prospectus · 2018-12-23 · this prospectus has been prepared in accordance with the executive...
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PROSPECTUS
ISSUE OPEN2 JUNE 2013
ISSUE CLOSE1 JULY 2013
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His Majesty Sultan Qaboos bin Said
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PROSPECTUSAL KAWTHAR FUND
(A SHARIAH COMPLIANT FUND)
Open ended fund
Sponsor / Investment Manager:
National Investment Funds Co. SAOCP.O. Box 3028, P.C. 112, Ruwi, Sultanate of Oman.
At a subscription price of: RO 1.020 per share (Including issue management expense of 20 baisa)
Custodian:
National Bank of Oman SAOGP.O. Box 751, P.C. 112, Ruwi, Sultanate of Oman.
Subscription to Units takes place in the following banks:
National Bank of Oman SAOG; Bank Sohar SAOG; Ahli Bank SAOG.
Issue open: 2 June 2013
Issue close: 1 July 2013
This Prospectus has been prepared in accordance with the Executive Regulations of the Capital Market Authority (CMA) Law and it has been approved by the CMA through Administrative Decision number 44/2013 dated 16 May 2013.
The Capital Market Authority (CMA) assumes no responsibility for the accuracy and adequacy of the statements and information included in this Prospectus nor shall it have any liability for any damage or loss resulting from relying upon or using any part of the same by any person.
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IMPORTANT NOTICE
All investors are requested to read the following notice carefully.
The aim of this Prospectus is to present material information that may assist investors to make an appropriate decision as to whether or not to invest in the securities offered.
Prospective investors should not treat the contents of this Prospectus as investment, tax or legal advice and must make their own investigation and evaluation of the opportunity to invest in the ‘Fund’ and should consult with their own advisors with respect to the evaluation of the risks of the investment and its suitability for their individual financial circumstances and risk preferences.
The Prospectus includes all material information and does not contain any misleading information or omit any material information.
The Fund’s Board, Investment Manager, Issue Manager, and the Sponsor are responsible for the provision of this material information and confirm that no material information has been omitted, the omission of which would render this Prospectus misleading.
Please note that investments in investment funds are not guaranteed (except to the extent expressly stated in the Prospectus); the value of the investment units change frequently and past performances may or may not be repeated. All investors should examine and carefully review the Prospectus in order to decide whether it would be appropriate to invest in the securities offered by taking into consideration all the information contained in this Prospectus in the context.
The CMA assumes no responsibility for the accuracy and adequacy of the statements and information included in this Prospectus nor shall it have any liability for any damage or loss resulting from relying upon or using any part of the same by any person.
Should copies of this Prospectus be produced in languages other than Arabic , the Arabic language Prospectus is the only approved version.
CONTENTS
Definitions & Terminology 8
Fund Features (Summary Terms) 9
Chapter 1: The Fund 10
Chapter 2: Investment Objective, Process And Restrictions 11
Chapter 3: Structure & Management of Fund 15
Chapter 4: The Investment Manager 17
Chapter 5: Service Providers 19
Chapter 6: Fees & Expenses 21
Chapter 7: Risk Factors & Mitigations 23
Chapter 8: Taxation 25
Chapter 9: Subscription and Redemption 26
Chapter 10: Unit Ownership 32
Chapter 11: NAV Calculation 35
Chapter 12: Regulatory Framework 37
Chapter 13: Articles of Association 38
Chapter 14: Accounts and Accounting Policies 39
Chapter 15: Dissolution and Liquidation of the Fund 41
Chapter 16: Undertakings 42
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DEFINITIONS & TERMINOLOGYIn this Prospectus, the terms and expressions listed below have the meanings set out opposite them, except when the context requires otherwise:
Application Form The application form to subscribe for Units.
Articles of Association:The Articles of Association of the Fund that shall prescribe the functions and powers of the Unit-holders and lay out rules for the operation of the Fund.
Auditors The external independent auditors of the Fund.Back-end load It is a percentage paid by Unitholders at the time of redeeming part or all of their UnitsBoard A committee having overall responsibility for the affairs of the Fund.
Business Week:From Sunday to Thursday as per existing CBO rules for banking days during a calendar week
Business Day: Any day on which commercial banks in Oman and MSM are open for business.CBO: Central Bank of OmanCMA: Capital Market Authority, Sultanate of Oman.
Capital Market Authority Law:Law and any relating to all capital market activities in Oman as established by the Royal Decree 80/98 (as amended) and all regulations issued thereunder.
Currency of the Fund: Rial Omani
Custodian:Entity responsible for safekeeping of assets of the Fund as per the terms of the Custodian Agreement.
Custodian Agreement: Agreement signed between the Custodian and the Fund, represented by the Board.
Fund: Al-Kawthar FundGCC The Gulf Cooperation Council.IPO: Initial Public Offering
Initial Subscription Period The period from 2 June 2013 to 1 July 2013Investment Management Fee Fees of the Investment Manager.Investor An investor in the Fund. Legal Jurisdiction: Omani Laws related to this matterMCDC Muscat Clearing and Depository Company SAOC
Means of Payment:Any payment made by the Fund will be made in by electronic bank transfer or by a cheque
MSM: Muscat Securities MarketNAV: The net asset value of the FundNIFCO: National Investment Funds Co. SAOCPerformance Fee The performance fee payable to the Investment Manager.Prospectus: This documentRial Omani “RO”: Rial Omani, the lawful currency of Oman.
Redemption Day: The last Business Day of the week on which the Investment Manager will affect the redemption request
Shariah The law derived from the Quraan and from the teachings of Prophet Mohammed (P.B.U.H)
Shariah AdvisorPerson or Group of Persons who will ensure adherence to Shariah principles for all investments and activities of the Fund
Shariah Compliant Conforms with Shariah rules as determined by the Shariah board. Outsourced Shariah Advisory Services
The committee comprising of the eminent scholars who review the structure and the operation of the Fund to ensure compliance with the principles and precepts of Shariah.
Sponsor NIFCOSPV A special purpose entity.
Subscription DayThe last Business Day of the week on which Investment Manager will process the subscription request
Units: Unit means each Unit in the Fund, having a nominal value of RO 1.000 (One Rial) eachUnitholders: Unit-holders mean holder of Units in the Fund. May be natural or legal person
Valuation Day: The day on which the Investment Manager calculates the NAV, i.e. the last Business Day of the week
SUMMARY TERMSFund Name Al-Kawthar Fund (a Shariah compliant fund)
Fund Manager NIFCO
Fund Currency Rial
Issue Open 2 June 2013
Issue Close 1 July 2013
Structure Open ended fund
Investment Objective
The Fund’s objective is to achieve capital appreciation primarily through investments in equities listed on the regulated stock markets of the member countries of the GCC and Sukuks as per the Shariah principles as interpreted by the Shariah Advisor and the Shariah guidelines stated herein.
The Fund will be managed by utilizing both a top down approach in order to determine country and sector allocations and a bottom up approach in order to make individual stock selections. The Fund will also take advantage of price distortions and arbitrage opportunities, which will require an active management style.
Geographic Focus GCC region
Minimum and Maximum Investment
The minimum subscription shall be 100 (one hundred) Units with multiples of 100 (one hundred) Units thereafter. There is no maximum subscription to the Units.
Investment Management Fees1.5% per annum of the NAV of the Fund before the Investment Management Fee and the Performance Fee of the Fund. The Investment Management Fee will be calculated on daily basis and paid monthly in arrears
Performance Fees
In case the NAV of the Fund at the close of a financial year appreciates by more than 10% compared to the beginning of the year, the Investment Manager will be paid 15% of the amount exceeding 10%. The Performance Fee shall be calculated on yearly basis using the weighted average units in issue and shall be payable to the Investment Manager at the end of each financial year
Shariah Advisor’s Fees
The Shariah Advisor shall receive a one off lump-sum fixed amount of no less than RO 12,000/- for advisory services relating to procuring Shariah fatwa for the Fund. In addition, the Shariah Advisor shall receive no less than RO13,500/- paid annually for undertaking security screening and quarterly audit fee for Shariah monitoring of the security holding and review of Shariah Complaint process.
Custodian Fees
Custody fee: A minimum aggregate annual fee of 0.16% of the NAV of the Fund.Transaction fee: RO 15/- per transaction (including bank charges if any). There is a ceiling of RO. 50,000/- on total Custodian charges per annum inclusive of Custody Fee and Transaction Fee payable to NIFCO. The Custodian charges will be calculated daily on average daily NAV and paid monthly in arrears.
