INVESTMENT MaNagEr - investvis.co.om is an unofficial version of the original Prospectus prepared in...
50
Transcript of INVESTMENT MaNagEr - investvis.co.om is an unofficial version of the original Prospectus prepared in...
INVESTMENT MaNagErVision Investment Services Co. SAOC
P.O. Box 712, Al HamriyaPostal Code 131
Sultanate of Oman
ISSUE OPENINg DaTE 10/01/2013
ISSUE CLOSINg DaTE 10/02/2013
ISSUE MaNagErVision Investment Services Co. SAOC
P.O. Box 712, Al HamriyaPostal Code 131
Sultanate of Oman
SUBSCrIPTION BaNKSNational Bank of Oman
Bank SoharAhli Bank
CUSTODIaNNational Bank of Oman
P.O. Box 751, Postal Code 112Sultanate of Oman
This Prospectus contains information submitted in accordance with the requirements of the Capital Market Law issued by Royal Decree 80/98 and the related regulation.
This is an unofficial version of the original Prospectus prepared in Arabic and approved by the CMA vide its Administrative Decision No.72/2012خ dated 30/12/2012.
The CMA will not be held liable for the accuracy and adequacy of the information provided in this Prospectus. It shall also not be liable for any liability arising from the reliance on this data and information or from their use by any person.
3
4
Contents
Chapter 1 Notice 5
Chapter 2 Glossary of Terms 6
Chapter 3 Summary 8
Chapter 4 Directory 10
Chapter 5 The Fund 11
Chapter 6 GCC Equity Market – An Emerging Investment Opportunity 12
Chapter 7 Islamic Investments 17
Chapter 8 The Investment Objective, Strategy & Policy 20
Chapter 9 Investment Restrictions 22
Chapter 10 Management of the Fund 23
Chapter 11 Investment Manager 28
Chapter 12 Taxation & Zakat 33
Chapter 13 Charges and Fee 34
Chapter 14 Accounts and Accounting Policies of the Fund 35
Chapter 15 Net Asset Value 37
Chapter 16 Terms of the Offer and Subscriptions 38
Chapter 17 Dissolution and Liquidation of the Fund 44
Chapter 18 Unit-Holders’ Rights 45
Chapter 19 Risk Factors 48
Appendix I: Due Diligence Certificate by the Issue Manager 50
Table of Contents
5
This Prospectus contains particulars of VISION AL KHAIR GCC FUND (Shariah Compliant) - “Fund”, a fund which shall comply with acceptable Shariah principles as directed by an approved Shariah Advisor. The Prospectus contains specific information on the offering of Units in the Fund for the purpose of giving information to potential investors. The Units of RO 1 each in the Fund are offered solely on the basis of the information contained in this Prospectus. The objective of this Prospectus is to provide information that may assist investors to make an appropriate investment decision with regard to the Units offered.
All prospective investors should read the contents of this Prospectus carefully; especially the Risk Factors mentioned in Chapter 19 and are advised to consult their professional advisors on matters referred to in this Prospectus before making an application for Units in the Fund.
Vision Investment Services Co SAOC (“Vision”) and members of the Fund’s Management Body believe that the Prospectus includes, to the best of their knowledge and belief, all relevant information and data that are deemed important and that no material information has been omitted; omission of which will render the Prospectus misleading.
The Fund shall be governed by the terms of this Prospectus, and the Regulations of Capital Market Authority, Oman (CMA). Wherein the terms of this Prospectus contradicts the Regulations of CMA, the Regulations of CMA shall prevail. The CMA is not responsible for the accuracy and adequacy of the information provided in this Prospectus. The CMA does not take any responsibility for any loss that may arise from dependence on information contained in this Prospectus.
