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Agreement Terms
 

1.   PURPOSE AND DEFINITIONS

1.1 PURPOSE
This Agreement sets out the terms and conditions upon which the Bank will offer the Customer an investment opportunity in accordance with the Principle of Mudharabah (as defined herein) vide the participation in the Mudharabah Fund (as defined herein) whereby the Customer (as Rabbul Mal) will contribute to the capital of the Mudharabah Fund and the Bank (as a Mudharib) will contribute the labour and expertise and both Parties (as defined herein) will be sharing the expected generated profit of the Mudharabah Fund's investment based on an agreed profit sharing ratio. In case of losses of investment of the Mudharabah Fund, the Customer loses from his capital while the Bank loses its efforts.

Therefore, the Customer's participation in the Mudharabah Fund via the Account (as defined herein) shall be made pursuant to the following terms and conditions:-

1.2 DEFINITIONS

Account
means a Fixed Term Investment Account-i to be opened by the Customer with the Bank where the deposits are invested in the Mudharabah Fund pursuant to this Agreement.

Bank's Rules and Regulations
means the Bank's general Rules and Regulations and terms and conditions governing the facilities and services provided by the Bank and the accounts that are or may from time to time be made available or opened by the Bank for the Bank's customers as may be prescribed or stipulated by the Bank from time to time.

Business Day
means a day (other than Saturday, Sunday or a Public Holiday) on which banks and other financial institutions licensed under the Islamic Banking Act, 1983 are open for business in Kuala Lumpur.

Customer
means the applicant whose details are as per the attached Application Form.

Evaluation Date
means the date for the evaluation and computation of the rate of return of the respective Investment Fund in the Mudharabah Fund which shall be on the 1st for Investment Fund 1, the 8th for Investment Fund 2, the 15th for Investment Fund 3 and the 23rd for Investment Fund 4 of every month. For the avoidance of doubt, the Evaluation Date is the date the Mudharabah Arrangement ends and a new Mudharabah Arrangement starts. In the event the Customer chooses to renew the Mudharabah Arrangement, such arrangement will be based on a new Investment Amount and profit sharing ratio as will be agreed by the Bank and Customer.

Investment Date
means the date where the Investment Amount will be invested in the respective Investment Fund as agreed upon by the Customer, which shall be on the 1st for Investment Fund 1, the 8th for Investment Fund 2, the 15th for Investment Fund 3 and the 23rd for Investment Fund 4 of every month.

Investment Amount
means the capital deposited by the Customer in the Account to be invested in the Mudharabah Fund as agreed upon. The initial Investment Amount shall be as stated in the Placement Deposit Form.

Investment Fund
means four (4) independent funds accumulated from the deposits of the Investment Amount, which shall be known as Investment Fund 1, 2, 3 and 4. For the avoidance of doubt, each Investment Fund is independent from other Investment Funds in terms of its capital and investments.

Placement Date
means the date on which the Customer deposits the Investment Amount to the Account in accordance with the Placement Deposit Form.

Mudharabah Arrangement
means the arrangement entered into between the Customer and the Bank pertaining to a partnership for profit in accordance with the Principle of Mudharabah.

Mudharabah Fund
means a Fund created by the Bank whereby a pool of capital accumulated from the deposits of the Investment Amount by the Bank's customers subscribing to the Account are invested by the Bank in accordance with the Principle of Mudharabah. The Mudharabah Fund consists of four (4) independent Investment Funds.

Mudharib
means the Bank

Parties
means collectively the Bank and the Customer, and "Party" shall refer to any one of them.

Placement Deposit Form
means the Placement Deposit Form as duly filled in by the Customer with the relevant details in relation to the Account as set out in Schedule 1 hereof.

Mudharabah Renewal Notice
means a written notice by the Bank to the Customer informing him of the renewal of the Period of Investment of the Investment Amount in the Mudharabah Fund.

Shariah Principles
means the Islamic principles of banking and finance as adopted and approved by the Shariah Committee of the Bank and the Shariah Advisory Council of Bank Negara Malaysia under Section 16B of the Central Bank of Malaysia Act 1958.

Principle of Mudharabah
means the Islamic principle relating to a partnership for profit between two or more parties whereby one party contributes the capital in the form of cash (Rabbul Mal) and another party contributes their labour and expertise in managing the business of the partnership (Mudharib). In case of losses to the investments of the Mudharabah Fund, the Mudharib loses his effort while the losses in capital will be borne by the Rabbul Mal.