All fees/costs payable to Sub-custodian for the securities acquired by the Fund in GCC countries other than Oman shall be paid by the Fund at actual. All fees/charges ancillary to Custodian services payable to stock exchanges, registrars, and MCDC, MSM, and regulatory bodies shall be paid by the Fund at actual
Investment Manager NIFCO
Custodian:National Bank of Oman SAOG P.O. Box 751, Postal Code 112, Ruwi, Sultanate of Oman.
Investment Manager’sAuditor:
Deloitte & Touche (M.E.) & Co. LLCP.O. Box 258, Postal Code 112, Ruwi, Sultanate of Oman
Fund Auditors:KPMG HSBC building, CBD area, Ruwi, Sultanate of Oman.
Legal Advisor to theIssue:
Trowers & HamlinsAl Jawhara building, Al Muntazah Street, Shatti Al Qurum, Muscat.
Address of theAl-Kawthar Fund
PO Box 3028 PC 112 Ruwi, Muscat, Sultanate of Oman, Tel: +968 2481 3143, Fax: +968 2481 3241
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CHAPTER 1: THE FUND
1.1 The Fund
The Fund is open-ended investment fund established under the law of Oman. It is a contractual arrangement between the Investors,
and the Investment Manager, under which investors acquire Units providing a pro-rata entitlement to the net assets of the Fund on
a divisible basis based on the terms and conditions described in this document. The Fund is registered with CMA. For subscription
and redemption process, please refer to chapter 9. The Units are not capital guaranteed
1.2 Establishment & Governance
The Fund is an investment fund with a variable capital divided into units with nominal value of RO 1.000. The affairs of the Fund
will accordingly be governed by this Prospectus and the Articles of Association which will serve as the constitution of the Fund. All
provisions of the CMA Law, the CMA Regulations and other directives issued by the CMA shall apply to the Fund at all times.
1.3 Minimum Capital
The Fund is an open-ended fund and hence there shall be no maximum capital. The minimum capital shall be RO 2 million. The
fully paid up capital of the Fund at the time of the establishment shall not be less than RO 2 million. The sponsor’s share shall not
be less than 5% of this capital. The sponsor shall not sell or redeem its share except after three years from the date of closure of
initial subscription.
CHAPTER 2: INVESTMENT OBJECTIVES, PROCESS AND RESTRICTIONS
2.1 Objectives Of The Fund
The Fund’s objective is to achieve capital appreciation primarily through investments in equities listed on the regulated stock markets
of the member countries of the GCCand Sukuks as per the Shariah principles as interpreted by the Shariah Advisor and the Shariah
guidelines stated herein.
The Fund will be managed by utilizing both a top down approach in order to determine country and sector allocations and a bottom
up approach in order to make individual stock selections. The Fund will also take advantage of price distortions and arbitrage
opportunities, which will require an active management style.
2.2 Investment Strategy Guidelines and Policies
The Fund invests primarily in the listed GCC stocks, within the criteria set by Shariah Advisor of the Fund and Sukuks The Fund manager
will focus on companies that enjoy strong fundamental factors and promising long-term growth after conducting a comprehensive
analysis.
Under normal market conditions, at least 80% of the Fund’s investments will be made in listed securities including listed equities,
SPVs, and Shariah compliant tradable income generating instruments, including Sukuk, of issuers in member jurisdictions of the GCC
states. The Fund may also invest up to 20% of its assets in unlisted equities of companies in these jurisdictions. Furthermore, the
Fund may invest up to 20% of its assets in SPVs or investment funds, which provide access to investments that would not otherwise
be directly available to the Fund. The Fund may from time to time invest in short-term instruments and otherwise maintain ancillary
liquid assets in order to ensure that it is in a position to meet repurchase requests as and when they may arise.
The Fund would have a diversified asset allocation strategy as such strategy provides a better risk/return profile. A more dynamic
approach to asset allocation would be considered for managing risk across various assets and then building portfolios that periodically
adjust their allocations to dynamic market conditions.
Distributions from the Fund will be made at the discretion of the Board. However, it is not the current intention of the Board to
declare distributions in respect of the Fund. Instead, net income realized will be reinvested and will be reflected by an increase in
the NAV of the Units, which may be realized by Unitholders at such time as they redeem their Units. In any case, distributions, if any,
will be made from net realized income only.
2.3 Shariah Guidelines
The business of the Fund will be conducted in accordance with Shariah principles as interpreted by the Shariah Advisor.
The Investment Manager will pre-screen all investments according to criteria agreed with the Shariah Advisor. The Fund will not
invest in:
(i) Interest bearing investments;
(ii) Forward currency transactions;
(iii) Securities issued by companies whose income is derived from any of the following activities:
(a) Manufacture or distribution of alcohol or tobacco products;
(b) Gambling;
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(c) Production, processing, packaging, or any other business activity relating to pork or pork products and other non-
halal meats and poultry;
(d) Conventional banking, insurance or any other interest related financial services activity;
(e) The production or distribution of pornographic materials; or
(f) Any other activity that is not permitted by Shariah principles as determined by the Shariah Advisor.
(iv) Derivates, including futures, options and contracts for differences; and
(v) SPVs, investments trusts, unit trusts, mutual funds and other collective investment schemes that do not adhere to Shariah principles as interpreted by the Shariah Advisor.
The following will be considered as Shariah compliant:
(i) Revenue share from non-compliant activities: in certain cases, revenues from non-compliant activities are tolerated, if
they comply with the following threshold:
(non-permissible income other than interest income) / revenue < 5%
(ii) Accounting-based screens: after removing companies with non-compliant business activities, the rest of the companies
should be examined for compliance in financial ratios, as certain ratios may violate compliance measurements.
(a) Leverage compliance: this compliance is measured as:
Debt / market value of equity (36 month average) < 33 %;
(b) Cash compliance: there are compliances with reference to cash holdings these are:
Accounts receivables / market value of equity (36 month average) < 49 %;
(Cash + interest bearing securities) / market value of equity (36 month average) <33%; (c) Such accounting based screens are not applicable to companies which are run on a fully Shariah compliant basis.
Such companies may be characterized by (the list below is indicative, non exhaustive and reviewed on a case to case basis):
• All transactions (business and financial) are in accordance with Shariah principles
• Has a Shariah Supervisory Board
• Incorporated and managed in a fully Shariah compliant manner.
The proposed investments will be approved based on their compliance with the investment rules and after obtaining approval from
the Shariah Advisor. The Shariah Advisor will prepare a list of the companies in which to invest in and will review the list quarterly.
The Shariah Advisor will also provide a certificate indicating that a business is Shariah complaint. In addition, the Shariah Advisor will
consider the Investment Manager’s proposal for investing in companies not listed on the stock market. Where a company is removed
after such revision, the Fund will disinvest immediately if such disinvestment will be profitable otherwise, the Fund will disinvest
within one month if disinvestment will realise losses.
2.4 Investment Restrictions
In respect of the Fund’s commitment to invest at least 75% of its capital to achieve its objectives, policies and Shariah guidelines,
the Fund shall comply with the following investment restrictions in relation to its investments:
(i) The Fund shall not invest more than 50% of its assets, as calculated at the time that the investment is made and using
the starting NAV for the relevant valuation period, in any one country.
(ii) The Fund shall not invest more than 50% of its assets, as calculated at the time that the investment is made and using
the starting NAV for the relevant valuation period, in any one sector.
(iii) The Fund shall not invest more than 10% of its assets, as calculated at the time that the investment is made and using
the starting NAV for the relevant valuation period, in the listed securities of any single corporate issuer.
(iv) The Fund shall not invest more than 5% of its assets, as calculated at the time that the investment is made and using the
starting NAV for the relevant valuation period, in any one unlisted security and
(v) The Fund shall not invest more than 10% (in aggregate) of its assets, as calculated at the time that the investment is
made and using the starting NAV for the relevant valuation period, in unlisted securities
(vi) The Fund shall not invest more than 5% of its assets, as calculated at the time that the investment is made and using the
starting NAV for the relevant valuation period, in any one investment fund.
(vii) The Fund shall not hold any commodities or right or interest therein, in activities that are outlined at paragraph 2.3 above
(Shariah guidelines).
(viii) The Fund shall not acquire any interest in land.
(ix) The Fund shall not invest in unlimited liability obligations.
(x) The Fund shall not take legal or management control in any of its investments.
