We, the undersigned as Directors of the Company hereby confirm performance of due inquiry in relation to the interval between 31st December 2012 (the date to which the last accounts have been made up) and 11 September 2013 (the date which prospectus is being issued) that: a) The business of the Company has in our opinion been satisfactorily maintained; b) There have not, in our opinion, arisen since the last Annual General Meeting of the Company any circumstances adversely affecting the trading or the value of the assets of the Company or any of its subsidiaries; c) The current assets of the Company and of its subsidiaries appear in its books at values which are believed to be realizable in the ordinary course of business; d) There are no contingent liabilities by reason of any guarantees given by the Company or any of its subsidiaries; or e) There are, since the last annual report, no changes in published reserves or any unusual factors affecting the profit of the Company and its subsidiaries. 8 Housing Development Finance Corporation Plc

13 HDFC MUDARABAH SUKUK Issue No Notice to investors Invitation to Subscribe The Board of Directors of Housing Development Finance Corporation Plc. (HDFC PLC) on December 14, 2012 passed a resolution approving the company to raise MVR 50 million through a Sukuk Issuance to the public, financial institutions, public corporations, private entities and other institutions. 5. About the prospectus This Issue Prospectus has been drawn up in accordance with the laws of Maldives. The main aim of this Prospectus is to provide all the information necessary for the investors to make the right decision regarding this Sukuk Issue. Each investor must study this Prospectus carefully in order to decide whether it is appropriate to invest in it by taking into consideration all the factors relating to the status and circumstances. It is solely the responsibility of the Issuer to include any essential and accurate information or data in this Prospectus. If any investor is in doubt about the contents of this document he/she should consult a person licensed under the Securities Act who specializes in advising on the acquisition of shares and other securities. HDFC Plc, September

14 PROSPECTUS 6. Details of the Sukuk offered The following summary should be read in conjunction with, and is qualified in its entirety by the detailed information elsewhere in the Prospectus. Prospective investors in this Sukuk should see the section in the prospectus under Risk Factors that discusses certain factors that should be considered in connection with an investment in the Sukuk. 1 Issuer: Housing Development Finance Corporation Plc. 2 Issue Price: MVR per Sukuk 3 Issue Date: 11 September Subscription Opening: 01 October 2013, 0900hrs 5 Subscription Closing: 27 November 2013, 1100hrs 6 Settlement Date: Date of Subscription 7 Allotment: Before 05 business days from the closure of subscription 8 Total Issue: MVR. 50,000, (100,000 Sukuk) 9 The Project: To fund shari'ah compliant mortgage housing finance operations under HDFC Amna 10 Tenure / Maturity Date: Ten (10) years from the allotment date 11 Profit: 12 Profit Payment Dates: 65% of the gross profit distributed to Sukuk holders Every six months after the date of allotment, until the Maturity Date 13 Next Business Day: The first day following a non-working day. 14 Type of Issue: Dematerialized 10 Housing Development Finance Corporation Plc

15 HDFC MUDARABAH SUKUK Issue No Mudaraba Sukuk Structure The structure of this Sukuk issuance is based on the Shariáh principle of Mudaraba (Money Management). In the Mudarabah concept, one party will be providing the capital (the Rabb al Maal) and the other party will be managing the capital (the Mudarib) in a proposed Shariáh compliant project. For the purposes of this Sukuk, the Sukuk holders are collectively the providers of capital (the Rabb al Maal) that purchase Sukuk certificates from the Issuer. HDFC Plc is the manager of the capital (the Mudarib). The project managed by the Mudarib is known as the Mudaraba. HDFC Plc, September

16 PROSPECTUS 8. Terms & Conditions All the relevant requirements and approvals from the regulatory authorities in the Republic of the Maldives in relation to the issue of this Sukuk have been obtained. Each Sukuk Certificate evidences an undivided ownership interest in the investment made, subject to the terms herein and has a limited recourse obligation of the Issuer. Each Sukuk Certificate ranks pari passu, without any preference or priority, with all other Sukuk Certificates. Proceeds from the Mudaraba are the sole source of payments to Sukuk holders pursuant to the Certificates. The Sukuk Certificates do not represent an interest in the Issuer or any of its affiliates. A meeting with the Sukuk holders can be convened at the discretion of the Issuer to discuss matters regarding the Mudaraba. By purchasing Sukuk certificates, the investors/sukuk holders agree to accept and abide by the following terms and conditions: 8.1 REPRESENTATION & WARRANTIES The Mudarib hereby represents and warrants to the Rabb al Mal, as follows: a) The Mudarib possesses all necessary powers and licenses to conduct its present business and the Project. b) The Mudarib Information provided under The Issuer (section 14) is true and correct. c) The Mudarib is experienced and knowledgeable in all business matters relating to the Project. d) The Mudarib has prepared with all due care the information provided under The Project on his/her experience and knowledge and has completed all reasonable investigation to assure that such are true and correct and disclose all facts relevant to the Rabb al Mal s evaluation of the Project. e) The Mudarib Financials are true and correct according to generally accepted accounting principles consistently applied accurately representing the Mudarib s financial status on the dates and the profit and loss for the periods indicated, and no liabilities, fixed or contingent exist at the indicated dates other than as appear in the Mudarib Financials; f) All transactions for the purpose of which this Sukuk proceed will be utilised are Shariah-compliant transactions; and g) All regulatory, governmental and corporate approvals and consents (including exchange control approvals) for the due execution and delivery of, and performance of the work intended to be carried out. 12 Housing Development Finance Corporation Plc

17 HDFC MUDARABAH SUKUK Issue No PARTICIPATION IN PROFIT a) The participation by Sukuk holders in the profit generated by the Mudaraba will be in accordance with the following ratio: i. 35% of the profit will be for Management Services and payable to the Mudarib. ii. 65% of the profit will be payable to the Rabb al Mal collectively. b) Profit will be distributed out of the gross profit generated from the sukuk fund. c) The profits generated by the Mudaraba will be paid by the Mudarib to Rabb al Maal collectively twice every calendar year; until the earlier of the Termination Date and the Maturity Date. 8.3 LOSSES a) 100% of any losses in the Project will be borne by the Rabb al Mal except in case of negligence, breach of obligation or willful default by the Mudarib. b) The Mudarib will receive no compensation for his Management Services, and will be liable for any loss in the Project if it is proven that he/she has breached his/her obligations or is proven to be failing in the discharge of his/her obligations under these terms. c) In the event of the Project showing losses during the continuity of this Sukuk issuance, the Mudarib shall forthwith give notice of such losses to the Rabb al Mal together with all accounts and details pertaining thereto and such other information and records as may be required by the Rabb al Mal. 8.4 TAXATION On behalf of the Project, the Mudarib shall be liable for and shall punctually and regularly pay all taxes, duties and other charges relating to the Project s business and operations. HDFC Plc, September

18 PROSPECTUS 8.5 MANAGEMENT AND CONTROL The complete management and control of the Project is exclusively vested in the Mudarib and the Mudarib shall be solely responsible for the management and control of the Project. 8.6 GENERAL COVENANTS OF MUDARIB THE MUDARIB covenants to the the Rabb al Mal that the Mudarib shall: a) promptly give notice to the Rabb al Mal of any change in the information disclosed in the section The Issuer. b) undertake the Management Services such as providing Islamic financing facilities to third parties with due care and all reasonable commercial diligence expected of an experienced businessman to ensure the success of the Project according to the description of The Project. c) utilize the Project assets exclusively for purposes of the Project d) collect all receivables from third parties arising from the Project or the transfer of Project assets or other documents requiring payment from third parties directly to the Account e) maintain all Project assets in the name of the Mudarib, but physically segregated from other assets of the Mudarib and free and clear of all liens and encumbrances except those in favour of the Rabb al Mal. f) maintain true and correct books of account relating to the Project together with all invoices, records contracts and all other documentation. g) supply to the Rabb al Mal any information, material or document relating to the Project or to Mudarib s financial status, and grant access to the Rabb al Mal or its agents to all books and materials relating to the Project and to the Mudarib s financial statements. h) immediately disclose in writing to material or document the Rabb al Mal any business factors of which the Mudarib becomes aware and which might adversely affect the success of the Project. i) not effect directly or indirectly any transaction on behalf of the Project in which the Mudarib or any shareholder of the Mudarib, if a corporation, is interested directly or indirectly without consent of the Rabb al Mal. j) under its sole responsibility, conduct the Project in conformity with all applicable civil and criminal laws. k) conduct the Project without violation of the principles of Islamic Shariah. 14 Housing Development Finance Corporation Plc