Period of Investment
means the fixed period(s) as determined by the Customer for the Investment Amount to be invested in the Mudharabah
Fund as set out in the Placement Deposit Form.

Upliftment/Cancellation Form
means the Upliftment or Cancellation Form of the Mudharabah Arrangement as set out in Schedule 3 hereof.

2.   MUDHARABAH ARRANGEMENT

2.1 THE ACCOUNT

(a) At the request of the Customer and subject to the Bank's approval, the Bank shall establish the Account to allow the Customer to deposit the Investment Amount on any Placement Date for the Customer to invest in the Mudharabah Fund. The Bank will credit into this Account the accrued return of profit, if any in accordance with the agreed profit sharing ratio on the Evaluation Date. The profit will be capitalised as part of the Investment Amount if the Customer participates in more than one (1) Mudharabah Arrangement. The period for participation of the Customer in the Mudharabah Arrangement shall be determined by the Customer in the Placement Deposit Form, which shall be one (1)month or three (3) months or six (6) months or twelve (12) months or any other period as determined by the Customer. Subject to Clause 2.3(c) hereof, the accrued return of profit will be credited into the Account on the Evaluation Date at the end of the Period of Investment.

(b) Depositing the Investment Amount in the Account shall not be considered as an immediate participation in the Mudharabah Fund. The participation of the Customer in the Mudharabah Fund will be activated when the Investment Amount is invested in the Mudharabah Fund on the Investment Date determined thereof.

(c) For the avoidance of doubt,

(i) the Investment Amount deposited in the Account when invested in the Mudharabah Fund is independent from the Bank's capital and
investments;

(ii) the Investment Amount deposited at any Placement Date will not be invested in the Mudharabah Fund until the next Investment Date;

(iii) The Bank has the right to utilise the Investment Amount in the Account with a guarantee by the Bank of the repayment of the Investment Amount upon the request from the Customer, unless and until the Investment Amount has been invested in the Mudharabah Fund on the Investment Date. The Customer is not entitled to receive any dividend or profit derived from the Investment Amount in the Account during the period between the Placement Date and the Investment Date.

2.2 PARTICIPATION IN THE MUDHARABAH

(a) The tenure of the Mudharabah Arrangement is one (1) month and if the Customer wishes to invest in more than one Mudharabah Arrangement, he must state his intention to participate in consecutive Mudharabah Arrangements in the Placement Deposit Form. The period for participation of the Customer in the Mudharabah Arrangement as determined by the Customer shall be for one (1) month or three (3) months or six (6) months or twelve (12) months or any other period as determined by the Customer. For the avoidance of doubt, the Period of Investment as set out in the Placement Deposit Form is for the purpose of enabling the Bank to plan for the Mudharabah investments only and it shall not be binding on the Parties.

(b) The Customer has agreed to enter into the Mudharabah Arrangement, as Rabbul Mal, by providing the Investment Amount as set out in the Placement Deposit Form on the Investment Date agreed upon. The Customer is not entitled to withdraw the Investment Amount unless the Investment Amount has been invested for a full complete month.

(c) The Bank has agreed to enter into the Mudharabah Arrangement, as a Mudharib by providing the labour, expertise and knowledge in investment and capital growth. The Bank shall be responsible for the management of all investments and the administration of the Mudharabah Fund.

(d) The Bank and the Customer acknowledge the risk of losses of investments to the Mudharabah Fund. In the event of losses to the investments, the Customer shall lose his Investment Amount accordingly and the Bank shall lose its efforts.

2.3 THE MUDHARABAH FUND

(a) The Parties hereby agree that:

(i) the Bank shall establish the regulations and procedures for the purpose of the management and administration of the Mudharabah Fund, for the interest of the Parties herein;

(ii) the Mudharabah Fund is divided into four (4) independent Investment Funds and each Investment Fund is independent from other Investment Funds in its capital and investments. These funds will be known as Investment Fund 1, 2, 3 and 4 and the investment of the respective Investment Fund shall be on the 1st for Investment Fund 1, the 8th for Investment Fund 2, the 15th for Investment Fund 3 and the 23rd for Investment Fund 4 of every month;

(iii) the Bank shall have the right to enter into any arrangement with any other parties for the purpose of providing the benefit or protecting the interest of the Parties in the Mudharabah Arrangement.