(xi) The Fund shall not borrow more than 10% of its NAV
(xii) The Fund shall not own greater than 10% of securities from any source.
(xiii) The Fund’s investments in securities, issued by a single source, shall not exceed 10% of the Fund’s NAV.
The Investment Manager may not perform any of the following transactions for the account of the Fund:
• Granting loans
• Short selling
• Granting collaterals and guarantees
• Acting as principal guarantor of issues
• Trading in commodities
• Trading in real estate.
• Discounting cheques.
• Borrowing on behalf of the Fund with the exception of the cases mentioned above.
• Any transaction in contradiction with Islamic Shariah provisions.
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2.5 Purification
Returns derived from the Fund’s investments may comprise an amount which is attributable for Shariah purposes to impure income
earned or received. If this is the case, the amount of any return which is so attributable shall be calculated by the Investment
Manager or notified to the Investors in accordance with the Shariah guidelines approved by the Shariah Advisor. The amount earned
in such cases will be donated periodically by the Fund to charitable organisations or Islamic organisations with no direct or indirect
benefit accruing to the Fund or any of its investors.
The following ratio will be provided to investors for purification purposes, it is calculated as:
(Non permissible revenue including interest income / total revenue)
Non permissible revenue including interest income is computed on an annual basis using the annual published financial
statements.
2.6 Financing
The Fund shall have the power to utilize Shariah compliant financing. Financing will only be used for short term liquidity purposes
to finance redemptions in the normal course of Fund operations and not for leverage. The Board shall restrict the financing so as to
ensure that the maximum amount financed does not at any time exceed ten percent of the NAV. All financing will be in accordance
with the principles of Shariah as interpreted by the Shariah Advisor.
2.7 Waiver or Amendment
The investment policies of the Fund, described above, may be amended by a special resolution of the Unitholders on the
recommendation of the Board, in consultation with the Investment Manager and the Shariah Advisor.
The general investment restrictions, described above, may be amended by an ordinary resolution of the Unitholders in consultation
with the Investment Manager and the Shariah Advisor.
CHAPTER 3: STRUCTURE & MANAGEMENT OF THE FUND
3.1 The Fund Organization
The Fund is incorporated as an open ended fund in the Sultanate of Oman. The registered office of the Fund is at Muscat International
Centre, Penthouse, P.O.Box 3028, Postal Code 112, Ruwi, Sultanate of Oman.
3.2 The Board
The Fund shall be managed and supervised by a Board elected by the general meeting in accordance with the provisions of the
Articles of Association. The Board will comprise of seven (7) members.
In accordance with the Articles of Association, the term of office of the Board shall be five years from the date of formation, except
in case of the first Board which shall be appointed by the Sponsor for a period of up to the first general meeting from the date of
registration.
Members of the Board are liable before the Investors and CMA, to supervise and oversee the Investment Manager and other service
providers and to safeguard the interests of the Fund and Investors in accordance with the law.
The management of the Fund is restricted to the terms of this Prospectus and hence no party beyond the authority of this Prospectus
and the Articles of Association is entitled to interfere in the Fund’s Management.
3.3 Membership Criteria of Board
The members of the Board shall satisfy the following criteria:
1. Having good conduct and sound reputation.
2. Not convicted in any crime or an offence involving dishonesty or breach of honesty or trust or a crime stipulated
in the Capital Market Law, Commercial Companies Law (RD 4/47) or Oman Commercial Law (RD/55/90) unless
rehabilitated.
3. Not declared as bankrupt.
Members of the Board: The following are the members of the first Board having a maximum term of one year, subject
to re-election.
1. Sayyidah Rawan Ahmed Al Said: She holds a Bachelors of Economics from the American University, Cairo, a Higher
Diploma in Investment Analysis from the University of Sterling, a Masters in Economic and Finance from Loughborough
University in Great Britain. She has experience of working in investment for more than 23 years in both the public and
private sectors. She is currently the Chief Executive Officer (CEO) of ONIC Holding and was Deputy CEO of the State
Reserve Fund. She is also currently a director of a number of financial institutions in the Sultanate of Oman and the GCC.
2. Sayyid Amjad Mohammed Al Busaidi: He holds a Masters degree in Business Administration from the University of
Southern Cross, Australia and is currently the CEO of Diwan of Royal Court Employees’ Pension Fund. He is a director of
a number of companies in the Sultanate of Oman and is also the Chairman of Nawras Telecommunication SAOG and
Bank Nizwa.
3. Abdullah Humaid Al Mamary: He holds a Bachelors degree in Business Administration from the University of Lincoln
in Great Britain. He is currently the Manager of the Sultan’s Special Force Pension Fund. He is a director of a number of
companies in the Sultanate of Oman and is also the Vice Chairman of Bank Sohar, Hotels Management Company and the
Middle East IT College.
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4. Colonel Said Abdullah Al Harthy: He holds a Diploma in Business Administration, Diploma in Finance and a Bachelors
degree in Military Sciences. He is a chartered accountant and is currently the Director of Finance at the Ministry of
Defence.
5. Abdullah Salim Al Harthy: He holds a Bachelors degree in Accounting and Finance from Sultan Qaboos University, Oman.
He is a member of the Certified Financial Analysts Institute in the USA. He is currently Director of Business Strategy for
the State General Reserve Fund and a director of a number of companies including Dubai Mercantile Exchange, Oman
and Vietnam Investment Fund, Oman and Libya Investment Fund and National Aluminum Products Company.
The remaining two members will be appointed by the Fund during the first meeting.
Where an office in the Board becomes vacant prior to the end of the term the Board may elect a substitute until the end
of the term.
3.4 Meetings of Board
Meetings of the Board shall observe the following:
1. The number of attending members shall not be less than two thirds of the total strength
2. The members shall not take part in discussion and/or voting on matters if he or his spouse or relatives up to second
degree have interest
3. Approval of resolutions shall need support from majority of the members
4. Objection by a member to any resolution shall be recorded in the minutes of the meeting
5. The Board shall meet at least four times per year with a maximum gap of four months between any two consecutive
meetings
3.5 Role Of Board
The Board shall carry out oversight and supervision of the Fund’s business and shall undertake the following:
1. Evaluation of the Fund’s investment performance compared to the benchmark
2. Ensure Fund’s compliance with the Prospectus, Articles of Association and statutory requirements.
3. Evaluation of the performance of the Investment Manager and other service providers.
4. Ensure adequacy of the Fund’s systems to safeguard its assets and ensuring that adequate accounting controls
are in place.
5. Ensure that Investment Manager’s system and controls are adequate to ensure compliance with the interests of the Fund
and Investors.
6. Avoidance of conflicts of interests and ensuring that adequate procedures are in place to resolve any conflict of interest
in the best interest of the Fund and Investors.
7. Ensure segregation of function when one company is acting as provider of more than one service to the Fund.
8. Approve the transactions with related parties and disclose the same.
9. Approve the annual report, financial statements and other information and disclose to the public and Investors to ensure
that the disclosure is fair, timely, transparent and not misleading.
10. Appointment and removal of service providers and determining their fees.
11. To take specific decisions in relation to the gains,
Investors who hold at least 5% of the Fund’s Units, may apply to the Board to overturn any decisions that are made by the Board and
that may harm the Fund or its investors.
CHAPTER 4: THE INVESTMENT MANAGER
4.1 Investment Manager
The Investment Manager of the Fund is NIFCO, a close joint company incorporated in the Sultanate of Oman pursuant to Royal Decree
81/98, having its registered office and headquarters at Muscat International Centre, Penthouse, P.O. Box 3028, Postal Code 112,
Ruwi, Sultanate of Oman.
The purpose of the Investment Manager is to establish and manage a number of investment funds, in order to derive profits for and
on behalf of the investors in those funds. The shareholders in the Investment Manager are the State General Reserve Fund, the Public
Authority for Social Insurance and a number of civil and military pension funds in the Sultanate of Oman. The Investment Manager
has been formed and will be managed in accordance with the Oman Commercial Companies Law. The Articles of Association of the
Investment Manager are available for inspection at the offices of the Investment Manager.
The Investment Manager is managed by the board which has been appointed by the shareholders in accordance with its articles of
association.
4.2 Role Of The Investment Manager
The Investment Manager will be responsible for identifying investment opportunities and entering into transactions consistent with
the objectives and investment guidelines of the Fund. After an investment is made, the Investment Manager will be responsible for
monitoring the investment until the time of exit. The Investment Manager will be responsible for monitoring the portfolio structure,
investment performance and compliance with the asset allocations. The Investment Manager manages the Fund in line with the
Prospectus, the Articles of Association and any applicable laws or regulation at the time being in force.