Notice
Ch
ap
ter
1
6
aaOIFIAccounting and Auditing Organization for Islamic Financial Institutions
articles of association
The Articles of Association of the Fund (as amended or replaced from time to time), which shall prescribe the functions and powers of the Unit-holders, the Fund’s Management Body and such other rules, for the operations of the Fund
Business DayA day on which all the markets in which the Fund invests, are open for business
Closing Date The closing date of the initial subscription
CMa Capital Market Authority, Oman
CustodianCompany responsible for safekeeping the assets of the Fund in accordance with the agreement
Fund VISION AL KHAIR GCC FUND (Shariah Compliant)
Fund’s Management BodyThe Management team, initially comprising of persons whose details appear in Chapter 10 of this Prospectus, who will have overall responsibility for the affairs of the Fund
gCC The Gulf Cooperation Council, as constituted from time to time
governing Law Laws of the Sultanate of Oman
IFrS International Financial Reporting Standards
Initial Issue Offering PeriodThe period commencing on 10/01/2013 and ending on the 10/02/2013
Investment Management agreement
The agreement between the Fund’s Management Body and the Investment Manager concerning the management of the Fund
Investment ManagerCompany responsible for managing the Fund’s portfolio in accordance with the agreement
Market Capital Markets in the GCC countries, Middle East and North Africa (MENA) Markets
MENa Middle East and North Africa
MSM Muscat Securities Market
Net asset Value The value of Units calculated according to International Financial Reporting Standards, and stated as Net Asset Value in the audited financial statements of the Fund
Net asset Value per Unit (NaV) The Net Asset Value divided by the number of Units in issue
QuarterA period that constitute three months ending March 31, June 30, September 30 and December 31 of a calendar year
redemption DayThe Business day on which Units are redeemed from the Fund, upon a valid redemption request
redemption FeeA fee paid by Unit-holders at the time of redemption of their Units in the Fund
rORial, the lawful currency of Oman. One Rial comprises 1,000 baisa. RO is pegged to USD at RO 1 = USD 2.597
Glossary of Terms
Ch
ap
ter
2
7
Service Provider
Service Provider is a juristic person who provides services to the Fund or its investors or Unit-holders, by virtue of a contract with the Fund. The term “Service Provider” includes the Investment Manager, Shariah Advisor, Custodian, Administrator, Auditor, Distributors, Sub-custodians, Legal Counsel and Brokers who execute orders for and on behalf the Fund
Shariah
Shariah (for the purpose of this Prospectus) refers to the generally accepted guidelines prescribed under Islamic Jurisprudence related to investments, financials and commercial operations
Shariah advisor
An independent institution which certifies Islamic products and investments as Shariah compliant. The Fund’s Management body has appointed Shariyah Review Bureau as the Shariah Advisor for the Fund
Subscription Banks (during initial Offer Period)
National Bank of Oman
Bank Sohar
Ahli Bank
Subscription DayThe business day on which new Units are allotted to investors, upon a valid subscription request
Unit-holders Holder of Units in the Fund
UnitUnit, each representing one proportionate indivisible share in the Fund
USD United States Dollar
Vision Vision Investment Services Co. SAOC
8
The following information is derived from the full text of this Prospectus and should be read in conjunction therewith.
Vision Al Khair GCC Fund (Shariah Compliant) is an open-ended investment Fund established in the Sultanate of Oman and constituted as a Joint Investment Account attached to Vision as per the Regulations of the Capital Market Authority (“CMA”), Sultanate of Oman.
Name of the Fund VISION AL KHAIR GCC FUND (Shariah Compliant)
Nature of FundA Fund investing in the listed securities in the GCC and MENA region which are in compliance with Islamic Shariah principles
address Post Box 712, Al Hamriya, Postal Code 131, Sultanate of Oman
Fund Structure Open Ended Fund
Fund Currency Rial
Nominal Value of Unit RO 1.000 (One Rial only)
Fund Size Minimum size RO 2 million
Promoter’s Commitment 5% of the initial Units subscribed
Initial Subscription PriceUnits will be available for subscription during the Offer period at a price of RO 1.020 per Unit (including an amount of RO 0.020 per Unit towards Issue Expenses)
Minimum InvestmentThe minimum investment in the Initial Offer shall be 100 Units and in multiples of 100 thereafter