(b) The evaluation and computation of the rate of return for each Investment Fund of the Mudharabah Fund shall be held on a monthly basis on the Evaluation Date and upon such evaluation:-

(i) the accrued profit, if any, will be distributed between the Bank and the Customer based on the agreed profit sharing ratio as set out in the Placement Deposit Form, and the Customer's entitlement will be credited into the Account;

(ii) the current Mudharabah Arrangement will expire and a new Mudharabah Arrangement will commence subject to clause 2.5 hereof.

(c) If the Customer intends to participate in more than one Mudharabah Arrangement, then he must state so in the Placement Deposit Form and determine the new Investment Amount to be invested. For the avoidance of doubt the new Investment Amount will be the initial Investment Amount or initial Investment Amount plus the accrued profit or the available amount in the Account.

(d) The Bank and the Customer agree that their respective contributions to the respective Investment Fund of the Mudharabah Fund shall be used for the purpose of investing in Shariah compliant ventures based on structures approved by the Bank's Shariah Committee, with a view to profit.

(e) Each Investment Fund's capital and investments are independent from each other and of the Bank's capital and all transactions in respect of each Investment Fund of the Mudharabah Fund shall be recorded separately to ensure their segregation from the Bank's transactions.

(f) The majority of investments (more than 50%) of each respective Investment Fund of the Mudharabah Fund must be based on tangible and/or leased assets.

(g) Subscription to and withdrawal from each respective Investment Fund of the Mudharabah Fund is only allowed on the Investment Date. The Customer has no right to withdraw the Investment Amount unless such Investment Amount has been invested for a full complete month.

(h) For customers participating in more than one Mudharabah Arrangement, the Bank may at its sole discretion give up part of its profit sharing to the customers.

(i) All actual operational costs incurred such as marketing, remittance, legal consultancy and services costs for each Investment Fund is borne by the respective Investment Fund with a maximum limit of five per centum (5%) of the Investment Fund's capital.

(j) The costs of managing each of the Investment Fund (such as employees' salaries) will be borne by the Mudharib.

2.4 RETURN OF PROFIT

(a) The Bank and the Customer agree that the return of profit (if any) shall be based on the published evaluation rate on the Evaluation Date.

(b) The net profit of the respective Investment Fund shall be the full Investment Fund value less the capital and the incurred operational costs.

(c) The net profit shall be distributed based on the profit sharing ratio as set out in the Placement Deposit Form. The Bank and the Customer further agree that the net profit (if any), shall be credited into the Account.

2.5 RENEWAL OF MUDHARABAH ARRANGEMENT

(a) Unless the Customer issues a written notice as set out in Schedule 3 hereof to the Bank to discontinue the Mudharabah Arrangement, the Bank and the Customer hereby agree that upon the expiration of the current Mudharabah Arrangement, a new Mudharabah Arrangement shall be automatically commenced and the period of participation in the Mudharabah Fund shall be in accordance with the Period of Investment as set out in the Placement Deposit Form. All other terms and conditions stipulated in this Agreement shall apply.

(b) The Bank and the Customer hereby agree that upon the renewal of the Mudharabah Arrangement, the Investment Amount and the profit (if any) will be reinvested in the respective Investment Fund unless the Customer indicates his desire to withdraw the said profit. The Investment Amount and the profit shall be treated as a new Investment Amount of the Customer to the respective Investment Fund.

3.   BANKING CHARGES

The Customer hereby agrees that the Bank may impose charges for any of its services rendered to the Customer other than those required and considered as part of the Mudharabah Arrangement or as part of the responsibilities of the Bank as a Mudharib, at the rates to be agreed upon between the Bank and the Customer. All banking charges when due shall be debited from the Account.

4.   CLOSURE OF ACCOUNT

4.1 CLOSURE OF ACCOUNT BY THE BANK

The Bank reserves the right to:-

(a) close the Account if the Customer's name appears in the blacklist issued by DCHEQS maintained by Bank Negara Malaysia by giving the Customer fourteen (14) days notice of such intention to close the Account;

(b) close the Account for any reason as required by law by giving fourteen (14) days notice of such intention to close the Account.

4.2 CLOSURE OF ACCOUNT BY OTHER MEANS

The Parties hereby agree that the Account shall be deemed closed in the following situations:

(a) if any of the parties herein wishes to terminate the Mudharabah Arrangement prior to the start of the Investment Date; or

(b) if the Customer notifies the Bank to not renew the Mudharabah Arrangement at the end of the Period of Investment; or

(c) if Bank Negara Malaysia instructs the Bank to close the Account.