The Investment Manager shall undertake the following:
1. Manage the portfolio of the Fund in the best interest of the investment objectives of the Fund as stipulated in the
Articles of Association
2. Take all investment decisions or other decisions in the best interest of the Fund and Investors
3. Accurately record all purchase and sale transactions undertaken in favour of the Fund and in keeping with their time
sequence
4. Shall have an accounting system to classify, monitor and check all transactions in the Fund’s portfolio which are entered
into the system and adjust to the cash and securities accounts opened in the name of the Fund with the Custodian
5. Provide liquidity for the Fund to discharge any obligations.
6. Safeguard the Fund from any unnecessary investment risks.
7. Disclose to Unitholders, organising bodies and supervisory bodies, on demand, fatwas and reports received from the
Shariah Advisor.
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These administrative activities may include the following administrative functions:
• Calculation of the NAV including the calculation of the Fund’s income and expense accruals and the pricing of securities at
current market value.
• Preparation of quarterly, semi-annual and annual financial reports to Unitholders.
• Maintenance and filing of the fund’s financial books and records as the fund accountant, including reconcilement of
holdings with custody and broker records.
• Payment of fund expenses.
• Settlement of daily purchases and sales of securities, ensuring collection of dividends and receivables.
• Calculation and payment to the transfer agent of dividends and distributions (if required).
• Preparation and filing of the fund’s prospectus.
• Preparation and filing of other CMA filings/reports.
• Calculation of the total returns and other performance measures of the Fund.
• Monitoring investment compliance with CMA, prospectus or other regulatory requirements.
• Supervision of the orderly liquidation and dissolution of the Fund (if required)
• Preparation of a summary of the Fund’s activities at the end of each financial year.
CHAPTER 5: SERVICE PROVIDERS
5.1 Shariah Advisor
Rating Intelligence Partners LLP has been appointed as the Shariah Advisor to the Fund.
A supervisory committee (the “Fund’s Outsourced Shariah Advisory Services”) would be appointed by the Board to advise the
Investment Manager on matters pertaining to the Shariah. The role of the Fund’s Outsourced Shariah Advisory Services is to provide
ongoing and continuous supervision and make final decisions in all matters pertaining to the Shariah for the Fund.
The Outsourced Shariah Advisory Services will review the structure and the proposed operation of the Fund as described in this
Prospectus, and would provided a certification (“Fatwa”) that they are in compliant with the principles and precepts of Shariah.
The role of the Shariah Advisor is as follows:
1. To conduct quarterly reviews to identify securities in which the Fund can invest whilst complying with Shariah, and
identify those which should be excluded for non-compliance with Shariah.
2. The Outsourced Shariah Advisory Services would serve in an advisory capacity only, and will not have the power to make
any investment decisions for the Fund. The Fund, in agreement with the members of the Outsourced Shariah Advisory
Services, intends to retain such members for the life of the Fund, although there can be no assurance that any of them
will remain a member of the Outsourced Shariah Advisory Services throughout the term of the Fund.
The members of the Shariah Board shall be permanently appointed throughout the term of the Fund, however, no continuation is
guaranteed and Rating Intelligence Partners LLP was appointed as Shariah Advisor who will in turn appoint the Shariah Supervisory
Board comprising of:
1. Dr. Mohammed Ali Al Ghari: He is an Associate Professor and Deputy Director of at the Economic Research Centre of
King Abudlaziz University in Jeddah and a member of the Academic Committee of the Islamic Development Bank in
Jeddah. He is a member of the Islamic Jurisdiction Committee in Jeddah, the Editor of the Islamic Economic Magazine,
London, and a member of the shariah supervisory board for a number of financial institutions such as the Saudi American
Bank, Saudi British Bank and Dow Jones Islamic Index.
2. Dr. Abdulsattar Abu Ghadah: He is a Shariah advisor for a number of financial institutions and private and government
banks. He is an advisor for the Islamic Law Knowledge Department in Kuwait, and a member of the sharia supervisory
board, for Al Barakah Islamic Investment Bank, Bahrain.
3. Dr. Nazih Hammad: He is a former professor at Um Al Qura University, Makkah, a member of the Islamic Jurisprudence
Academy, Jeddah, a member of the sharia supervisory board at the City Islamic Bank and at Bermal Asset Management
Company.
4. Dr. Mohammed Ali Qattan: He is a former sharia supervisor, for Al Mal Islamic Investment Company and an Islamic
economy researcher in the Emiri Diwan, Kuwait. He is an author of books in Islamic economy and a member of Sharia
supervisory boards of several financial institutions in Kuwait, Kenya, Great Britain, Switzerland and the USA.
A copy of the agreement with the Shariah Advisor is available for inspection at the office of the Investment Manager
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5.2 Custodian
National Bank of Oman SAOG is the Custodian for the assets held by the Fund. The Custodian may appoint a sub-custodian to keep
the assets located within and outside the Sultanate of Oman. Appointment of sub-custodian shall not exonerate the Custodian of
any of its obligations.
Written consent of the Board shall be obtained for all contracts concluded with the sub-custodian and such contracts shall provide
adequate protection for the assets on terns and conditions consistent with the contract with the Custodian.
All contracts concluded with the Custodian shall at least cover:
1. Requirements that enable the Fund to exercise all the rights pertaining to the assets kept with the Custodian
2. Requirements pertaining to the location where the Fund’s assets are kept
3. Method of holding the assets
4. Care and liability for loss
5. Review and compliance reports
6. Fees, method of payment and timing of payment
No contract concluded with the Custodian shall provide for creation of any encumbrance of the assets of the Fund, except for claims of payment of fees and charges to the Custodian for acting in such capacities. The contracts shall not contain any provision that would require the payment of fees or expenses to the Custodian in the form of transfer of ownership of assets belonging to the Fund.
The assets of the Fund, wherever required or deemed necessary, shall be registered in the name of the Custodian or sub-custodian or their respective nominee with an account number or other designation in the records of the Custodian or sub-custodian or the nominee, to establish that the ownership of the assets is vested with the Fund.
The Custodian shall exercise due diligence in keeping the assets of the Fund and shall protect the interests of the Fund in every act, and they shall be liable for any loss to the Fund’s assets resulting from any omission or wrongful act by them or their respective employees directors or managers.
5.3 Auditors
KPMG have been appointed as the first Auditors of the Fund. Their address is P.O. Box 258, Postal Code 112, Ruwi, Sultanate of Oman.
The Board of Directors of the Fund will appoint external auditors that are accredited and will give the auditor access to the books of
the Fund and allow the auditor to request data, clarifications and verification of assets and liabilities. The auditor will thereon report
to the Board of Directors of the Fund.
The auditor of the Fund cannot be the same as the external auditor to the Investment Manager of the Fund.
The external auditor of the Fund will be appointed for one financial year. An accounting firm shall not be appointed for more than
four consecutive years, and can be appointed again only after the passage of two consecutive years.
5.4 Legal Counsel
Trowers & Hamlins are the Legal Counsel to the Fund. Trowers & Hamlins is a branch office of an English firm and its address in
Muscat is P.O. Box 2991, Postal Code 112, Muscat, Sultanate of Oman.
Inspection of Documents
The Articles of Association of the Fund and the material contracts that have been entered into by the Fund can be inspected by
bona fide potential Investors at the office of the investment manager
CHAPTER 6: FEES AND EXPENSESThe Fund will bear and be charged all expenses related to establishment and running of Fund.
6.1 Investment Manager Fees
Pursuant to the terms and conditions of the investment management agreement, the Fund will pay to the Investment Manager;
(a) Investment Management Fee: 1.5% per annum of the NAV of the Fund before the Investment Management Fee and
the Performance Fees of the Fund. The Investment Management Fee will be calculated on daily basis and paid monthly
in arrears;
(b) Performance Fee: In case the NAV of the Fund at the close of a financial year appreciates by more than 10% compared
to the beginning of the year, the Investment Manager will be paid 15% of the amount exceeding 10%.
6.2 Shariah Advisor Fee
The Shariah Advisor shall receive a one off lump-sum fixed amount of no less than RO 12,000/- for advisory services relating
to procuring Shariah fatwa for the Fund. In addition, the Shariah Advisor shall receive no less than RO13,500/- paid annually
for undertaking security screening and quarterly audit fee for Shariah monitoring of the security holding and review of Shariah
Complaint process.