19 HDFC MUDARABAH SUKUK Issue No TRANSFERS The Issuer makes no representation that the Sukuk may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating any such sale. Persons into whose possession this Prospectus or any Sukuk may come must inform themselves about, and observe, any applicable restrictions on the distribution of this Prospectus and the offering and sale of the Sukuk. 8.8 LIMITED RECOURSE By subscribing for or acquiring the Sukuk, Sukuk holders acknowledge that they will have no recourse to any of the assets of the Issuer (other than the Mudaraba) to the extent that the Issuer fulfils all of its obligations under Sukuk. The net proceeds of the realisation of the Mudaraba may not be sufficient to make all payments due in respect of the Sukuk. If, following the distribution of such proceeds, there remains a shortfall in payments due under the Sukuk, no Sukuk holder will have any claim against the Issuer to the extent the Mudaraba has been exhausted. 8.9 NEGATIVE PLEDGE For so long as any payment remains outstanding under any Sukuk, the Issuer undertakes not to create or have outstanding any mortgage, charge, lien, pledge or other security interest upon the whole or any part of the Mudaraba. In the event of non-payment of profit or principal due on the Sukuk, the Sukuk holders are entitled to declare any payment obligation under the Sukuk immediately due and payable and such payments due shall be made to the Sukuk holders not less than 10 days. HDFC (issuer) will cancel and will not resell the Sukuk which are redeemed or purchased by the issuer or its subsidiaries or agents of the issuer TERMINATION a) Subject to other provisions of these terms, it is agreed that upon full payment on Termination Date or earlier, if proceeds have been received, the Mudaraba shall be redeemed. b) The occurrence of an event of default would entitle the Sukuk holders to declare the Sukuk immediately due and payable without any provision for period of grace, while provision for remedy may be negotiated to the extent appropriate. c) An event of default here means: (i) default is made in the payment of any Periodic Distribution Amount on the due date for payment thereof and, in the case of any Periodic Distribution Amount only, such default continues for a period of a two weeks without any lawful justification; HDFC Plc, September

20 PROSPECTUS (ii) the Issuer is (or is deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts or a moratorium is agreed or declared or comes into effect in respect of all or any part of the debts of the Issuer; (iii) it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under the Sukuk; d) While the amount invested by the Rabb al Mal must be repaid on the due date, mentioned above, the accounts of the Mudarabah will be drawn up within 15 days thereof and the agreed share the Rabb al Mal s profit will be promptly paid MEETINGS OF SUKUK HOLDERS The Sukuk holders may convene meetings of Sukuk holders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Mudaraba Sukuk, those Conditions which are also approved by the Issuer. Such a meeting may be convened by the Issuer and shall be convened by the Issuer upon the request in writing of Sukuk holders holding not less than onetenth of the aggregate Nominal Amount of such of the Mudaraba Sukuk as are current as of such date. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing at least half of the aggregate Nominal Amount of such of the Mudaraba Sukuk as are current as of such date or, at any adjourned meeting, one-quarter of the aggregate Nominal Amount of such of the Mudaraba Sukuk as are current as of such date. An Extraordinary Resolution requires the affirmative vote of at least one more Sukuk holder than half of those represented in the relevant meeting in order for it to be passed. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all Sukuk holders, whether present or not FORCE MAJEURE a) Any delays in or failure by a Party hereto in the performance of the obligations hereunder if and to the extent it is caused by the occurrences or circumstances beyond such Party s reasonable control, including but not limited to, acts of God, fire, strikes or other labour disturbances, riots, civil commotion, war (declared or not) sabotage, any other causes, similar to those herein specified which cannot be controlled by such Party. b) The Party affected by such events shall promptly inform the other Party of the occurrence of such events and shall furnish proof of details of the occurrence and reasons for its non-performance of whole or part of these terms agreed. The Parties shall consult each other to decide whether to terminate these conditions or to discharge part of the obligations of the affected Party or extend its obligations on a best effort and on an arm s length basis. 16 Housing Development Finance Corporation Plc

21 HDFC MUDARABAH SUKUK Issue No Eligible participants This issue is open to any individual or corporate legal entity that is permitted to transact on the Maldives Stock Exchange according to the laws of the Maldives. This would include Public Limited Liability Companies, Commercial Banks, Pension Authority, Public Corporations and Insurance Companies. All supporting documents accompanied with the application should be valid; this includes copies of national identity cards, passport copies, birth certificates and any other documents validating the name and date of birth of the applicant. For Individuals: A copy of the National Identity Card (only for Maldivians), or Bio-data Pages of current Passport (only for foreigners) For Legal Entities: A copy of the Certificate of Registration. A board resolution/similar document authorizing the investment in HDFC MUDARABAH SUKUK- Issue No. 1 and the opening and operation of an account with MSD. A copy of the Memorandum & Articles of Association and bylaws that govern the operations of the entity, if any A copy of the National Identity Card of the authorized signatories HDFC Plc, September

22 PROSPECTUS 10. Procedure for application Applications must be made on the Application Form supplied with this Prospectus. Application can be also be downloaded from our website Applicants using downloaded forms are requested to inspect the Prospectus, which is on the company website whilst hard copies will be available at HDFC PLC s Office. All the Application should be submitted directly to HDFC PLC at the following address; Housing Development Finance Corporation Plc 4th Floor, H. Mialani Sosun Magu Male, Republic of Maldives Subscription List The subscription list will open at 0900 hours on 01 October 2013 and remain open for 35 market days and close at 1100 hours on 27 November HDFC reserves the right to close the issue prior to the closing date in the event of an oversubscription following due notice to the public. Duly completed Application Forms will be accepted by HDFC PLC at its office of business. The Prospectus and Application Forms will be made available 14 (fourteen) market days prior to the opening of the subscription list Mode of payment i) Each application should accompany a check/cash/pay-in-slip for the full payment of the Sukuk applied. The amount payable should be calculated as per the following formula: Where V = full payment of Sukuk applied for S = price per Sukuk (i.e. MVR 500) n = number of Sukuk applied for 18 ii) iii) iv) Payments should be made by check, crossed as Account Payee Only and made payable to HDFC Bond -2 or cash to HDFC Bond -2 ( , Bank of Maldives), where the pay-in slip should be attached to the application form sent to HDFC head office. All such subscription payments will be deposited to HDFC - Sukuk 1 account on the Subscription Closing date and HDFC Plc has all the rights to reject the application if a check is not honored on its first presentation. An acknowledgement receipt will be issued for the checks/cash/pay-in-slip received and Application Forms accepted. v) Application Forms and the accompanying checks and cash payments which are incomplete in any way and/or not in accordance with the terms, conditions and instructions set out in this Prospectus, and application forms which are illegible will be rejected. Housing Development Finance Corporation Plc

23 HDFC MUDARABAH SUKUK Issue No Dematerialized offering This offering of Sukuk will be carried out in a dematerialized environment. This means that the Sukuk certificates issued by HDFC Plc. will be deposited with the Maldives Securities Depository (MSD). A record of each Sukuk holder and Sukuk held shall be maintained by MSD, and statements shall be issued upon request from time to time to evidence the holding. An MSD account opening form is enclosed with each Sukuk application form, and must be perfected by every applicant subscribing to the Sukuk Issue Allotment The Sukuk will be allotted within 05 (five) business days from the Subscription Closing date. All the applications shall be considered for allotment in order of first come first serve basis Acceptance and refunds Where an application is not accepted in full or in part, the balance of the application money, shall be refunded to the applicant within 10 (ten) working days from the closure of the issue. The HDFC PLC reserves the right to accept subscriptions in full or in part from any subscriber Payment of Money at Redemption a) The Sukuk holder, whose ownership of the Sukuk is registered with the MSD, will receive half yearly profit shared in accordance with the pre-agreed profit sharing ratio. b) Redemption money and profit will only be deposited to the bank account given in the application form. The bank account should be in his/her/entity s name and should be in a local bank in Maldives Rufiyaa (MVR). This account must be live and operational all the time during the tenure of the Sukuk. c) After the Sukuk allotment, MSD should be contacted for any update to the particulars provided earlier. d) If any Sukuk holder fails to update his/her particulars or refuses to claim and receive payment of the redemption money payable to such Sukuk holder, the amount due to such Sukuk holder shall be deposited by the Paying Agent to a separate bank account at the end of thirty days after the date of maturity and shall be paid to the holder of such Sukuk when a claim is lodged no later than six months from the date of final maturity. e) No sukuk, partly or in full, may be redeemed prematurely. HDFC Plc, September