And pursuant to Clause 4.1 and clause 4.2(b) and (c), the respective Investment Fund shall be evaluated on the Evaluation Date and the profit (if any) shall be distributed based on the profit sharing ratio as duly agreed by the Parties herein.
In the event that the Account is closed pursuant to this clause, the Mudharabah Arrangement shall forthwith terminate pursuant to Clause 14 herein.

5.   CLOSURE OF MUDHARABAH FUND

In the event of dissolution of the Mudharabah Fund by the Bank for whatever reasons, the Mudharabah Fund and the Mudharabah Arrangement shall be closed and/or terminated on the Evaluation Date and the Investment Amount together with the accrued profit, if any, in the respective Investment Fund shall be distributed to the Customer and the Bank accordingly.

6.   PARTNERSHIP ACCOUNT

The Customers agree that they shall be jointly and severally responsible for all obligations and liabilities in connection with the Account.The instructions given by the Customers for the operation of the Account shall remain in force until revoked in writing notwithstanding any change in the constitution or the name of the partnership and shall apply notwithstanding any change in the membership of the partnership whether by death, bankruptcy, retirement, the admission of new partners or otherwise.

7.   CORPORATE ACCOUNT

The Customer agrees to provide the relevant resolutions to authorise the opening of the Account and to provide specimen signatures for the operation of the Account. The instructions given by the Customer for the operation of the Account shall remain in force until revoked in writing.

8.   LIMITATION OF LIABILITY

The Customer agrees that the Bank shall not be liable for any losses of capital in the Mudharabah Arrangement except in case of negligence or misconduct in relation to the Mudharabah Arrangement or breach of the terms and conditions of this Agreement.

The Customer agrees that the Bank shall not be responsible for losses, costs and expenses which may be incurred by the Customer in connection with the execution by the Bank of any instructions in respect of the respective Investment Fund of the Mudharabah Fund or if the Account or any part thereof is reduced or frozen by any government or official authority.

9.   RIGHT OF SET-OFF

Subject to the expiry of the Period of Investment and in relation to the Account, the Customer authorises the Bank to (without prior notice to the Customer) combine, consolidate or merge all or any of the Customer's accounts with the Bank and may apply, set-off or transfer any sum standing to the credit of any such accounts in or towards satisfaction of any sum then due from the Customer to the Bank and unpaid and may do so notwithstanding that the balances on such accounts and the liabilities may not be expressed in the same currency and the Bank is hereby authorized to effect any necessary conversions at its own rate of exchange than prevailing or the Bank Negara Malaysia rate of exchange, whichever is lower. The Bank shall not be obliged to exercise any of its rights under this clause herein which shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which it is at any time otherwise entitled (whether by operation of law, contract or otherwise).

10. CHANGE OF TERMS AND CONDITIONS

The terms and conditions in this Agreement herein are not exhaustive. Subject to the approval of the Bank's Shariah Committee and the acceptance of the Customer, the Bank reserves the right to add, modify vary or delete any of these terms and conditions. Should the Customer choose not to agree to the changes in the term and conditions, then the Bank has the right to terminate the Mudharabah Arrangement.

11. RULES AND REGULATIONS OF REGULATORY BODIES

In addition to and subject to the Shariah Principles and without prejudice to this Agreement and the Bank's Rules and Regulations, where applicable, the terms and conditions of this Agreement shall be governed by and subjected to such rules, regulations and/or directives (whether having the force of law or not) required of or imposed upon the Bank from time to time and at any time by Bank Negara Malaysia or any other authority having jurisdiction over the Bank and shall be subject to the prevailing guidelines, issued from time to time. Pursuant thereto, the Bank shall notify the Customer as practical as possible, provided that it does not exceed thirty (30) days, of any changes made to this Agreement.

12. DISCLOSURE

The Customer hereby agrees and authorises the Bank to disclose any information about or with regard to the Customer's affairs and/or the Account as authorised by law or for such purposes, as the Bank may deem reasonable or necessary.

13. CHANGE OF ADDRESS, SIGNATURE OR PARTICULARS

Any change of address or signature(s) or other particulars that are recorded with the Bank shall be notified to the Bank in writing. All communications including the service of any legal process sent by post to or left at the Customer's last address registered with the Bank shall be deemed duly delivered to and received by the Customer.

14. TERMINATION

The Customer and the Bank agree that the Mudharabah Arrangement shall terminate forthwith upon receipt of the notice of termination from the
Customer or the Bank:-

(i) upon closure of the Account in accordance with Clause 4.2(a); or

(ii) upon closure of the Account in accordance with Clause 4.1, 4.2(b), 4.2(c) and 10; or

(iii) upon closure of the Mudharabah Fund pursuant to Clause 5 herein.