6.3 Custodian Charges
(a) Custody Fee: A minimum aggregate annual fee of 0.16% of the NAV of the Fund.
(b) Transaction Fee: RO 15/- per transaction (including bank charges if any). There is a ceiling of RO. 50,000/- on total
Custodian charges per annum inclusive of Custody Fee and Transaction Fee payable to NIFCO. The Custodian charges will
be calculated daily on average daily Net Assets and paid monthly in arrears.
6.4 Administrative Fee
The Investment Manager will be paid an annual fee of 0.3% of the NAV of the Fund with a maximum amount of RO 50,000/-. The
administrative fee will be calculated daily on average daily NAV and paid monthly in arrears.
6.5 Distribution Charges
NIFCO has been appointed as Distributor of the Fund. The distributor is responsible for marketing and promotion of the fund. The
distributor is expected to do the following :
(i) Develop extensive marketing strategy and campaigns
(ii) Sell the Fund to the prospective investors
(iii) Develop marketing material including presentations for the prospective investors
(iv) Seek sub-intermediaries to widen the investors reach
A fee of 1% would be payable for initial and subsequent subscription to the Fund. A copy of the distribution agreement is available
for inspection at the office of the Investment Manager.
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6.6 Sitting Fees & Expenses
Chairperson and each member of the Board shall be entitled to a sitting fee of RO 350/- and RO 300/- per meeting respectively. In
addition each member may charge out of pocket expenses incurred solely for the purpose of carrying out their duties for the Fund.
The total amount under the head of ‘sitting fee’ and ‘out of pocket expenses’ for each of the members, however, shall not exceed
RO 5,000 (five thousand only) each year.
6.7 Other Expenses
In addition to the above specific recurring expenses the Fund will also incur the following expenses;
(a) CMA regulatory fees:
(b) Accounting / record keeping expenses
(c) Audit fees;
(d) Brokerage commission, and other ancillary charges related to assets of the Fund.
(e) Taxes, if any;
(f) NAV publishing and expenses related to dispatch of statement of account ;
(g) Printing and distribution expenses related to annual accounts and Unitholders meetings;
(h) Any losses incurred as a result of dealing in securities held on behalf of the Fund;
(i) Any other expenses directly related to the Fund.
6.7 Redemption fee
Redemptions made within one (1) year of the purchase by the Unitholder will carry an Back-end load of 3% of the redemption
value. Redemptions made after completion of one (1) year but before completion of two (2) years from the date of purchase by the
Unitholder will carry an Back-end load of 1.5% of the redemption value. Redemptions made after completion of two (2) years from
the date of purchase by the unitholder will not bear any Back-end load.
CHAPTER 7: RISK FACTORS & MITIGATIONSInvestors should carefully consider the risks described below in addition to all other information presented in the Prospectus before
deciding to invest in the Fund. Investors are warned that there are risks involved with investing in the Fund, which may affect the
Fund’s performance, including but not limited to the risks listed below. Investors may note that the risk factors mentioned below
are the Sponsor’s opinion based on current knowledge and information available with it. The actual risks and their impact could be
materially different from that mentioned herein.
Specific Risk Factors:
7.1 Market Risk
Market risk refers to potential losses that may arise from changes in the market prices of the investments of the Fund. Prices of
securities that the Fund invests in, fluctuate in response to various factors, for example, events or news that relates to securities as
well as general market or economic conditions.
Mitigation: The Investment Manager’s team will consist of professional and experienced research team which will conduct thorough
investment research and analyze performance and prospects of various securities before selecting a particular investment. The team
will also endeavor to adequately diversify the portfolio to spread and minimize risk.
7.2 Exchange And Currency Risk
The Fund expects to invest in securities denominated in currencies other than OMR. Though these currencies are pegged to the USD,
any change to the peg or changes in exchange control regulations will have an impact on the NAV.
Mitigation: The Fund will continuously monitor and review the currency scenario in its investible markets. It will take necessary
steps, if required, from time to time to hedge the foreign exchange risk of the currencies other than OMR
General Risk Factors:
7.3 Political & Economic Risks
The value of the Units and the income generated by the Fund may be affected by uncertainties such as diplomatic developments,
changes in government policies, taxation and interest rates, currency repatriation and other political and economic developments in
law and regulations and, in particular, the risk of expropriation, nationalization and confiscation of assets and changes in legislation
relating to the level of foreign ownership.
Mitigation: Political risk in GCC is relatively low compared with other regions in Middle East. However, it is a risk factor that cannot
be eliminated completely.
7.4 Legal Risks
The laws and regulations governing the Fund are subject to change. The legislation can change in countries where the Fund may
invest. Such legislation may have an adverse effect on the investments held by the Fund.
Mitigation: The Investment Manager will continuously monitor and review any legal and regulatory issues arising, with its legal and
compliance advisors
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7.5 Taxation Risks
The Fund is exempt from tax as per the prevailing regulations applicable in Oman, but may be subject to local taxations to the extent
income is derived from other jurisdictions. Accordingly, it is possible that the Fund could be subject to taxation in the countries in
which the Fund may invest that is not anticipated either at the date of this document or when investments are made, valued or
disposed of.
7.6 Other Risks
The foregoing list of risk factors is not comprehensive. Investment in the Fund should be regarded as long-term in nature. Prospective
Unitholders should consult their own advisors before deciding to subscribe for Units.
CHAPTER 8: TAXATION
8.1 Tax Position Of The Fund
As per the Royal Decree No. 28/2009 (as amended), the income of Funds are exempt from Income Tax. The income earned by
the Fund is therefore exempt from Omani taxation but may be subject to local taxation to the extent income is derived from other
jurisdictions.
8.2 Unitholder Taxation
There is no Omani tax on the receipt of dividends from the Fund, or on the proceeds of any disposal of Units. Unit-holders may be
subject to taxation if they are subject to taxation in any other jurisdictions. Prospective Investors should consult their own counsel
regarding tax laws and regulations of any other jurisdiction which may be applicable to them. The tax and other matters described
in this memorandum do not constitute, and should not be considered as, legal or tax advice to prospective Investors.
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CHAPTER 9: SUBSCRIPTION AND REDEMPTION
9.1 Initial Subscription
The subscription for the Units of the Fund shall be open to Omani and non-Omani individuals as well as to Omani and non-Omani
corporate institutions.
9.1.1 Application Forms for Subscription:
The Prospectus and Application Forms for subscription can be obtained from the branches of the collecting banks.
9.1.2 Mode of Subscription:
1. The subscribers shall be responsible for furnishing all their particulars, ensuring correctness and validity of the information
provided in the Subscription Forms. Depending on what is required in the Application Forms, the banks receiving the
subscriptions have been instructed to accept the Application Forms that comply with all the requirements as provided
for in the Application Form and in this Prospectus.
2. The subscribers shall be required to carefully read the Prospectus and the terms and conditions of the subscription.
3. The subscribers shall be required to submit the complete Application Form and furnish all their particulars as required in
the form,
4. The subscribers applying for Units during the Initial Subscription Period shall be required to submit the duly completed
Application Form to the bank receiving the subscriptions (as referred to in the Prospectus) and make payment towards
the value of Units as specified in the Prospectus, ensuring that all the documents in support of the information referred
to above are enclosed.
5. In case of payment of the value of Units being subscribed is made through cheque/demand draft or remittance, it shall
be in favour of “Al-Kawthar Fund.”
9.1.3 Subscription on behalf of minor children
For the purpose of initial subscription, any person below 18 years of age as on the last subscription date will be treated as a minor.
Only the father may subscribe on behalf of his minor children.
If the subscription is made on behalf of a minor by any person other than the father, he/she shall be required to attach a valid legal
power of attorney issued by the competent authorities authorizing him/her to deal in the minor’s funds through sale, purchase and
investment.
9.1.4 Initial Subscription Price
The initial subscription price is RO 1.000 (one Rial) per Unit and in addition to that, the issuance fee is RO 0.020 (twenty baisas).
9.1.5 Minimum Subscription
The minimum initial subscription shall be 100 (one hundred) Units for each subscriber and in multiples of 100 (one hundred) Units)
thereafter.
9.1.6 Maximum Subscription
As per the relevant regulations, there is no maximum limit on the Unit-holding by a single investor
9.1.7 Minimum size for Initial Subscription
The Fund will not be established and all applications received for initial subscription shall be refunded unless valid subscriptions are
received for a minimum of 2,000,000 (two million) Units during the Initial Subscription Period.