24 PROSPECTUS Rejection of applications Incomplete applications will be rejected at HDFC s absolute discretion. Late Applications (delivered after the closure of the Subscription Period) will be rejected. Applications considered as oversubscription will be rejected and refunded within 10 working days following the closure of the issue. The Management and Board of Directors reserve the right to refuse or accept any application owing to a valid reason Underwriting and issue costs No underwriter has been appointed for this series of Sukuk issue. All expenses and fees attributable to this series of Sukuk issue, including legal fees, authority fees, advisory charges, Paying Agent fees and bank charges will be borne by the Issuer Paying Agent Maldives Securities Depository Company Pvt. Ltd. will be appointed as the Paying Agent whose address is given below; Maldives Securities Depository Company Pvt Ltd H. Gadhamoo Building, 3rd Floor, Boduthakurufaanu Magu, Male, Maldives. Tel: (+960) , Fax: (+960) , info@msd.com.mv Websites: Housing Development Finance Corporation Plc

25 HDFC MUDARABAH SUKUK Issue No The Project The funds raised by the issue of Sukuk will be utilized to give Shariah compliant mortgage financing facilities under the HDFC Islamic window HDFC AMNA and no amount of the proceeds will be utilized for any other purpose other than what is stated in the prospectus. More information about this operation can be obtained through the following link: < HDFC Amna was launched in May 2012 in a ceremony held at Nasandura Palace Hotel, Maldives. Amna is an Arabic word which refers to security. Amna is stated in al Quran to connote peaceful, protected and secure. HDFC Amna is neither a separate company detached from HDFC nor a subsidiary of HDFC. HDFC Amna is simply and solely an Islamic window of HDFC offering Islamic home financing facilities to the customers under the existing license of HDFC to offer home financing products to Maldivians in an affordable manner. This Islamic window can be defined as a department of a conventional financial institution offering Islamic financial services. Hence, HDFC Amna will operate as a department of HDFC. HDFC Amna will observe the following standards to achieve Shari'ah compliance: Complete Segregation of Funds Shari ah Supervisory Board (Shari ah Committee) Products fully based on Islamic Concepts including the contracts Management in accordance with Islamic principles HDFC Amna has started its operation in December As at the ended of first quarter 2013, HDFC Amna has a housing portfolio of MVR29 million. The Sukuk Issue is part of HDFC PLC s intention to leverage its capital base with a diversified portfolio of Shariah compliant debt instruments that would include local investors as well. Another objective of issuing Sukuk to the public by HDFC is to create a secured low-risk long-term Shariah compliant investment avenue for the local takaful /insurance companies, pension authority, government corporations, companies and the members of public. HDFC has embraced principles of sustainable and responsible finance in all aspects of operations. HDFC Sukuk with a listing in the Maldives Stock Exchange will increase vibrancy in the market by giving opportunities for varying investors to take part in the national housing development endeavor. HDFC Plc, September

26 PROSPECTUS 12. Security Performance guarantee from HDFC Plc. is given to this offer in Annex Listing The Sukuk offered under this prospectus will be eligible for trading in the Maldives Stock Exchange. Application for listing has been made. 14. Rights of the Sukuk holder The Sukuk Holder will be entitled to a half yearly profit in accordance with the terms given in this prospectus. In the event the Sukuk holder needs liquidity before the Sukuk s date of maturity, the Sukuk will be eligible for trading in the Maldives Stock Exchange and the holder has the right to transfer ownership through secondary markets. 22 Housing Development Finance Corporation Plc

27 HDFC MUDARABAH SUKUK Issue No The Issuer Housing Development Finance Corporation Plc. Our Vision Our vision is to provide decent and affordable homes in a safe and healthy environment, and work towards uplifting the living standards of all Maldivians by becoming the market leader for financial services in the Maldives. Our Mission Our mission is to offer financial and social strength to all Maldivians by providing home finance and other savings and investment products managed professionally and profitably to the highest International Standards and to the complete satisfaction of all stakeholders. Our Pledge HDFC would strive hard and explore all avenues to: Provide a solution to every single customer. Process home-finance applications to the highest professional standard to give a speedy and effective service. Manage all aspects of customer relationship with due care, communication and sensitivity to ensure 100% home-finance performance. To conduct all affairs as a responsible corporate citizen with good governance, accountability and transparency. HDFC Plc, September

28 PROSPECTUS Company Overview Housing Development Finance Corporation (HDFC) Limited was incorporated as a state owned enterprise on 28 January 2004 by a Presidential Decree under the Companies Act, Law No: 10/96. The commercial operations commenced on March 29, HDFC was established with technical assistance from the World Bank, and initially all shares were held by the Government of Maldives (GOM). HDFC Plc. was registered as a public company on the 9th of February The HDFC Plc. was privatized with the signing of a shareholders agreement for privatization between the GOM, IFC, ADB and HDFC-Investments Ltd.- India on July 23, This Public Private Partnership has a joint foreign investment in 51% shares by International Finance Corporation (IFC) of the World Bank Group, Asian Development Bank (ADB) and HDFC Investments Ltd of India. The structure of the shareholding in the privatized HDFC Plc. is given in clause 21 (Detail of shareholding in the company). The July 2008 initiative to restructure the capital and recommence the business of HDFC Plc. became effective on February 10, 2009 with the first equity disbursement by the International Shareholders. IFC and ADB s commitment extended to a multi-lateral funding facility with seven-year tenure. HDFC Ltd of India, with over thirty years of experience in mortgage finance, is the technical partner of HDFC Plc. with assistance from IFC s Advisory Service Performance Based Grant (ASPBG). In March 2013, the company has issued a listed bond of MVR million at an interest rate of 7.5.p.a. Eight individuals and one institution invested with this bonds issue. 24 Housing Development Finance Corporation Plc

29 HDFC MUDARABAH SUKUK Issue No. 01 Having restructured its capital, and with new lines of long-term credit, Housing Development Finance Corporation Plc., Maldives (HDFC) re-entered the market for mortgage home-finance for housing needs of individuals and families. HDFC has a unique place in the financial landscape of the Maldives as the nation s only specialized housing finance institution. With six commercial banks operating in the mortgage housing home-finance market, HDFC s competitive long repayment terms and flexibility in underwriting a facility with the family income-pooled for assessment of repayment capacity has enabled the achievement of more than 50% market share by the end of 2012 when the industry homefinance portfolio stood at approximately MVR 2 billion. The demand for home-finance continues at a rate of growth that outstrips the supply of matching funds, and long-term Sukuk denominated in MVR is seen as the way forward to create sustainable housing finance in the Maldives. The GOM s policy of improving the infrastructure in focus islands to facilitate economic development through zonal investment opportunities for Public, Private, Partnership (PPP) ventures is viewed as a positive factor in going forward with the development of housing finance. Such an approach would assist sustainable growth in home ownership based on mortgage security over properties that will appreciate in value to satisfy the fair value criterion in debt provisioning and managing credit risk. This is very important as a market characteristic, especially in the light of the financial crisis faced by developed economies of the world. HDFC Plc, September

30 PROSPECTUS HDFC Plc s Board, Advisory Committees and Senior Management Board of Directors* Nominee Directors Ms. Renu Sud Karnad HDFC Investments Ltd. (India)- Chairperson 2009 Mr. Sanjaya Gupta ADB Chairman 2011 and 2012 Audit and Management Committee Ms. Fareeha Shareef GOM - Chairperson Nomination and Remuneration Committee Alternate Directors Mr. Conrad D'Souza HDFC Investment Ltd (India) Audit and Management Committee Ms. Christine Engstrom ADB Mr. Hamid Sodique GOM Managing Director Dr. A. D. Priyanka Baddevithana Nomination and Remuneration Committee Company Secretary Mr. Adam Athif *Only the Managing Director holds a qualifying share in the stock of HDFC. The Chairman and Board Directors function in a non-executive capacity. Shari-ah Committee Dr. Ibrahim Zakariyya Moosa Dr. Rusni Hassan Dr.. Aishath Muneeza Chairman Member Member Senior Management Dr. A. D. P. Baddevithana Mr. Ali Shareef Mr. Ibrahim Didi Mr. Mohamed Shaafiee Mr. Adam Athif Mr. Mohamed Fathy Mr. Mohamed Shafeeq Managing Director Chief Financial Officer Deputy General Manager & Head of Accounts Chief Technology Officer Senior Manager Administration and HRD Senior Manager - IT Senior Manager - Business Development 26 Housing Development Finance Corporation Plc