Maximum InvestmentThere is no maximum limit on the Unit holding by a single investor
Subscription Period January 10, 2013 to February 10, 2013
Subsequent Subscription The Fund shall be open for subsequent subscription on any business day, 30 days from the date of publication of the first NAV of the Fund as mentioned in Chapter 16
Subsequent Subscription Fee
The Subsequent Subscription Fee shall be up to 3% of the NAV on the relevant subscription date. This will be used to pay the cost of sales, marketing and distribution expenses. The Investment Manager has the discretion to waive off the Subsequent Subscription Fee completely or in part to investors
redemption of Units
After the publication of the first NAV, the Fund will accept requests for Redemption of Units on any business day as per the terms of redemption provided in Chapter 16 of this Prospectus
redemption FeeRedemption of any Units held by a Unit-holder will be subject to deduction of a Redemption Fee of 1% of NAV, payable to the Investment Manager
Investment Objectives and Policy
The objective of the Fund is to achieve capital appreciation and income generation by providing its Unit-holders an opportunity to invest in the listed securities in the GCC economies that are compliant to Shariah principles
Investment Manager Vision Investment Services Co. SAOC
Custodian National Bank of Oman
administrator Vision Investment Services Co. SAOC
Summary
Ch
ap
ter
3
9
Legal advisors Rajab Al Kathiri & Associates (Lawyers & Legal Consultants)
auditor Ernst & Young, Oman
External auditor of Investment Manager
KPMG, Oman
ZakatThe responsibility of Zakat payment lies with the Unit-holder of the Fund. The Fund shall pay no Zakat
Taxation
As per the current taxation laws in Oman, the income of the Fund is exempt from Tax. However, the Fund may be taxable in other jurisdictions in respect to income derived from such jurisdictions
Financial YearThe period beginning January 1 and ending December 31 except for the first financial period which will start on the Date of Incorporation of the Fund and end on December 31, 2013
audit PeriodThe Fund will be audited annually as per the IFRS Standards in accordance with the CMA guidelines
Eligible InvestorsThe Fund is open for subscription to both Omani and non-Omani investors
Net asset Value (NaV)The Net Asset Value of the Fund will be calculated at the end of each business day and published in one Arabic and one English newspaper
risk Factors
An investment in the Fund involves risks. Investors should note that while all efforts will be taken by the Investment Manager to achieve the Fund objectives, there is no assurance that the same would be met. Please refer to Chapter 19 of this Prospectus for Risk Factors
Management Fee
The Investment Manager will receive from the Fund, a Management Fee of 1.5% per annum of the Net Asset Value of the Fund, accrued on each Business day and payable monthly in arrears
Performance FeeThe Investment Manager shall be entitled to a Performance Fee of 15% over and above an annual return of 10%, calculated and payable annually in arrears
Other Fund ExpensesThe Fund shall bear other running expenses like a Fee for the Fund’s Management Body, Custodian, Shariah Advisor, Auditor and other administration expenses
Shariah auditThe Fund shall be subject to a periodic audit by the appointed Shariah Advisor
10
DIRECTORY
Ch
ap
ter
4
INVESTMENT MaNagErVision Investment Services Co. SaOC
P.O. Box 712, al Hamriya, Postal Code 131Sultanate of OmanTel. No. 24726000Fax. No. 24726010
aDMINISTraTOrVision Investment Services Co. SaOC
P.O. Box 712, al HamriyaPostal Code 131
Sultanate of OmanTel. No. +968 24726000Fax. No. +968 24726010
CUSTODIaNNational Bank of Oman SaOg
P.O. Box 751Postal Code 112
Sultanate of OmanTel. No. +968 24778610Fax. No. +968 24778993
aUDITOrSErnst & Young, Oman
P.O. Box 1750, ruwiPostal Code 112, Muscat
Sultanate of OmanTel. No. +968 24559520
Fax. No. +968 24566043
ISSUE MaNagErVision Investment Services Co. SaOC
P.O. Box 712, al HamriyaPostal Code 131
Sultanate of Oman
LEgaL aDVISOrS rajab al Kathiri & associates
P.O. Box 3888,ruwiPostal Code 112
Sultanate of OmanTel. No. +968 24787640Fax No. +968 24703387
SHarIaH aDVISOr Shariyah review Bureau
PO Box 21051, al Manama,Kingdom of Bahrain
SUBSCrIPTION BaNKSBank Sohar SaOgTel. +968 24730221 Fax.+968 24662156
ahli BankTel. +968 24577081 Fax. +968 24567841
National Bank of Oman SaOgTel. +968 247788757 Fax. +968 24778993
11
Vision al Khair gCC Fund (Shariah Compliant) is an open ended Investment Fund established in the Sultanate of Oman and constituted as a joint investment account as per the Regulations of the Capital Market Authority.