9.2 Acceptance of the applications:
The collecting bank shall neither receive nor accept the Application Forms for subscription under the following circumstances:
If the Application Form does not bear the signature of the subscriber;
1. In case of failure to pay the full value of the Units subscribed in accordance with the conditions provided for in the
Prospectus;
2. If the value of the Units subscribed is paid through cheque and if the same is dishonored for whatever be the reason;
3. If the request is made in joint names.
4. If the supporting documents referred to in the Prospectus and the Application Form for Subscription are not enclosed with
the Application Form;
5. If the subscription form does not contain all the particulars of the bank account of the subscriber;
6. If any particulars of the bank account held by the subscriber as provided for in the Application Form are noted to be
incorrect;
7. If the particulars of the bank account provided for in the Application Form are found to be not relevant to the subscriber,
with the exception of the applications submitted in the name of minor children, who are allowed to make use of the
particulars of the bank accounts held by their father;
8. In case of failure to have the power of attorney attached with the Application Form as provided for in this Prospectus
in respect of the person who subscribes and signs on behalf of another person (with the exception of a father who
subscribes on behalf of his minor children);
9. If any legal or regulatory requirements are not met.
All subscription applications as per the procedure stated in this Prospectus would be fulfilled for allotment of Units since there is no
fixed capital and the ‘Fund’ is an open-ended fund.
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9.3 Enquiry & Complaints
Subscribers who intend to seek clarification or file complaints with regard to the issues related to their applications must contact the
branch of the bank where the subscription was made as detailed below:
Bank Contact
National Bank of Oman SAOG
Bank Sohar SAOG
Ahli Bank SAOG
Ms. Koukab Ali Said Al HasniPO Box 751, Ruwi, PC 112, Sultanate of Oman
Phone: +968 24778757 Fax: +968 24778993Email: [email protected]
Ms. Nadia Yousuf Yacoob Al BalushiPO Box 44, Jibroo, PC 114, Sultanate of Oman
Phone: +968 24730221, Fax: +968 24730010Email: [email protected]
Mr. Sulaiman Ali Al HinaiPO Box 545, Mina Al Fahal, PC 116, Sultanate of Oman
Phone: +968 24567841 Fax: +968 24577081Email: [email protected]
Should a inquiry or complaint be made and no response is received from the bank, the Investment Manager shall be contacted at
the following address:
National Investment Fund Company, Muscat International Centre, Penthouse, Ruwi, Tel. No. +96824813143, Fax No.
+96824813241.
9.4 Subsequent subscription of units
Post initial subscription period and re-opening of the fund for subsequent subscription, application Forms may be submitted to the
Investment Manager’s office during its official working hours on any Business days. The Investment Manager reserves the right not
to accept any Application Form that reaches its office after the official working hours on any given Business Day or at any time on
a day, which is not a Business Day. The Investment Manager shall accept the Subscription Forms after confirmation of compliance
with the procedure in line with the requirements as provided for in the Prospectus.
All subscription requests through the accepted Application Forms shall be fulfilled on the following Valuation Day at a subscription
price based on the NAV of the Fund at that Valuation Day. Application Forms received on any Valuation Day will not be entertained
on that particular day.
The minimum subscription will be at least 100 units (One hundred units only). Money will have to be deposited with the Application
Form. The Fund will entertain only such subscription request as per the prescribed procedure (provided on Application Form) for
which the monies have been received in its bank account.
Existing Unitholders may choose the option to request reinvestment of any cash dividend that may be declared by the Fund.
The Investment Manager will issue Units of the Fund within two (2) Business days from the relevant valuation day.
Following is the address and contact details of the Investment Manager for obtaining and submission of the Application Forms for
post initial subscription:
NATIONAL INVESTMENT FUNDS CO. SAOC
PO Box 3028, Ruwi, 112, Muscat, Oman
Tel.: +968 24813143
Fax: +968 24813241
Documents required from subscribers:
1. Individuals: copy of the identity card (if Omani) or a copy of the passport (if non-Omani) of the individual along with
their bank statement outlining their bank account number.
2. Companies and other corporations: copy of the corporate documents of the entity, decree or decision establishing
the entity along with a list of authorised signatories and copies of their identity cards along with their bank statement
outlining their bank account number.
9.5 Redemption
9.5.1 Voluntary Redemptions:
Redemptions made within one (1) year of the purchase by the Unitholder will carry an Back-end load of 3% of the redemption
value. If redemptions made after completion of one (1) year but before completion of two (2) years from the date of purchase by
the Unitholder will carry an Back-end load of 1.5% of the redemption value. Redemptions made after completion of two (2) years
from the date of purchase by the Unitholder will not bear any Back-end load.
Units of the Fund may be redeemed only once a week on the Redemption Day provided that:
The Investment Manager may refuse or defer redemption in the following cases:
a) if the total of all the Unit Holder’s redemption requests to be satisfied on any one dealing day amount to 10% or more of
the Net Asset Value of the Fund; or
b) if there has been a public holiday or suspension of dealing on the relevant stock exchange in which the securities and
or other assets held by the Fund, then the Redemption Day will be on the following Business Day; or
c) if there has been more than two days of public holiday or suspension of dealing on the relevant stock exchange in
which the securities and or other assets held by the Fund, then the redemption requests would be entertained on the
Redemption Day of the following week.
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The aggregate Units to be redeemed by the Fund on each Redemption Day in connection with all voluntary redemptions of Units
must not exceed 10% of the total issued Units of the Fund on that Redemption Day. In case the aggregate issued Units to be
redeemed by the Fund to effect validly requested redemptions would exceed 10% of the total Units of the Fund, then the Fund will
fulfill such requests on a partial, pro-rata basis. Unfulfilled redemption requests will be carried forward to the next Redemption Day.
Such carried forward redemption requests will be aggregated with the following week’s redemption request and will be treated pari
passu with the new requests.
9.5.2 Redemption Price
The redemption price per Unit shall be based on NAV per unit calculated as at the Redemption Day (less any Back-end load
applicable).
9.5.3 Procedure for Redemption
(a) The request for redemption of Units has to be a minimum of 100 (one hundred) Units per applicant except in cases where
a Unitholder is requesting to redeem his entire holding.
(b) In case a calendar week is shortened by more than one Business Day due to declared holidays or for any reasons
resulting in closure of Banks or MSM the Fund will not entertain request for redemptions in that particular week.
The applications received in that particular shortened week will be carried forward to next week.
(c) In order to redeem Units on a Redemption Day, a Unitholder must provide a duly completed and signed request
for redemption, in a specified form, to the Investment Manager at least 5 Business Days prior to the relevant
Redemption Day.
(d) Redemption requests will not be revocable without the consent of the Investment Manager and Units in respect of which
Redemption requests have been received will not be transferable.
(e) Payment of the redemption price in respect of voluntary redemptions will normally be made by electronic bank transfer
or by a cheque within 3 business days from Redemption Day, except that such payment may be delayed in circumstances
where the determination of NAV has been delayed for material reason. Settlement proceeds may be subject to bank
charges payable by the person requesting for redemption.
9.5.4 Redemption “in-specie”:
Units shall only be redeemed for cash. There shall be no Redemption in exchange for the transfer of interests in the securities and
other assets of the Fund.
9.5.5 Suspension of Redemption:
The Fund may not suspend the right of the investor to redeem the value of his units except:
For any period during which trading is suspended on securities representing at least 51% of the total assets of the Fund.
1. In accordance with any limits or provisions clearly stated in the Articles of Association of the Fund.
2. In exceptional circumstances approved by CMA.
3. The Fund after suspending redemption shall, within the next Business Day after the date of suspension, send a notice to
CMA and shall disclose the same.
9.5.6 Redemption on Termination:
The Board may recommend to the extraordinary general meeting, that the Fund be dissolved or liquidated, for any reason
including:
1. Accomplishment of the objective for which the fund was established pursuant to the Articles of Association and the
Prospectus.
2. Reduction of the NAV of the fund to less than RO 500,000
3. The Fund stops carrying out its business without legitimate reason.
4. Reduction in the NAV to the extent that expenses incurred by the fund are unreasonably high.
5. On recommendation by the Investment Manager.
6. On request by CMA.
Following commencement of Redemption on termination of the Fund, the Investment Manager shall make no further purchases on
behalf of the Fund, shall sell/dispose-of all securities and other assets held on behalf of the Fund, shall not receive further requests
for redemption/subscription of Units, shall pay all outstanding expenses of the Fund and shall arrange for preparation of a final set
of audited accounts for the Fund.