31 HDFC MUDARABAH SUKUK Issue No Profile of HDFC Plc s Board The Directors Board comprises of five nominee and alternate directors appointed by GOM, ADB and HDFC Investments- India. The chairman to the Board of Directors is appointed on rotation, and with a non-voting managing director responsible for policy implementation and on-going operations. All directors possess a wide range of talents, skills and experience with proven track records in the field of housing finance and business administration. Ms Renu Sud Karnad 61 Nominee Director Ms Renu Sud Karnad, is a nominee Director of HDFC Investments Ltd., India, from the inception of the privatization of HDFC Plc in 2009 and does not hold any shares in any company in the Maldives that has a conflict of interest with HDFC Plc. She is the Joint Managing Director at Housing Development Finance Corp. Ltd. in India, and Home Finance Services India Private Limited. She joined the firm in 1978 and has been its Executive Director since Ms. Karnad has been Director of ICI India Limited since August, 2003, HDFC Bank Ltd. since July, 2002 and Motor Industries Co. Ltd. since April, She serves as Director of HDFC Asset Management Co. Ltd., Indraprastha Medical Corp. Ltd., Gruh Finance Ltd., HDFC Realty Ltd., Ascendas Limited, Credit Information Bureau (India) Ltd. (CIBIL), Feedback Ventures Ltd., HDFC Chubb General Insurance Ltd., and Mother Dairy Fruits & Vegetables Limited. She is a Member of the Board of Advisors at Swiss Technology Venture Capital Fund. Ms. Karnad also holds Pravin Fellowship from Woodrow Wilson School of International Affairs, Princeton, NJ. She is a Law Graduate and also holds a Masters degree in Economics from Delhi University. Over the years, Ms. Karnad has had to her credit, numerous awards and accolades. She was featured in Business Today magazine s list of Most Powerful Women in Indian Business many years, and was among the list of 25 top non-banking women in finance by U.S. Banker magazine in 2008 and was chosen as the Best Woman Corporate Leader by Business & Economy magazine for the year She was felicitated at the Women Achievers Award 2007 by the FICCI Ladies Organization. In 2006, Wall Street Journal Asia adjudged her among the Top Ten Powerful Women in Asia. HDFC Plc, September

32 PROSPECTUS Mr. Sanjaya Gupta is a nominee Board Member representing ADB since March He does not hold any shares in any company in the Maldives that has a conflict of interest with HDFC Plc. As a senior professional with more than 24 years of work experience, he has coordinated with international financial institutions (IFC, ADB, and KFW), and with various central and state Government departments to augment the Indian real estate/ retail mortgage space. Mr. Gupta started his professional career at HDFC Ltd., as a Management Trainee since then he moved into various critical positions, such as Business Head for Middle East, Deputy General Manager at HDFC Ltd. etc. He also was the Vice President Business Head Mortgage Operations for ABN AMRO NV. He was the Chief Executive Officer & Managing Director for American International Group Inc. He has also co-promoted a housing Finance company, for the urban poor in India India Shelter Finance Corporation Ltd. a first of its type company in the country. Mr. Gupta holds an MBA from the University of Lucknow and is a B.Com Graduate. Completed his High School from St. Joseph s College Nainital and is a Certified Project Manager by Perot Systems Project Management Institute. In addition he is also a Certified Housing Finance Trainer by Centre of Housing Finance a JV, USAID and HDFC Ltd. He is also a Fellow of the Royal Institute of Chartered Surveyors - UK. Mr. Sanjaya Gupta 50 Nominee Director 28 Housing Development Finance Corporation Plc

33 HDFC MUDARABAH SUKUK Issue No. 01 Ms. Fareeha Shareef 35 Nominee Director Nomination and Remuneration Committee Ms. Fareeha Shareef is a nominee Board Member representing the Government of Maldives since privatization of HDFC Plc in She has over seven years of experience in the financial and business advisory services. She has declared holding of 200 shares of the Bank of Maldives, and also sitting board member of the Maldives Pension Administration Office. She is the CEO of FJS Consulting Pvt. Ltd, a leading management consultancy firm based in the Maldives. She has worked with major organizations including State Trading Organization Plc., Maldives National Shipping Limited, Maldives Tourism Development Corporation, Housing Development Corporation Ltd, Bank of Maldives Plc. and developmental agencies including UNDP, FAO, IFAD, WHO, World Bank and Asian Development Bank. She has worked in KPMG Ford Rhodes Thornton and Co, Sri Lanka as an Advisor in the Risk Advisory Section of the firm. She has also worked at Public Enterprises Monitoring and Evaluation Board of Ministry of Finance. She holds a Masters Degree in Management Studies (Accounting) from the University of Waikato, Hamilton, New Zealand in addition to a Bachelor s Degree in Commerce & a Bachelor of Commerce and Management (Accounting & Finance) from Lincoln University, Christchurch, New Zealand. She is a member of Association of Chartered Certified Accountants (UK), Institute of Internal Auditors (USA), Certified Practising Accountants of Maldives (CPA Maldives) and a Provisional Member of New Zealand Institute of Chartered Accountants (NZ). Mr. Conrad D Souza 53 Alternate Director Audit and Management Committee Mr. Conrad D Souza, is an Alternate Board Member for HDFC Investments Ltd. India since the inception of the privatization of HDFC Plc. in He does not hold shares in any company in the Maldives that has a conflict of interest with HDFC Plc. He has 27 years of experience in the field of Housing Finance. He joined Housing Development Finance Corporation Limited India in 1984 and is currently Senior General Manager Management Services and Investor Relations. His responsibilities include corporate planning and budgeting, corporate finance and investor relations. He was earlier the Treasurer of HDFC-India and his responsibilities included resource mobilization both domestic and international and asset liability management. Mr. D Souza has also worked earlier in Operations and Management Services at HDFC-India. He has been a consultant in housing finance to USAID/UNDP and IFC (Washington) and has undertaken assignments in Asia, Africa and Eastern Europe. He is a member of the National Stock Exchange of India Limited s Committee on Currency Derivatives and is also a governing council member the Association of Finance Professionals of India. Mr. D Souza has a Master s Degree in Commerce, a Master s Degree in Business Administration and is Senior Executive Program (SEP) graduate of the London Business School. HDFC Plc, September

34 PROSPECTUS Ms. Christine A. Engstrom is an alternate Board Member representing the Asian Development Bank (ADB) since the inception of the privatization of HDFC Plc in She does not hold any shares in any company in Maldives that has a conflict of interest with HDFC Plc. As a Principal Investment Specialist at the ADB with more than 18 years of work experience, Ms. Engstrom is currently the Unit Head of Financial Institutions at ADB where she heads a team providing debt, equity and guarantees to financial institutions in Asia. Ms. Engstrom started her career at the International Finance Corporation (IFC), Washington, D.C., working in the Asia Department before moving to the Overseas Private Investment Corporation (OPIC), in Washington, D.C. as Senior Investment Officer. Ms. Engstrom was employed at Fannie Mae from 2001 to 2006 as Deal Structuring Manager in Single Family Mortgages before assuming the post of Senior Transaction Manager in Fannie Mae s Capital Markets group. She is currently based in Manila. Ms. Engstrom holds an MBA from Georgetown University as well as M.A, International Affairs from University of Virginia in addition to B.A. in Political Science from the University of Washington. Ms. Christine A. Engstrom 47 Alternate Director Mr. Hamid Sodique, is an alternate Board Member representing the Government of Maldives since May He does not hold any shares in any company in Maldives that has a conflict of interest with HDFC Plc. He has over 15years of experience in Consultation work and Project and Management area and was a member of the Maldives Pension Administration Office and served in the Investment Committee of the Board until August He started his Professional career in the Maldives Monetary Authority in 2006 and since then has worked at prominent positions in well know Organization such as UNESCO, SAARC, AAA and is currently working at a private consulting firm. He has executed many national and international projects on business management, strategic planning, Entrepreneurship Skills Training and Mentoring. Mr. Sodique holds a Master Degree in Business Administration from the University of Adelaide, Australia in addition to a Bachelor s Degree in Business Administration from University of Brunei Darussalam. Mr. Hamid Sodique 38 Alternate Director 30 Housing Development Finance Corporation Plc

35 HDFC MUDARABAH SUKUK Issue No. 01 Dr. A. D. P. Baddevithana 55 Managing Director Nomination and Remuneration Committee Dr. A. D. P. Baddevithana holds a qualifying share at HDFC Maldives, and does not hold shares in any company that has a conflict of interest with HDFC Maldives. He counts more than 30 years of experience, with 20 years in senior management positions in Housing Finance, Banking, and Business Administration in the UK, Sri Lanka, and Maldives. Prior to taking up the position of Managing Director of HDFC Maldives in September 2008 he served the HDFC Bank of Sri Lanka as its Head of Credit, Operations and Marketing over a period of six years. He began his career in 1977 as a management trainee of the Peter Robinson Group in the UK, and his employment record includes Kensington and Westminster District Finance Office, the Housing Corporation of England and Wales, Clerical Medical Investment Ltd. of the Halifax Group UK, and in Sri Lanka in 1997 as the founder General Manager of the first private sector building society known as Nations Building Society, a position he held until he joined the HDFC Bank of Sri Lanka in He is a Life Member of the Association of Professional Bankers of Sri Lanka, a Certified Professional Marketer of the Asia Pacific Marketing Federation, Fellow of the Sri Lanka Institute of Marketing, and holds academic qualifications of Ph.D., MBA, MA and BA. He has attended many international seminars and conferences in the UK, USA, Germany, Singapore, India, Malaysia and Indonesia covering banking, corporate governance and housing finance. He has been a key resource person and adviser for a number of state, international and private sector led ventures including, HACAS UK, the Commonwealth Institute, ADB, World Bank and the Central Bank of Sri Lanka, and has served as an accredited resource person for programs of the Institute of Chartered Bankers of the UK. HDFC Plc, September