15. FURTHER PROVISIONS

15.1 RECONSTRUCTION OF THE CUSTOMER AND THE BANK

The liabilities and/or obligations created by this Agreement shall continue to be valid and binding for all purposes notwithstanding any change by amalgamation, reconstruction or otherwise which may be made in the constitution of the Bank, and similarly the liabilities and/or obligations created by this Agreement continue to be valid and binding for all purposes notwithstanding any change by amalgamation, reconstruction or otherwise in the constitution of the Customer (if applicable) or any change of any sort in relation to or affecting the Customer (if applicable), and it is expressly declared that no change of any sort in relation to or affecting the Customer (if applicable) shall in any way affect the liabilities and/or obligations created hereunder to any transaction whether past, present or future.

15.2 RIGHTS CUMULATIVE, WAIVERS

The rights of the Bank under this Agreement herein are cumulative and may be exercised as often as they consider appropriate and are in addition to its rights under any applicable law. The rights of the Bank in relation to this Agreement shall not be capable of being waived or varied otherwise than by an express waiver or variation in writing. In particular any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right or affect the liabilities of the Customer under this Agreement. No defective, single or partial exercise of any right, power or privilege hereby conferred on the Bank shall preclude any further exercise thereof by the Bank or the exercise of any other right, power or privilege conferred on the Bank and no act or course of conduct or negotiation on the part of the Bank or on its behalf shall in any way preclude the Bank from exercising any such right or constitute a suspension or any variation of any such right.

15.3 TIME

Time shall be of the essence in this Agreement.

15.4 INVALIDITY OF ANY PROVISION

Subject to the Shariah Principles, if any of the provisions of this Agreement becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired provided that the Mudharabah contractual relationship is valid in the Shariah perspective.

15.5 GOVERNING LAW

This Agreement shall be governed by and shall be construed in all respects in accordance with the laws of Malaysia so long as it does not contradict the Shariah Principles.

15.6 DISPUTE RESOLUTION

(a) Any dispute, controversy or claim arising out of or in relation to this Agreement, or the breach, termination or invalidity thereof shall be settled, insofar as it is possible, by mutual consultation and consent.

(b) If Parties should be unable to reach mutual consent within thirty (30) days after the notice by either Party of dispute, the question shall be settled by arbitration. The award of the arbitrators shall be final and binding upon the Parties hereto.

(c) Subject to Clause 15.6(a) and Clause 15.6(b) above, all disputes or differences whatsoever which shall at any time hereafter whether during the continuance in effect of this Agreement or upon or after its discharge or determination arise between the Parties hereto concerning this Agreement or its construction or effect or as to the rights, duties and liabilities of the Parties hereto concerning this Agreement or as to any other matter in any way connected or arising out or in relation to the subject matter of this Agreement shall be finally settled in accordance with the laws of Malaysia so long as it does not contradict the Shariah Principles.

15.7 WITHHOLDING TAX

All profit payments by the Bank to the Customer under this Agreement shall be made in full without any deduction or withholding (whether in respect of set-off, counterclaim, duties, taxes, charges or otherwise whatsoever) unless the deduction or withholding is required by law.

15.8 INDEPENDENT PARTIES

Nothing in this Agreement shall be deemed to constitute a partnership, other than the partnership in the Mudharabah Arrangement amongst the parties to this Agreement pursuant to the Partnership Act 1961 and/or any common law principles relating to partnership and no party shall have any authority to bind or shall be deemed to be the agent of the other in any pursuant to the Partnership Act 1961 and/or any common law principles relating to partnership.

15.9 NO PAYMENT OF INTEREST

For the avoidance of doubt and notwithstanding any other provisions to the contrary herein contained, it is hereby agreed and declared that nothing in this Agreement shall oblige the Bank or the Customer, respectively, to pay or to receive interest (by whatever means or name called) on any amount due or payable to another party or to do anything contrary to the Shariah Principles.

15.10 ZAKAH

It is hereby agreed that the computation and payment of Zakah is the responsibility of the Customer.

15.11 SHARIAH COMPLIANCE

It is hereby agreed and declared that this Agreement relating to the Account has been reviewed and approved in principle by the Shariah Committee of the Bank, and has further and subsequently been reviewed and approved in principle by the Shariah Advisory Council of Bank Negara Malaysia.

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