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CHAPTER 10: UNIT OWNERSHIP
10.1 Unitholders Rights:
All Units shall carry equal rights. A Register of Unitholders shall be maintained by the Investment Manager and shall include full
particulars and details of the Unitholders and their addresses, fax, telephone numbers, email and mobile number (if available), other
contact details, number of units held by each Unitholder and the details of serial numbers of the Unit certificates evidencing the
ownership of Units.
All Unitholders shall have the following rights inherent in the ownership of the Units, namely:
1. The right to one (1) vote for each Unit;
2. The right to receive dividends, if and when, declared from time to time by the Board;
3. The right to share in the distribution of the Fund’s assets upon liquidation of the Fund;
4. The right to inspect the annual balance sheet, profit and loss statement and cash flow statement and the other financial
books of accounts and records including Unitholder’s Register;
5. The right to redeem their Units in the Fund subject to the provisions of this Prospectus;
6. The right to receive notice of and the right to participate and vote in any meeting of the Unitholders by person or by
proxy;
7. The right to apply for the annulment of any decision by a meeting of the Unitholders or the Board or the Investment
Manager which is contrary to the law of the Sultanate of Oman or this Prospectus;
8. The right to institute actions against the Board, the Investment Manager or the Auditors of the Fund on behalf of the
Unitholders; and
9. Unitholders who hold at least 5% of the Units may request the Board to cancel any resolution adopted by the Board or
in the general meeting as the case may be, if such resolution is detrimental to the Fund or Investors. The request shall
be referred to the Board which has issued the resolution, to decide on it.
10.2 Limits of Liability:
Liability of the Unitholders for obligations of the Fund is limited only to the extent of their commitments and any undistributed
profits. No Unitholder will be obligated to make any payment in excess of its commitment for any liability or for the discharge of
the obligations of the Fund.
10.3 Transfer of Units:
The Units will not be transferable unless by way of inheritance or court order The transfer of ownership shall be registered free of
charge within three days from the date of receipt of the necessary documents.
Units in respect of which a redemption request has been received will not be transferable unless the redemption request is revoked
with the consent of the Fund.
10.4 Ownership of Assets:
The assets of the Fund will be kept separate from the assets of the Investment Manager.
10.5 General Meetings:
(a) The general meeting is the supreme authority of the Fund and shall comprise of all Unitholders.
(b) Every Unitholder or his proxy carrying a written authorization may attend the general meeting and shall have one vote
for every Unit held by him.
(c) The general meeting shall be held in accordance with the Articles of Association. The extraordinary general meeting
may be held if the Fund’s interest so requires or in accordance with the law or regulation or on request by one or more
Unitholders who hold 10% or more of the Fund’s Units. However, in case of all of the following issues, the extraordinary
general meeting shall be convened to consider:
• Amendment to the Articles of Association.
• Change of main investment objectives of the Fund.
• Change in the frequency of calculation of NAV or NRV.
• Reducing the frequency or limits on redemption.
• Change of the Fund’s status such as a merger, spinoff or conversion etc.
• Dissolution and liquidation of the Fund.
(d) Where the Board fails to convene the general meeting the Investment Manager shall convene it. Notice to attend the
general meeting shall not be valid unless it also includes the agenda. Notice to attend the general meeting shall be
published, after approval by CMA, in at least two daily newspapers for two consecutive days. The notice shall be sent to
the Unitholders by ordinary post or delivered by hand or to his representative after recording his signature, at least two
weeks prior to the date of the meeting together with authorization form, agenda, memos and documents to be discussed
by the meeting.
(e) The Board shall establish the agenda of the general meeting or it may be established by the Investment Manager if the
meeting is convened by the Investment Manager. The agenda shall also include proposals by any Unitholder who holds
at least 5% of the Units of the Fund, if these are proposed at least two weeks prior to the date of sending the notice to
the Unitholders to attend the meeting. The general meeting shall not consider any issues that are not included in the
agenda.
(f) Unitholders and proxies who hold all the Units of the Fund may hold a general meeting without regard to the rules
stipulated for such meeting. The meeting may adopt any resolutions within the authority of the general meeting.
(g) The general meeting shall be valid if attended by Unitholders or proxies representing at least 50% of the Units in case
of an ordinary general meeting and at least 60% for extraordinary general meetings. Where the required quorum is not
present, a second general meeting shall be called within one month from the date of the first meeting. The notice shall
be published in two daily newspapers at least one week prior to the date of the meeting. The second ordinary general
meeting shall be valid regardless of the percentage of attendance. The second extraordinary general meeting shall
require attendance by investors holding at least 50% of the Units.
(h) Resolutions of the ordinary general meeting shall be adopted by absolute majority.
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(i) The general meeting shall be chaired by the chairman of the Board or its vice chairman and by the Investment Manager
if it has called for the general meeting but the chairman and vice chairman are absent. The meeting shall appoint a
secretary to record the minutes including deliberations, resolutions and votes. Every investor shall have the right to
access the minutes.
(j) The CMA may send an observer to attend all general meetings, supervise its procedures and ensure that resolutions are
adopted in accordance with the law. The minutes signed by the secretary and approved by the chairman of the meeting,
Auditor and the legal advisor, shall be filed with CMA within fifteen days from the date of the meeting.
10.6 Income Distribution
The Unitholders are entitled to the net income realized by the Fund after deducting all liabilities, including fees, expenses and taxes.
However, the Investment Manager has the discretion to distribute the net income in cash / Units or reinvest such profits without
distributing them to the Investors. However, it is not the current intention of the Board to declare distributions in respect of the Fund.
Instead, net income realized will be reinvested and will be reflected by an increase in the NAV of the Units, which may be realized
by Units at such time as they redeem their Units. In any case, distributions, if any, will be paid from net realized income only.
10.7 Distribution Announcements and Payment:
Distribution announcements will be published in two daily newspapers in Oman, one in English and one in Arabic. Distributions will
be paid to the Unitholders in Rial unless otherwise specifically requested. In the event that the distribution payments are requested
to be paid in a currency other than Rial, the Investment Manager will perform the necessary foreign exchange transactions and any
expenses incurred in connection with such transactions will be borne by the requesting Unitholder. In such situations, Unitholders
should be aware that the value of the distribution payments may be adversely affected by fluctuations in currency exchange rates.
Unitholders may elect in writing to receive distribution either by cheque or payment by electronic bank transfer, net of bank charges.
In absence of any instruction the distribution payment will be sent through cheque to the address specified by the Investor.
10.8 Voting Rights:
Each Unitholder has a right to exercise a vote at any meeting of Unitholders. Each Unit will represent one vote.
10.9 Proxy:
A Unitholder may give a written proxy to another person to attend the general meeting and vote on its resolutions. The Unitholder
may revoke such proxy at any time.
CHAPTER 11: NAV CALCULATION
11.1 NAV Calculation
The Investment Manager shall calculate the NAV of the Fund on the Valuation Day. The NAV per Unit is the NAV divided by the
number of Units in issue. The NAV is the value of the assets attributable to the Fund (including accrued income) less the attributable
liabilities (including accrued charges and expenses and provisions for contingent liabilities as appropriate). The value of the assets
attributable to the Fund and the attributable liabilities are determined by the Board in accordance with the following:
(A) The assets attributable to the Fund are deemed to include the following:
(i) All cash in hand, or on deposit, or on call, including any income accrued thereon;
(ii) All bills, demand notes, promissory notes and accounts receivable;
(iii) All bonds, shares, stock, debenture stock, subscription rights, warrants, options and other investments and securities
owned or contracted on behalf of the Fund other than Units and rights to Units;
(iv) All other assets of the Fund of every kind and nature, including prepaid expenses as valued and defined from time
to time by the Board;
(B) Any expense or liability attributable to the Fund may be capitalized and amortized over such period as the Board may
determine (and the Board may from time to time determine to lengthen or shorten any such period) and the unamortized
amount thereof at any time will also be deemed to be an asset.
(C) The assets attributable to the Fund are valued as follows:
(i) All listed securities will be valued at market value. Investments listed or quoted on the market shall be valued at
the closing prices on the relevant Valuation Day provided; however, that if such investments shall be listed on or
dealt in upon more than one stock exchange, the Board may in its discretion select one stock exchange which the
Board believes reflects the most accurate value.