36 PROSPECTUS Profile of HDFC Plc s Shariáh Advisory Committee The HDFC Amna department is managed and systematized to ensure proper Shari ah governance mechanisms both within the department and among its stakeholders. A Shari'ah Committee consisting of three members will be established to advise the Board of Directors of HDFC on Shari'ah related matters. The members of the Shariah Committee are: Dr Ibrahim Zakariyya Moosa holds a PhD in Fiqh and Usulul Fiqh and a M.A in Islamic Revealed Knowledge from International Islamic University Malaysia. He obtained his Bachelor s Degree in Islamic Shariáh from Islamic University of Medina, Saudi Arabia. Currently he is the Rector of College of Islamic Studies. He also served as a Parliament Member for nine years (from 1989 to 1999); was a Member of the Special Majlis for thirteen years (from1990 to 2004); was a Member, Supreme council of Islamic Affairs. (from 1995 to 2004); and also was a Member of Quran translation committee (from 1995 to 2004). He has attended seminars and published articles on different matters related to Shariáh. Dr Ibrahim Zakariyya Moosa 57 Shariáh Advisory Committee Chairman Assoc. Professor Dr Rusni Hassan is an Associate Professor at the Ahmad Ibrahim Kulliyyah of Laws (AIKOL), International Islamic University Malaysia (IIUM). She graduated with LLB (Honours) and LLB (Shariah) (First Class), Master of Comparative Laws (MCL) and Ph.D. in Law. Her area of specialization includes Islamic Banking, Finance and Islamic Documentations, Islamic Capital Market, Takaful and Islamic Law of Transactions. She is a Board Member and PhD Selection Committee at IIUM Institute of Islamic Banking and Finance. Presently she is a member of Shariah Advisory Council of Central Bank of Malaysia (Bank Negara Malaysia). She was a member of Shariah Committee for HSBC Amanah Malaysia, HSBC Amanah (Takaful) Malaysia and a registered Shariah Unit Trust Advisor with the Securities Commission. She has presented numerous research papers on Islamic finance in national and international conferences and she has also written books of Islamic finance related subjects. She is the co- author of the winning essay of the worldwide Islamic finance essay competition organized in Kuala Lumpur Islamic Finance forum (KLIFF) of 2010 for research: Take It or Leave It! The Iniquitous Islamic Banking Documents and has won a gold medal and a silver medal in IIUM Research Invention and Innovation Exhibition 2012 for her research on Islamic banking and finance. Assoc. Professor Dr Rusni Hassan 46 Member 32 Housing Development Finance Corporation Plc

37 HDFC MUDARABAH SUKUK Issue No. 01 Dr. Aishath Muneeza 27 Member Dr. Aishath Muneeza is currently the Head of Islamic Finance of Capital Market Development Authority (CMDA), which is the regulatory body for the capital markets of Maldives and the chairperson of the Capital Market Shariáh Advisory Committee of CMDA. She sits in the National Fiqh Academy (National Fatawa Council) of Maldives. She is also the Islamic Finance Consultant for the Central Bank of Maldives, Maldives Monetary Authority. She also serves as the Islamic finance Consultant for Housing Development Finance Corporation PLC (HDFC) of Maldives and she sits on their Shariah Advisory Committee. The Islamic wing of HDFC, HDFC Amna was set up under her direct guidance. She is also a registered Shariah Advisor at Securities Commission of Malaysia to advice on nonringgit shariah compliant products. Aishath Muneeza is also the Chairperson of Shariah Advisory Board of Alia Maldives Pvt. Ltd and Allied Insurance Maldives Pvt. Ltd. The Islamic Capital Market framework in the Maldives was set up under her direct guidance. She conducts seminars and workshops on Islamic Finance. She delivers public lectures and conducts training on Islamic Finance related areas for government officials and private institutions. She has presented numerous research papers in national and international conferences and has spoken about Islamic finance related matters in different parts of the world including France, India, Bangladesh, Pakistan, United Arab Emirates, Singapore, Tunisia, Nigeria, Mauritius, Australia, Brunei, Indonesia and Malaysia. She has published academic books and more than fifty papers on Islamic banking and Finance. As an Attorney, she also drafts documentation for Islamic products for Islamic financial Institutions. She structured the first Islamic bond (sukuk) which is to be offered in the Maldives. She also structured the first sovereign private sukuk offered in the Maldives. She is the co- author of the winning essay of the worldwide Islamic finance essay competition organized in Kuala-Lumpur Islamic Finance forum (KLIFF) of She had won gold and silver medals in the IIUM Research, Invention and Innovation Exhibition 2012 & 2013 for research conducted on disciplines related to Islamic banking and finance. She holds a LL.B (HONS) degree, a LL.M (Banking) and Ph.D (law) from International Islamic University Malaysia. HDFC Plc, September

38 PROSPECTUS Profile of other members of the senior management team. Mr Adam Athif joined HDFC Plc. in December He does not hold any shares in the company or in any company in the Maldives that has a conflict of interest with HDFC Plc. Mr Athif started his career in the Government of Maldives in 1990 as a Secretary since then he has worked his way up the ladder and has worked in areas related to Administration and Human Resources in the Private Sector as well as the Government. He holds a Diploma in Business Administration and is well versed with local Housing Market having attended various workshops in relation to Housing Finance. Mr. Adam Athif 41 Company Secretary, Senior Manager Administration and HRD Mr. Ali Shareef joined HDFC Plc in October He does not hold any shares in any company in Maldives that has a conflict of interest with HDFC Plc. He has over 11years of experience in Finance in the Government Sector and has acted as a Consultant to local firms. He started his Professional career in the Public Enterprises Monitoring and Evaluation Board at the Ministry of Finance and Treasury and worked on due diligence of SOE s, Financial reviews of PE s, advice PE s on budgets, business plans & Policies. Mr. Shareef holds a BA (Hons) Accounting from University of Hertfordshire, UK/ through Inti College Malaysia and is an Affiliate Member of the Association of Chartered Certified Accountants of the UK since He served as Technical Advisor to the Minister in the Public Enterprises Monitoring and Evaluation Board, Ministry of Finance and Treasury prior to joining HDFC Plc. Mr. Ali Shareef 31 Chief Financial Officer Mr. Ibrahim Didi, joined the HDFC Plc. in June Other than 83 shares in the Bank of Maldives, he does hold any shares in any company in the Maldives that has a conflict of interest with HDFC Plc. He began his career in the Ministry of Planning in August 1998, and his service record includes reputed organisation such as Island Aviation Service Ltd. and Wataniya Telecom Maldives Pvt Ltd., where he was the Finance Operations Manager for three years prior to joining HDFC Plc. He is a passed finalist of the Managerial Level of CIMA. He attended many local and international seminars and workshops on Business Administration, Banking and Islamic Finance. Mr. Ibrahim Didi 36 Deputy General Manager and Head of Accounts 34 Housing Development Finance Corporation Plc