The objective of the Fund is to achieve capital appreciation and income generation by providing its Unit-holders an opportunity to invest in the listed securities in the GCC economies that are compliant to Shariah principles. The Fund will follow a dynamic allocation policy with investments spread across a diversified range of industries in the GCC.
The affairs of the Fund shall be supervised by the Fund’s Management Body. The assets of the Fund shall be managed by the Investment Manager and reviewed by the Shariah Advisor periodically. The Fund’s Management Body has appointed Vision as the Investment Manager to the Fund and Shariyah Review Bureau as the Shariah Advisor to the Fund.
The Fund will be governed by the terms of this Prospectus which will serve as the constitution of the Fund, as also the provisions of the Capital Market Authority Law and Regulations and Directives issued by CMA.
The Fund
Ch
ap
ter
5
12
Over the past three decades, GCC economies have witnessed an unprecedented economic transformation which had a positive impact on the socio economic factors. The GCC region is blessed with enormous oil and gas reserves and plays an important role as the largest producer and exporter of petroleum products in the world. Hydrocarbon exploration and production forms the backbone of growth in these economies. With rising oil exports, the lifestyle of GCC residents has improved dramatically during this period. Oil proceeds have been prudently used to modernize infrastructure, create employment and improve lifestyle, while the countries have been able to accumulate official reserves and maintain relatively low external debt. Key highlights include facts such as:
• GCCcountriesaccountsfor23%worldwideoilproductionandcontributes8%oftheglobalgasproduction.• GCCcountriescontrols29.9%oftheprovenoilreservesoftheworldandholds20.4%oftheglobalgas
reserves.• HigherthanbudgetedoilpricestranslatingintohighercurrentaccountsurplusesbyGCCgovernments,
while favorable Government initiatives facilitate to foster growth and diversify the economy in non oil sectors in the region.
• Atmoderateoilprices;thehydrocarbonbasedliquiditycreateswealth,facilitateseconomicgrowthandenhances investment expenditure in the GCC.
GCC economies lay emphasis on diverting their annual budgetary spends towards education, housing and developing the industrial sector. The GCC countries have continued to implement policy reforms to accelerate non oil growth as a measure to reduce exposure to volatility in oil prices and create employment opportunities for a rapidly growing population.
The emerging GCC countries provide investors with an opportunity to invest in these growing economies; ably supported by strong demographics, diversification to non oil sectors and healthy financial reserves.
Favourable Demographics
The GCC region has one of the fastest growing populations in the world. Comparatively, young population demographics facilitate higher retail spending and consumption that has great potential to support further economic growth. With a vast majority of the population being under 25 as of 2010, the region’s population forecast is set to increase to 50 million by 2017 from of 42 million in 2010, at a CAGR of 2.42% (Source: IMF).
With high proportion of young population, the challenge for the Governments is to create employment opportunities in the coming years. The younger generation is expected to be exposed to better education, which will result in a balanced proportion of male and female employees constituting the workforce. The rise in population shall stimulate growth, as a result of growing housing demand and retail consumption.
Ch
ap
ter
6
GCC Equity Market – An Emerging Investment Opportunity
Source: IMF
gCC Population
13
Pursuing Downstream Diversification
GCC countries are pursuing to develop the infrastructure of downstream petrochemical plants in order to diversify from the export of crude oil as a product. The GCC economies would seek to increase the downstream activities in future to create more value to the existing value chain. Going further, the GCC economies seek to reduce the crude oil exports to retain a portion, which would enable these countries to increase its own downstream activities. The crude oil shall be used as feedstock for the manufacture and export of downstream petrochemical products that will provide employment opportunities to the growing population and thereby increase economic activity.
The GCC countries started embarking on non oil diversification programs in the mid 1970s. GCC countries invested large sums in the development of energy intensive heavy industries, such as a) Saudi Arabia’s SABIC, created in 1976 to manufacture downstream petrochemical products and b) Dubai Aluminum, found in 1975. Bahrain promoted itself as an offshore banking hub in 1975 and Dubai created its free trade zones in the mid 1980s. GCC governments have implemented a variety of measures to boost private sector activities and encourage foreign investment, the outcome of which fuelled GCC construction sector. GCC governments also use its oil revenue to invest in foreign assets through Sovereign Wealth Funds, the returns of which stem the non oil income.
