Coporate Financial Reporting

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CORPORATE FINANCIAL REPORTING

Assignment #1
On

* Sukuk (in context to Pakistan)
* Listing requirements by KSE
* IFSB
* History of Accounting Standards and Adoption of IFRS
* Deloitte Pakistan/Global Deloitte

(1) Sukuk (in context to Pakistan)

Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds. Since fixed income, interest bearing bonds are not permissible in Islam, Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. Financial assets that comply with the Islamic law can be classified in accordance with their tradability and non-tradability in the secondary markets. Sukuk means a financial instrument in the nature of redeemable capital evidencing undivided beneficial ownership of the holder in certain specific assets based on Shariah principles and concepts approved by a Shariah Advisor appointed by the issuer for this purposes. ISSUE OF SUKUK

Eligibility for Issue of Sukuk
Any company or body corporate may issue Sukuk under section 120 of the Ordinance subject to the terms and conditions mentioned therein and in these Regulations. The company or body corporate shall, before the Issue of Sukuk, obtain all necessary approvals from the relevant regulatory authorities, where applicable. Conditions for Issue of Sukuk

Any company or body corporate that intends to Issue Sukuk shall fulfill the following conditions namely: * It has no over-due loan.
* The issuer’s as well as the instrument rating is not lower than triple B minus (BBB-) assigned by a credit rating company registered with the Commission under the Credit Rating Companies Rules, 1995. * It has appointed Trustee through a trust deed for safeguarding interest of the Sukuk holders. * It has arranged appropriate security, where required, in the form acceptable to the Trustee. * It has obtained consent of a depository company to declare the Sukuk as eligible security for the purposes of depository system. Types of Sukuk:

The types of sukuk enumerated by the Shari’a Standards of AAOIFI18 are as follows:

1. Certificates of ownership in leased assets
2. Certificates of ownership of usufructs
a. Certificates of ownership of usufructs of existing assets b. Certificates of ownership of usufructs of described future assets c. Certificates of ownership of services of a specified party d. Certificates of ownership of described future services

3. Salam certificates
4. Istisna’a certificates
5. Murabaha certificates
6. Musharika certificates
a. Participation certificates
b. Mudaraba certificates
c. Investment agency sukuk
7. Muzara’a (sharecropping) certificates
8. Musaqa (irrigation) certificates
9. Mugharasa (agricultural) certificates

LISTING REQUIREMENTS BY KSE

* A company applying for listing on the Exchange, shall pay an initial listing fee equivalent to one tenth of one percent of the PAID-UP-CAPITAL subject to a maximum of rupees two million and five hundred thousand. * No company will be listed unless it is registered under the Ordinance as a public limited company or has been setup under a statute and its minimum paid-up capital is Rs.200 million. * Despite receiving the application for listing and any preliminary actions thereon, no company shall be listed unless it has made a public issue which is subscribed by not less than 500 applications. * The prospectus or offer for sale shall be submitted to and cleared by the Exchange before an application for its approval is made to the Commission. The Exchange may require additional information, data, certification or requirement to be included in the prospectus or the offer for sale. If any applicant fails to comply with such requirements, the Exchange may refuse to issue clearance under these Regulations. * Without prejudice to the foregoing, the prospectus or the offer for sale...
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