39 HDFC MUDARABAH SUKUK Issue No. 01 Mr. Mohamed Shaafiee 36 Chief Technology Officer Mr. Mohamed Shaafiee joined HDFC Plc., in July He does not hold any shares in the company or any other company in the Maldives that has a conflict of interest with HDFC Plc. He started his career as Interim Chief Information Officer at Makmal Komersial Holdings Sdn. Bhd., Malaysia, in the year Since then he has worked with a number of reputable Maldivian firms in top-level management capacity, including Wataniya Telecom Maldives and Focus Computers Pvt Ltd. Clients who have benefited from his consultancy services over the past decade include Maldives Police Service, Crown Company Pvt Ltd, Attorney General s Office and Damas Company Pvt Ltd. Prior to joining HDFC he was working for the President s Office, Maldives, as their Head of IT, with a stint at the 17th SAARC Summit as the Project Director for IT assigned by the Government of Maldives. He holds a Master s degree in Software Engineering from Staffordshire University in addition to a Bachelor s of Science degree in Computing. One of the outstanding achievements in his area of interest is the development of a non-von-neumann Programming Language, Symlah, which is the first Turing-complete programming language developed by a Maldivian. Mr. Mohamed Shafeeq 35 Senior Manager- Business Development & CRM Mr. Mohamed Shafeeq, Joined HDFC Plc. In July 2009 and does not hold any shares in the company or in any company in the Maldives that has a conflict of interest with HDFC Plc. He began his career in 1997 with Society for Health Education (SHE), a reputed nation-wide nonprofit non-government organization in the Maldives, and was promoted as its Finance Director in He holds a Master in Business Administration from the University of Ballarat, Australia in addition to a BA (Hons) Accounting and Finance awarded by University of East London, UK. He is a member of Association of Chartered Certified Accountants (UK), and also a senior member of Certified Practising Accountants of Maldives (CPA Maldives) He attended many local and international seminars and workshops on Business Administration, Marketing, Banking and Finance. Mr. Mohamed Fathy 38 Senior Manager - IT Mr. Mohamed Fathy, joined the HDFC Plc. in March 2004 as part of the initial team and holds one share in the company. He does not hold any shares in any company in Maldives that has a conflict of interest with HDFC Plc., except at Bank of Maldives Plc at which he holds 50 Shares. Mr. Fathy began his career 2001 in the field of audit and gained experience at local firms and with the experience gained got engaged in providing consultancy services as a freelance consultant. While at HDFC he has headed the Internal Audit Division as well as the IT Division, in addition to numerous contributions provided in the development internal controls and systems, he holds Bachelor of Commerce from Banglore University of India and M.Sc. in IT Management from Asia Pacific University (A.P.U), Malaysia. HDFC Plc, September

40 PROSPECTUS 16. Managing Director s Report We are pleased to present this report to the Sukuk prospectus of HDFC Plc. with extracts from the Audited Accounts for the year ended December 31, 2012 while the full audited financial statements complete with the auditor s report is annexed: The nine-year financial landscape shows that HDFC has grown with each passing year to reach stability and sustainability (9mont hs) Year Gross income Net income (0.2) Operating profit/ (loss) (1.3) Since its establishment by the Maldives Monetary Authority in 2004, HDFC has played an unmatched role in the life of the nation by helping Maldivians live their dream of having a decent home in a safe and healthy environment. It is the only specialized housing financial institution in the Maldives for mortgage home loans, the majority shareholding of which, upon privatization, was taken up by international investors comprising International Finance Corporation (IFC) of the World Bank Group, Asian Development Bank (ADB) and HDFC Investments Ltd. of India. The nine-year financial landscape shows that HDFC has grown with each passing year to reach stability and sustainability. HDFC s transformation into a Public Private Partnership in 2008 was carefully designed to create a stable housing finance solution that is both affordable and sustainable. Moving to a new phase by embracing responsible finance with its principles of client protection, HDFC has not only served the housing needs in the Male region, but has made great strides towards giving access to finance to tens of thousands who live in the far-flung atolls with its Island Outreach Programme. The performance of the year under review surpassed the key performance indicator benchmarks set at the beginning of the period despite the country situation in 2012, and the obstacles HDFC had to face during a period viewed by the international investors as the most volatile and turbulent one in the history of the Maldives. HDFC was able to record an impressive growth in the operational profit of MVR 57.9 million for the year ended 2012, which was a 52% increase over 2011 with an year-over-year loan portfolio growth of 33%. HDFC has strived to reach greater heights of excellence with each passing year, and 2012 was no exception. 36 Housing Development Finance Corporation Plc

41 HDFC MUDARABAH SUKUK Issue No. 01 Therefore, it would be remiss not to mention the commitment and passion of one of the finest teams of professionals I have been privileged to work with, right across the board, from HDFC s Chairman and Board of Directors who have set effective policies and charted a course to take the organization from strength to strength, and its management and staff who have made it possible for us to record yet another landmark year of growth and sustainability in We thank our valuable customers whose commitment to performance of their financial obligations has established a sound credit culture as the bedrock of HDFC s success thus far. They have given much needed investor confidence to expand operations in order to offer access to finance and financial inclusion to many Maldivians living in the remote atolls to the north and the south of the Male region. We take this opportunity to express our sincere gratitude to our regulators, the Maldives Monetary Authority led by its Governor Dr. Fazeel Najeeb, and the respective teams that have assisted HDFC by their supervision to achieve continuous improvement in policies and processes towards the development of a robust organization, built to last. We also appreciate the government and private agencies who have been our partners and well-wishers, especially the housing ministry and the finance ministry, and their respective ministers, and the CEO and management of Capital Market Development Authority for the active interest they have taken in furthering HDFC s cause of providing homegrown solutions in housing finance to the masses in an affordable and a sustainable manner. HDFC Plc, September

42 PROSPECTUS Lending Operations and the Social Impact HDFC s inclusive business model has developed a range of products and services that involve the cottage industries in the value chain as suppliers of building material such as compressed cement blocks and carpentry work carried out at an island level to reduce the cost of construction. The total number of beneficiaries at the bottom of the pyramid exceeds 10,000 during the 9-year existence of HDFC. A comprehensive range of products and services have been innovated to serve the customers better. Effective counseling service and CRM have helped in achieving best-fit product development through customer feedback. Total loans approved and disbursed under various product categories serve to profile HDFC s direct contribution to the housing finance market. Since its inception, total housing finance injected to the market stood at MVR 1.2 billion as at the year ended on December 31, Approximately 6,000 customers under the pooled application process participated in HDFC s growth. As at the year end, the total outstanding capital stood at MVR 800 million profiled as below: 38 Housing Development Finance Corporation Plc

43 HDFC MUDARABAH SUKUK Issue No. 01 Country Report on Housing and Housing Finance Having re-structured its capital in February 2009, and with new lines of long-term credit, HDFC has re-entered the market for mortgage loans for housing needs of individuals and families. HDFC is able to offer long repayment terms in a market where the demand has grown at a pace outstripping the supply of matching funds. The privatization has transformed the institution to face the future as a commercially viable, private sector-led company that can grow and develop effective solutions to the urgent housing problems of the Maldives. The Maldives consist of approximately 1,200 islands covering an area of 90,000 sq. km. of the Indian Ocean, set in an Exclusive Economic Zone (EEZ) covering 859,000sq km. The island nation has 196 administrative islands designated for habitation, in addition to which over 100 islands are allocated as resort properties and 35 islands designated for industry and agriculture. Maldives is home to approximately 350,000 citizens living in a dispersed manner with only thirteen islands outside of Male region recording a population of more than 5,000 inhabitants. This presents a formidable challenge to a housing finance institution which intends to operate at a national level due to the diverse needs HDFC Plc, September 2013 of the population that is thinly spread in some regions, with the exception of the posttsunami phenomenon of concentration through in-migration, where the stress of housing is felt the most in the Male Atoll. The nation s capital Malé, with around 2.5 sq. km. of total land area, has over one third of the entire population, while approximately seventy percent of the rest of the inhabited islands have less than 1,000 inhabitants each. Maldives has a relatively young population with almost forty percent under 15 years of age and around three percent over 65 years of age. This demographic profile translates to a growth in demand for housing in the foreseeable future as the young population matures to full-fledged participation in the econ- 39

44 PROSPECTUS omy. With regard to human development trends, the country ranks high among the Asia- Pacific countries. In order to provide a sustainable solution to the limitation of suitable land to develop much needed housing stock in the Male Atoll, land reclamation in a viable manner began at the turn of the century with the Hulhumale project spearheaded by state-owned Hulhumale Development Corporation (renamed as Housing Development Corporation or HDC in 2009). Another recent project under the umbrella of Global Projects Development Company (GPD) to reclaim the Gulhi Falhu reef-basin has also met with a degree of success. There is special emphasis on developing these two projects to provide modern and sustainable communities. Here the challenge would be to provide housing development finance to match the rapid pace of development as Hulhumale is scheduled for a second phase of reclamation in The government s concept of developing focus islands that will create a demand for housing is also a positive trend. It will assist sustainable development of home ownership based on mortgage financing of properties that would appreciate in value to maintain a positive equity scenario. The underlying real estate value and market value of homes being developed from HDFC mortgage loans is a highly significant factor as a market characteristic, especially in the light of the 2008 financial crisis faced by the developed economies of the world, where subprime home lending and a property bubble that burst had contributed to a financial meltdown. The statistics of households according to UNFPA (United Nations Population Fund-2008 survey updated for 2012) are as follows: Households : Male 15,000 Atolls 33,000 Total 48,000 Therefore, the density in Malé is around eight members per household with 60,000 people per sq. km., which is one of the highest in the world. In the outer atolls, this figure is reduced to around six. However, it is the constraints on buildable land that has made Male one of the most densely populated capital cities. A desirable family size per unit of four would lead to an additional housing requirement for the Male Atoll estimated at present to be 10,000 units, which can be absorbed by the combined infrastructure of Hulhumale and Gulhi Falhu developments. Therefore, HDFC s solution for financing sustainable housing development in the Maldives is linked to the strategies of the Housing Development Corporation (HDC) of Hulhumale, and GPD of Gulhi Falhu. Their Joint Venture Partnerships with a number of international property developers should yield approximately 2,000 units of housing per annum and, with an additional role as a social landlord in Hulhumale, the HDC has shown their commitment to addressing the housing problem facing the Male Atoll. 40 Housing Development Finance Corporation Plc