Some of the key infrastructure projects implemented in the GCC in recent times are listed below:
Bahrain
Infrastructure project costing USD 291 million towards road and sanitation projects
Development of sea facing residential village, Water Garden City at a cost of USD 9.5 billion. On completion, it will be spread on an area of 2.2 million sq.m and will include residential units, a beach park, a marina, schools, commercial spaces, retail outlets and leisure facilities
Oman
USD 6 billion worth refinery in Duqm with an operating capacity of 230,000 barrels a day, in association with a UAE firm
Spread over 500,000 sq. m of land in Salalah, the Medical City is being developed at the site of an integrated medical tourism complex at a cost of USD 1 billion
Saudi arabia
Building new cities such as King Abdullah Economic City, Sudair Industrial City, Jizan Economic City and Kingdom City across the country at a cost of USD 187 billion over a period of next 15 years
Three Independent Water and Power Projects (IWPPs) and several other power and water projects, which are envisaged to add 15,000 MW to the Saudi Arabia’s generating capacity at an investment cost of USD 15 billion
Qatar
The mission to prepare the infrastructure for the FIFA World cup 2022 falls in line with the National Development Strategy (2011-16). Key infrastructure projects includes Doha Port at an estimated cost of USD 4.4 billion, the New Doha International Airport (NOlA) at an estimated cost of USD 13 billion and other projects of developing roads and cities
Doha Metro project covering a length of 340 km at a budgeted cost of USD 25 billion
UaE
Abu Dhabi’s GASCO is undertaking the USD 9 billion Integrated Gas Development project scheduled to be completed by mid 2013
The Dubai government has plans to invest USD 81 .67 billion in the development of its Aviation Sector as part of its Strategic Plan 2015 , to develop Dubai as a key GCC player in Aviation and Logistics
14
government Foreign Exchange reserves - an effective hedge
The GCC economies prefer to base their government annual budget on crude oil price less than the existing market price. This mechanism enables the petro dollar based governments to prudently spend on the infrastructure development, while maintain a growth in external foreign exchange reserves.
As a consequence of the housing bubble of the USA, the global financial sector across the world was hit due to the sharp fall in global credit growth, thereby slowing the major economies. There was a sharp slowdown in oil demand during this period. Despite the declining hydrocarbon export values, GCC economies were able to maintain a small trade surplus and positive current account balances as a result of prudent foreign exchange management. While the major economies reduced economic spending, GCC governments undertook additional spending to stimulate local demand and maintain positive levels of economic growth. Respective governments drew contributions from the already accumulated foreign exchange reserves to maintain financial stability and keep major strategic projects afloat. Hence, the GCC countries witnessed a smooth recovery faring better than the global economy assisted by a recovery in oil price.
Increasing global Presence
The share of GCC in the world economy is expected to grow steadily in the medium to long term. The pace of growth is forecasted to be higher than that of the global growth with an annual GDP average of 4.5% in real terms, compared with 3.3% globally.
% of World gDP 2000 2005 2010 2015 2020
USa 30.7 27.7 24.4 21.2 19.7
EU 25.2 28.8 25.1 22.7 19.9
Japan 14.6 10.2 9.1 7.2 5.6
China 3.7 5.1 8.9 11 .8 13.8
India 1.4 1.8 2.3 3.3 4
russia 0.8 1.7 2.9 3.4 3.2
Brazil 0.8 1.7 2.9 3.4 3.2
gCC 1.1 1.4 1.5 1.6 1.7
The GDP of all the GCC countries are estimated to grow at a healthy pace.
As per the IMF estimates, the total investments (defined as the total value of the gross fixed capital formation and changes in inventories and acquisitions less disposals of valuables) has grown 8.9% CAGR for the region in the past five years beginning 2007 and, the total investments in the region is likely to increase to USD 463 billion in 2017 from USD 294 billion in 2011.
Source: EIU
Source: IMF
role of Islamic Finance
A rapid growth of Shariah compliant assets in the world, particularly during the global economic crisis in 2008, stands testimony to the confidence among investors and stakeholders on the positive aspects of investing on the principles of Islamic finance.
The Global Shariah Compliant Asset Under Management (AUM) grew by 7.6% to USD 58 billion in 2010, up from USD 53.9 billion in 2009, according to Ernst & Young Islamic Funds & Investments Report. The nature of business and control obliged under the aegis of Shariah principles has paved way to shield the investors’ capital better than that of the global and regional conventional investments.