(ii) Investments for which, in the Board’s opinion, no appropriate market price is readily available, or in case of a
listed security that has not been traded during ninety working days preceding to the Valuation Day, are valued at
their market value as determined by one or more independent professional appraisers, at the sole discretion of the
Board, in coordination with the Investment Manager;
(iii) Any currency other than Rial shall be converted into Rial at the prevailing official bank rate for conversion with
reference to Oman or, in the absence of an official bank rate, at the rate (whether official or otherwise) which the
Board shall in its absolute discretion deem, after consulting with the Investment Manager.,
(iv) Cash held by the Fund shall be valued at its full nominal value.
(D) Notwithstanding the foregoing, where, at the time as of which the assets of the Fund are being valued, any investment
has been realized or contracted to be realized, there shall be included in the assets of the Fund in place of such
investment the net amount receivable by the Fund in respect thereof, provided that, if the net amount receivable is not
payable until some future time after the time at which the assets are being valued, the Board may make such allowance
as it considers appropriate.
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(E) Any valuations made pursuant to this Prospectus will be binding on all persons; and
(F) The liabilities attributable to the Fund will be determined to include all of its liabilities (including such amount as the
Board determines in respect of contingent liabilities) of whatever kind and nature except liabilities represented by
Units. In determining the amount of such liabilities, the Board may calculate any liabilities on an estimated figure for
yearly or other periods in advance and accrue the same in equal proportions over any such period. Where applicable,
liabilities shall be accrued from day to day. In all cases the standard accounting practice IRFS will be applicable on NAV
calculation.
11.2 Suspension of Calculation of NAV
The Investment Manager in consultation with the Board may suspend the determination of the NAV on any Valuation Day for the
whole or any part of a period during which; a breakdown occurs in any of the means normally employed by the Investment Manager
in ascertaining the NAV; or circumstances considered to be abnormal market conditions exist as result of which, in the opinion of the
Investment Manager, it is not reasonably practical for the Fund to determine the NAV.
11.3 Currency of NAV
The NAV of the Fund and NAV per unit will be expressed in Rial.
11.4 Publication
NAV per Unit will be published, at the end of every week, in either the newspapers or magazines or by way of electronic media.
CHAPTER 12: REGULATORY FRAMEWORK
The Fund will be governed by the Capital Market Law, its Executive Regulation and all other applicable laws of the
Sultanate of Oman.
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CHAPTER 13: ARTICLES OF ASSOCIATION
The Fund shall have Articles of Association that will govern various operational aspects of the Fund. Investors to the Fund shall have
the right to inspect the Articles of Association prior to investment and by investing in the Fund, are deemed to have accepted and
consented to all the provisions of the Articles of Association.
CHAPTER 14: ACCOUNTS AND ACCOUNTING POLICIES
14.1 General
• The Fund shall have a financial liability independent from the Investment Manager and the Board.
• An independent and separate bank account for the Fund shall be maintained by the Custodian in the Sultanate where
necessary outside the Sultanate, for making withdrawals and deposits on behalf of the Fund.
• he Fund shall be treated, in respect of all sales and purchases and other transactions, as an independent entity and shall
be credited in case of sales and debited in case of purchases. All costs related to the Fund shall be directly paid from the
assets of the Funds.
• Accounting records for the Fund shall be maintained independently from the records of the Investment Manager and
shall be audited by the Auditors approved or nominated by the Board. The Board has the power to remove or change the
Auditors of the Fund during the life of the Fund. The appointment of Auditors will be notified to the CMA.
• The financial year of the Fund is from 1st January to 31st December. Except in the first year of commencement, for which
the financial year will be from the date of commencement to the end of December of the following year.
14.2 Accounting Policy
The accounts are to comply with International Financial Reporting Standards and as required by Omani Law.
14.3 Revenue and Expenditure of the Fund
Revenue of the Fund shall consist of:
(a) Profits earned as a result of dealing in securities held on behalf of the Fund;
(b) Income received from assets of the Fund;
(c) Any other revenue directly linked to the Fund and resulting from the investment of the assets of the Fund.
Expenditure of the Fund shall consist of:
(a) Fees of the Investment Manager;
(b) Administrative fees;
(c) Fees of the Custodian and sub-custodian if any;
(D) Fees of the Outsourced Shariah Advisory Services;
(e) Fees charged by the regulators in jurisdictions where the Fund has investments;
(f) Sitting fees of the Board;
(g) Expenses in respect of maintaining accounting records and auditing fees;
(h) Brokerage commission and banking fees paid in connection with the sale and purchase of securities held on behalf of
the Fund;
(i) Any losses incurred as a result of dealing in securities held on behalf of the Fund;
(j) Any technical, legal or professional fees relating to the acquisition, maintenance and disposal of assets of the Fund;
(k) Any expenditure related to the exercise of rights and duties in respect of the assets of the Fund;
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(l) Cost of preparing, printing, publishing and distributing public notices, annual and interim reports, valuations, accounts and
pricelists and such other reports or documents as may be allowed or required under the applicable laws or regulations
of Oman and any other communications to Unitholders;
(m) Costs of printing any certificates or proxies;
(n) Cost of preparing and filing all official documents concerning the Fund, including registration statements and offering
circulars with all authorities having jurisdiction over the Fund or the offering of Units;
(o) Cost of holding any meeting of Unitholders;
(p) Legal fees;
(q) Taxation; and
(r) Any other expenditure directly related to the Fund.
14.4 Reports & Accounts
The Investment Manager will prepare or cause to be prepared by the Auditors and disclose the same after approval by the Board
the following:
1. The quarterly unaudited (but reviewed) results of the Fund, for the previous three months within 30 days from the end
of each quarter. Audited accounts will be sent to the MSM and the Unitholders by mail within 60 days of the closing of
each financial year; and
2. The annual report for the Fund, and audited accounts or audited consolidated returns (including the Auditors’ report) for
the Fund for each Financial Year, within 60 days from the end of the Financial Year.
The accounts will be sent to the MSM and to the Unitholders by mail within 60 days of the closing of each financial year .
The Fund will also issue a simplified financial statement each Financial Year in accordance with applicable laws in addition to the
Annual Report of the Fund.
CHAPTER 15: DISSOLUTION AND LIQUIDATION OF THE FUND
The Board may recommend to the Unitholders at the extraordinary general meeting to dissolve and liquidate the Fund for any reason
including;
1. Expiration of the term of the Fund
2. Accomplishment of the objective for which the Fund was established pursuant to the Articles of Association and this
Prospectus.
3. Reduction of NAV of the Fund to less than RO 500,000
4. The Fund stops carrying out its business without legitimate reason.
5. Reduction in the NAV to the extent that expenses incurred by the fund are unreasonably high.
6. On recommendation by the Investment Manager; and
7. On request by CMA.
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CHAPTER 16: Undertakings
Firstly: Al-Kawthar Fund
The Board will collectively and individually abide by all of the provisions of the Capital Market Law, the Executive Regulation of the
Capital Market Law issued under Ministerial Decision No. 1/2009 and all other legislation and regulations relevant and applicable
in the Sultanate of Oman.
Chairperson of the Board
Secondly: Legal advisor
Trowers & Hamlins confirms that all procedures relating to the preparation of the Prospectus and issuing of the Units is in conformity
with the provisions of the Capital Market Law and the Executive Regulation of the Capital Market Law issued under Ministerial
Decision No. 1/2009.
Trowers & Hamlins
Legal Advisor
Thirdly: Issue Manager
The Issue Manager confirms the following:
1. All information relating to the subscription for the Units of Al-Kawthar Fund as included in the Prospectus is conformant with all of the documents and other material relating to the offer.
2. The information contained within the Prospectus is complete and correct and does not omit any material information,
the omission of which would render the Prospectus misleading.
3. The Prospectus and the offer to which it relates, is conformant with all the rules and terms of disclosure as stipulated
in the Capital Market Law and the Executive Regulation of the Capital Market Law issued under Ministerial Decision
No. 1/2009, and that the prospectus model is approved by the CMA.
4. The information contained in this Prospectus in Arabic (and the unofficial translation into English thereof) is true, sound
and adequate to assist the applicants to make the decision as to whether or not to invest in the Fund.
National Investment Funds Co. SAOC Issue Manager
44 National Investment Funds Co. SAOC P.O. Box 3028, P.C. 112, Ruwi, Sultanate of Oman.