45 HDFC MUDARABAH SUKUK Issue No. 01 Maldives Economic Landscape The national housing policy for outer atolls is one that is linked with the GOM s economic development policy. Typical of an island nation, development in Maldives is also constrained by the absence of land based mineral resources. There is limited scope for expansion of the agriculture sector. Certain areas possess vulnerability to natural disasters and environmental hazards. The major industries driving the Maldivian economy are fisheries and tourism with the supporting industries of transport, construction, boat-building, fish processing and finance. Tourism, fishing and transport are the major sources of foreign exchange earnings and government revenue, and which together directly account for about 60 percent of gross domestic product. In terms of employment, these three sectors along with construction industry account for more than 50% of total employment. A large expatriate workforce plays a key role in the development of the Maldivian economy. Their needs of accommodation have created a vibrant market for rental income from foreign employment categories that include teachers, accountants, medical personnel and other business and technical professions including civil construction and infrastructure development. The Government s support for the development process is seen from the large number of employees in the public sector, which accounts for approximately one third of the working population. The public sector consists of the government and state owned enterprises (SOEs) covering a wide range of activities including fuel supply, banking, air and sea transport, international shipping, communications and the provision of electricity and utilities, fisheries operations, tourism and importing and distributing a large share of essential foodstuff. The Maldives narrow financial sector is dominated by the banking sector, which consists of one locally owned commercial bank, BML, the recently established Maldives Islamic Bank, MIB, branches of three Asian commercial banks, SBI, Habib, MCB, and a branch of a global bank, HSBC. Non-bank financial institutions, known as OFIs (Other Financial Institutions) include players in the general insurance market, Maldives Finance Leasing Company, (MFLC), and the only housing finance institution, HDFC. MMA is the primary source of domestic financing for the Government s fiscal operations. The commercial banks mobilize savings and provide credit and foreign exchange to the private sector. Currently work is underway to promote the Maldives Stock Exchange for raising much needed capital for economic development. Capital Market Development Authority (CMDA) facilitates trad- HDFC Plc, September

46 PROSPECTUS ing arrangements. There is limited secondary market trading activity with shares of the Bank of Maldives (BML), and two other state owned public companies, namely the Maldives Transport and Contracting Company (MTCC) and the State Trading Organization (STO), playing the lead role out of the six listed entities. The recently passed Securities Act paves the way for the establishment of a formal capital market, with HDFC taking the lead by issuing the first ever rated bond to be listed in the Maldives Securities Exchange in February The open economy of the Maldives has a narrow export base with high dependence on imports for most of its economic activities. Imports have averaged around 61% of the GDP in recent years, while domestic exports, consisting primarily of fish and fish products have ranged between 11-15% of the GDP. Net surplus on services and transfers has averaged around 34% of the GDP. Service receipts come from tourism and related activities. There is a significant outflow of transfers from the economy owing to the large expatriate workforce. Medium and long-term debt flows and inflows of capital for direct investments dominate the capital account of the balance of payments. There is no exchange control legislation in the Maldives. Foreign direct investment in the country needs prior approval of the government and a negotiated annual royalty is payable. There are no restrictions on transferring of profits. The construction sector continued to remain robust in 2012, with 8% growth during the year. According to a World Bank report published in 2012, Maldives economy has recovered from the debacle of 2009 where the GDP had contracted by 4.74% (negative) to achieve 7.46% growth by the end of 2011 as depicted below: GDP growth in 2012 was limited to 3.4% despite coming close to the anticipated performance from tourism and construction sector during the year. This may be attributed to a reality check on the recovery efforts after the 2009 negative GDP, which cast a long shadow into the future impacting the structure of the national debt and budget deficit. The European debacle reflected in the global economic and financial conditions in 2012 would impact on the Maldives tourism, but the continued success of reaching across the globe for all-yearround tourism and innovation to capture new market segments are positive signs for future growth. Maldives is proactively seeking other avenues of GDP growth from a diversified field of economic activity, and it signals a future that would reduce Maldives overdependence on tourism. 42 Housing Development Finance Corporation Plc

47 HDFC MUDARABAH SUKUK Issue No. 01 Acknowledgements The privatized HDFC Maldives has completed 4 years of growth to lay a firm foundation of sustainable development to address the housing needs of the Maldives. To help achieve the aspirations of the people, there is an urgent requirement to upgrade substandard housing and build up a new housing stock in this emerging economy. In building capacity of HDFC to meet these challenges, the greatest asset at our disposal is the commitment and professionalism of all our employees towards realizing the mission and vision of HDFC Maldives. I am immensely grateful to our dedicated staff for their valuable contribution. Our valued customers are essentially the citizens of Maldives, and the raison d être and the core of HDFC s continued motivation to improve their lives through access to affordable housing finance so that they can live in decent homes, in safe and healthy environments. We thank them for forging a lifelong relationship with an institution they can call their own. We appreciate the enabling and regulatory environment created by the Maldives Monetary Authority, Ministry of Finance and Treasury, Ministry of Housing and Infrastructure, Male City Council, Ministry of Economic Development, Judiciary and all other government agencies, as well as the officials of international shareholders and investors who monitor and mentor our progress. In my personal capacity, as the Managing Director, I would like to place on record my profound appreciation to all the stakeholders, especially our staff, shareholders, customers, chairman and the board of directors for their support and cooperation extended to me. The outgoing Chairman of 2012, Mr. Sanjaya Gupta has been a tower of strength in concluding a successful year. He was ably supported by his fellow directors Ms. Renu Sud Karnad, Mr. Subrata Data Gupta, Mr. Ismail Ali Manik, Ms. Fareeha Shareef, and alternate directors Mr. Conrad De Souza, Ms. Christine Engstrom, and Mr. Hamid Sodique. We extend our very sincere gratitude to the outgoing director and IFC nominee Mr. Subrata Dutta Gupta for completing a three and a half year directorship of HDFC that came to an end on December 31, He has left an indelible mark as a pioneer of the privatized HDFC s progress, and will always be remembered for his yeomen service towards the success of the early years following privatization. We wish him well in all future endeavors. We also thank our legal counsel Mazlan and Murad Law Associates as well as PWC Maldives for their professional input, and our Consultant on Islamic Finance, Ms. Aishath Muneeza, for her passion and dedication to establishing an Islamic Finance Window at HDFC. No National Housing Finance Institution could hope to grow and sustain a sound loan portfolio that adds value to the lives of the people it serves without the participation of sound investment partners. In this regard, we thank the IFC, ADB, FMO of Netherlands, the country s very own Bank of Maldives, Allied Insurance Company of Maldives, Maldives Post Ltd., and Amana Takaful (Maldives) PLC for their support in making 2012 a successful year for HDFC. Going forward, a great deal is expected of HDFC s partnership with national and international players to usher an era of model living for Maldivians in decent homes in an environment as clean, green, and breathtaking as the ocean paradise that defines the Maldives. HDFC Plc, September

48 PROSPECTUS 17. HDFC s Corporate Governance The essence of corporate governance at HDFC Plc. is the relationship between the board of directors, management and the shareholders to act in the best interest of the all the stakeholders. Corporate Governance ensures that companies are directed and managed at Board and management level in a fair and transparent manner. HDFC s corporate governance is planned and implemented at the Board level and led by the Board. It provides guidance on how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized. It is concerned with the organization s policy direction and implementation in a fair and transparent manner by the board of directors, the management and the staff of HDFC. The code of corporate governance provides guidance on how to set the objectives of the company for optimum performance while managing and monitoring the risks in order to achieve: i) Creation of value (through entrepreneurism, innovation, and development) ii) Implementation of effective control systems commensurate to the risks involved iii) Accountability and transparency Corporate governance refers to internal disciplines or systems, which govern the relationships among the 'key players' or entities that are instrumental in the performance of the organization. The details of which is provided in Annex Inspection of documents The Memorandum and Articles of Association of HDFC Plc., Shareholders Agreement and all other documents including audited accounts from inception of the Company referred to in this Prospectus may be inspected at any time during normal business hours at the Registered Office of HDFC Plc. until the end of the subscription period. The Registered office of HDFC Plc; Housing Development Finance Corporation Plc 4th Floor, H. Mialani, Sosun Magu Male, Republic of Maldives Tel: , Fax: info@hdfc.com.mv 44 Housing Development Finance Corporation Plc