The performance of the S&P GCC Shariah Index in comparison with the S&P 500 and Euro Stoxx 50 Index illustrates that the returns of the S&P GCC Shariah Index fared better during the global credit crisis period in 2009. Being subject to limited leverage as per the Shariah principles paved way to generate sustainable profits and positive cash flows to the Shariah compliant securities, even during the volatile times in 2009 and 2010.
In comparing the S&P GCC Shariah Index with the S&P GCC Composite Index, the S&P GCC Shariah Index has demonstrated resilience and has performed better than S&P GCC Composite Index during the Arab Spring in 2011. Despite an initial dip, the S&P GCC Shariah Index bounced back strongly than the S&P GCC Composite Index, illustrating the underlying strength of Shariah compliant equities.
15
Source: IMF
Total Investment to gDP
16
The securities that are in compliance with Shariah principles have outperformed the broader market consistently over a period of time with lower volatility. In the past, Shariah Compliant equities and asset classes have been perceived as an investment vehicle only for the growing class of people who practice Islam in specific countries. However, this viewpoint is fast changing with Shariah compliant assets perceived as an investment vehicle of choice with a diverse set of investors who view its growth potential and robust business framework.
This makes an attractive investment case not only for investors focusing on Islamic products but also for conventional investors (both institutions & individuals) who are seeking capital appreciation with lower risk.
17
Introduction to Islamic Investments
Islamic finance is a mode of finance that derives its principles from the Islamic Law, Shariah. The distinguishing characteristic of Islamic finance to the conventional finance is the prohibition of Riba (Interest) and Gharar (Uncertainty) which are forbidden in Islam.
Shariah compliant investments represent ethical financial transactions that are organized in accordance with Islamic Law. The philosophy of Shariah Investments are based on two basic principles namely sharing of profit & loss and significantly, the prohibition of the collection and payment of interest. An ideal Shariah Investment promotes social justice by sharing risk and reward while prohibiting transactions that are considered immoral.
Shariah compliant equity fund invests only in listed securities that engage in businesses in compliance with Shariah as against its conventional counterparts. A Shariah compliant fund invests in listed securities which are engaged in Halal business and has significant portion of non-liquid assets.
As a statutory requirement, a Shariah mutual fund must appoint a Shariah Advisor to provide guidance to the Fund’s Management Body and to the Investment Manager on matters of Shariah law and in particular, whether the proposed investments of the Fund are Shariah compliant. Shariah investments are subject to be governed by a Shariah Advisor which frequently reviews and guides the Investment Manager. Shariah compliant investments are certified by an advisor comprising of distinguished Shariah Scholars. This ensures that the investments are in conformity to the percepts of Islamic principles.
Islamic Investments – a channel to unearth new opportunities
The Islamic finance industry constitutes a wide gamut of financial services activities that include:
• CompaniesthatpracticeShariahfortheirdaytodaymanagement;• BanksthatlendonShariahprinciples;• Fundmanagement industrywhich includes funds investing in securities that adhere to the tenetsof
Islam.
Securities listed in the GCC Stock Markets which are compliant with Shariah principles are an emerging opportunity for investors, particularly in the fund management industry. The industry has registered a tremendous growth during the last decade in both Islamic and non Islamic countries. The asset size of global Islamic finance reached USD 1.2 trillion in 2010. According to Standard & Poor, the Islamic asset is projected to reach USD 2 trillion by 2015.
According to an IMF study, the Islamic banks exhibited stronger resilience during the global financial crisis of 2008 - 2009 due to its higher solvency and higher proportion of its lending to consumer sector. This increased the widespread acceptance of asset backed Islamic financial instruments throughout the world.
Some of the key aspects of Islamic finance are:
• Islamicfinanceconnectsdomesticsavingsdirectlytotherealeconomicactivity.Thisisduetothefactthat Islamic savings are directly linked to tangible investments unlike conventional savings which has several complex intangible and derivative instruments for investment.
• Islamicfinanceencourages longterminvestment intheformofsharingof risk.Thoughcumbersome,Islamic finance promotes transparency and discourages speculation. This paves way for the private sector to participate in the infrastructure development in the form of Public Participation Program agreement.