49 HDFC MUDARABAH SUKUK Issue No Risk Factors Risks Related to the Issuer HDFC activities primarily relate to the provision of mortgage home-finance for the construction and purchase of residential properties. The company s activities are exposed to a variety of financial risks and those activities involve analysis, evaluation, acceptance and management risk or combination risk. HDFC s total Balance Sheet value as at the year ended December 31, 2012 stood at MVR million of which, borrowings (see Note 28 to the Audited Financial Statements in Annexure 4) MVR million was represented by: Million Bank Overdraft International Finance Corporation (IFC) Asian Development Bank (ADB) Corporate Sukuks Netherlands Development Finance Company (FMO) Wakala Facility HDFC is exposed to the following risks; Exchange Rate Risk Equity Risk Market Risk Exchange Rate Risk Foreign exchange risk is mitigated through a hedging mechanism by entering into a Currency Swap Agreement between HDFC and State Trading Organization Plc. Equity Risk Since the stock of HDFC Plc. is not listed on the Maldives Stock Exchange and held between International Shareholders and the Government of Maldives, the company does not have an equity risk. Market Risk Market risk is the risk that the fair value or the future cash flows of the financial instruments will fluctuate because of the changes in market prices. HDFC has a significant concentration of fair value risk on the properties taken as mortgage security for home -finance. Due to the very nature of the assets funded under the portfolio, it makes the company exposed to the risks associated with economic standing of the Maldives particularly as it relates to the cost of construction, rental market for residential properties, real estate values and sales. Market risk is mitigated by: Strict credit criteria that preserves the margin of the amount funded versus the HDFC Plc, September

50 PROSPECTUS cost/value on any property. Prudential criteria that would ensure that the ability to repay debt is reasonably assured by customer s financial circumstances and credit history. Regular review and assessment of market factors that affect the quality of the mortgage portfolio. Risks Related to the Issue Before making an investment decision, prospective purchasers of Sukuk should consider carefully, in the light of their own financial circumstances and investment objectives, all of the information in this Prospectus. The Issuer believes that the factors described below represent the principal risks inherent in investing in the Sukuk, but the inability of the Issuer to pay any amounts on or in connection with the Sukuk may occur for other reasons and the Issuer does not represent that the statements below regarding the risks of holding any Sukuk are exhaustive. There may also be other considerations, including some which may not be presently known to the Issuer or which the Issuer currently deems immaterial, that may impact any investment in the Sukuk. Payment risk is the risk that the issuer will default on payment of yield and principal. HDFC s liquidity management process ensures that it has sufficient liquidity to pay its creditors and lenders when they fall due. Difficult macro-economic and financial market conditions could materially adversely affect Issuer s business, results of operations, financial condition and prospects. The Sukuk will not be guaranteed by the Government of the Republic of the Maldives. A more competitive environment in the Republic of the Maldives may adversely affect the Issuer s business and results of operations The Issuer s business may be adversely affected if there is any disturbance to its operational systems or a loss of business continuity. Future events may be different from those reflected in the management assumptions and estimates used in the preparation of the Issuer s financial statements, which may cause unexpected losses in the future Absence of secondary market/limited liquidity - there is no assurance that a secondary market for the Sukuk will develop or, if it does develop, that it will provide the Sukuk holders with liquidity of investment or that such secondary market will continue for the life of the Sukuk. Accordingly, a Sukuk holder may not be able to find a buyer to buy its Sukuk readily or at prices that will enable the Sukuk holder to realize a desired yield. The market value of the Sukuk may fluctuate and a lack of liquidity, in particular, can have a material adverse effect 46 Housing Development Finance Corporation Plc

51 HDFC MUDARABAH SUKUK Issue No. 01 on the market value of the Sukuk. Accordingly, the purchase of the Sukuk is suitable only for investors who can bear the risks associated with a lack of liquidity in the Sukuk and the financial and other risks associated with an investment in the Sukuk. An investor in the Certificates must be prepared to hold the Sukuk for an indefinite period of time or until their maturity. The Sukuk are limited recourse obligations - The Sukuk are not debt obligations of the Issuer. Instead, the Sukuk represent an ownership interest solely in the Mudaraba. Recourse to the Issuer in respect of the Sukuk is limited to the Mudaraba and proceeds of the Mudaraba are the sole source of payments on the Sukuk. The Shariah Advisor and the CMDA Shariah Advisory Committee have issued an opinion in respect of the Sukuk. However, an opinion is only an expression of the view of the Shariah Advisor and the CMDA Shariah Advisory Committee board based on their experience in the subject and is not a binding opinion. There can be no assurance as to the Shariah permissibility of the structure of the issue and the trading of the Sukuk and none of the advisors to the Issuer makes any representation as to the same. Sukuk holders are reminded that, as with any Shariah views, differences in opinion are possible. Sukuk holders are advised to obtain their own independent Shariah advice as to whether this Prospectus and the Sukuk meets their individual standards of compliance and make their own determination as to the future tradability of the Sukuk on any secondary market. HDFC Plc, September

52 PROSPECTUS Risk management policies The other risk management policies and processes adopted by HDFC are given below: Credit Risk The company takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for HDFC by failing to discharge an obligation. Credit risk is the most important risk for HDFC s business; management therefore carefully manages its exposure to credit risk. Credit exposures arise principally in lending activities that lead to home-finance and advances. There is also credit risk in off-balance sheet financial instruments, such as home-finance commitments. Credit policies were formulated covering HDFC's credit activities and establishment of individual limits of authority for initiating, reviewing and approving credit. Prudential due diligence on customers creditworthiness is assessed using the Maldives Credit Information Bureau, physical verification, background screening. Liquidity Risks Liquidity risk is the risk that HDFC is unable to meet its payment obligations associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and fulfill commitments to lend. HDFC s liquidity management process, as carried out within HDFC and monitored by the senior management in HDFC, includes: Day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met. This includes replenishment of funds as they mature or are borrowed by customers; Maintaining a portfolio of deposits with that can easily be liquidated as protection against any unforeseen interruption to cash flow Monitoring balance sheet liquidity ratios against internal requirements; and Managing the concentration and profile of debt maturities. Monitoring and reporting take the form of cash flow measurement and projections for the next week and month respectively, as these are key periods for liquidity management. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date of the financial assets. HDFC also monitors unmatched medium-term assets, the level and type of undrawn lending commitments and undrawn borrowings. 48 Housing Development Finance Corporation Plc

53 HDFC MUDARABAH SUKUK Issue No Capital Management of HDFC HDFC s objectives when managing capital, which is a broader concept than the equity on the face of balance sheets, are: To comply with the capital requirements set by the lenders To safeguard HDFC s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders To maintain a strong capital base to support the development of its business Capital adequacy and the use of regulatory capital are monitored daily by HDFC s management, employing techniques based on the guidelines developed by the Basel II Committee, for supervisory purposes. The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature of and reflecting an estimate of credit, market and other risks associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some adjustments to reflect the more contingent nature of the potential losses. HDFC Plc, September

54 PROSPECTUS 20. Material outstanding indebtedness in relation to the issue As at December 31, 2012 HDFC PLC does not have any debts in the Company s balance sheet that cannot be serviced from its ordinary course of business. 21. Litigation and disputes At the date of publication of this Prospectus, to the best of the Company s knowledge and understanding, there is no significant on-going litigation by or against HDFC or any of its Directors. There has not been any litigation against HDFC or any of its Directors in the past 05 (five) years, nor are there any penalties imposed by any regulatory authority or judicial decision. 50 Housing Development Finance Corporation Plc

55 HDFC MUDARABAH SUKUK Issue No Details of shareholding in the company Details of the shareholding in the company (including Directors of the Board). Authorised Share Capital of the company : MVR 318,750,000 (Issues MVR 159,375,000), MVR 100 par value 23. Staff Details At the date of publication of prospectus the company has 30 staff members. Broad categories are appended below; HDFC Plc, September

56 PROSPECTUS 24. Disclosure of material contracts & conflict of interest of directors With the exception of Ms. Fareeha Shareef, Director representing Government of Maldives, none of the Directors have any material interest in any contract of the Company. Ms. Shareef has availed a housing-finance facility under HDFC s normal Homefinance Scheme. The company is not in any breach or violation of, or in default under, any material contract. As of the date of this prospectus, the company has not received any written notice of default under any material contract. No event has occurred which would result in a breach or violation of, or a default under any Material Contract. No Material Contract has been cancelled by the Company or any other party There are no claims by any parties pending under any Material Contract The company does not anticipate any termination of or change to, or receipt of a proposal with respect to any Material Contract as a result of issuing the Prospectus Managing Director Dr. A.D.P. Baddevithana 52 Housing Development Finance Corporation Plc