• OneofthebiggestchallengesfacedbySmallandMediumEnterprises(SME),whichplayanimportantrole in the development of an economy, is inadequate financing facility. Conventional banks across the world have been reluctant to extend credit to the SMEs mainly due to the size of the business. Islamic financial institutions are better suited to address the credit needs of SMEs due to the structure of their transactions.
• Theassetbackedlendingnatureof Islamicfinancehasplayedakeyroleandwouldcontinuetobeanimportant growth area for the development of housing sector in the GCC countries. The demand for housing in these countries continues unabated due to the unique demographics of the region, with majority of population being very young.
Islamic Investments
Ch
ap
ter
7
18
This provides a significant opportunity to Shariah Compliant businesses to have access to funds as mentioned above. This also provides mutual funds which dedicates its investments in Shariah Compliant securities; providing its Unit-holders a professional approach to investment for investors seeking exposure to Shariah compliant investments.
Shariah advisor
Shariyah Review Bureau W.L.L. (SRB) has been appointed as the Shariah Advisor by the Fund’s Management Body. SRB shall supervise and advise on the Shariah commissioning processes while overseeing the consultation, certification and compliance development.
SRB is a Middle East based firm with an international scholarly platform of 31 distinguished Shariah Scholars covering major global markets including Kingdom of Saudi Arabia, Sultanate of Oman, Egypt, Qatar, UAE, Kingdom of Bahrain, Malaysia, USA, Germany, Algeria and Sudan.
SRB is licensed by the Central Bank of Bahrain and it provides ancillary services covering Shariah review, structuring, compliance certificates (fatwa), and Shariah supervisory audit services. It is an associated member of the Account and Auditing Organization for Islamic Financial Institutions (AAOIFI) and a member of the General Council for Islamic Banks and Financial Institutions.
The Shariah Advisor has assigned three Shariah Scholars for review and certification of the Fund. SRB will be responsible for conducting periodical Shariah compliance audits on the Fund’s business activities so as to conform its operations and Investments in alignment to the Shariah principles.
role of the Shariah advisor
The primary role of Shariah Advisor is to ensure that the Fund is in full compliance with the objective of the Shariah Law. In order to achieve this goal, the Fund requires adhering to the following supervisory and control procedures by the Shariah Advisor:
• The Shariah Advisor shall appoint its representatives for the Fund from its pool of Shariah Scholars.• Review the Fund’s terms and conditions and examine the Fund’s framework, operations and investment
strategy so as to ensure that Fund uses Shariah compliant instruments and standards. • Review the policies and procedures of the Fund and ensure it is in compliance with the provisions of
Shariah Law.• Identify any non compliance with the tenets of Shariah and discuss with the Fund’s Management Body.• Offer alternative solutions to the Fund’s Management body that are in compliance with the Shariah Law.• To address all queries related to the Shariah Law, as and when required.• Issuance of Shariah Certificate after making sure all of the above criteria are compliant.
Level of Influence of Shariah advisor
The Fund is obligated to comply with the decisions and fatwas issued by Shariah Advisor. In addition, the Fund also needs to comply with the standards of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
Shariah Scholars for the Fund:
The Shariyah Review Bureau W.L.L. (SRB) has appointed the following distinguished members as Shariah Scholars for the Fund:
• SheikhOsamaSaadBahar• Dr.SheikhSalehShalhoob• SheikhWalidBinSulaimanAlQurry
The Shariah Advisor is responsible for monitoring the transactions carried out by the Fund, to make sure the
19
investments made by the Fund are compliant with Islamic principles as approved. The Shariah Advisor shall also give recommendations to the Fund’s Management Body on the purification of the Fund’s profits that might contain an element of Haram, if any. The Shariah Advisor, in agreement with the Fund’s Management Body shall identify the charitable trusts where the purification amount can be donated.
Shariah advisor Fee
The Fund shall pay to the approved Shariah Advisor an annual fee of not more than RO 12,000 for the financial year 2013 and shall determine the subsequent annual fee after due consultation.
Shariah audit Period
After the launch and finalization of the legitimate framework of the Fund, the Shariah Advisor shall review the investment portfolio of the Fund at the end of each quarter and audit all its activities, including investments on an annual basis.
20
Investment Objective
The objective of the Fund is to achieve capital appreciation and income generation by providing its Unit-holders an opportunity to invest in the listed securities in the GCC economies that are compliant to Shariah principles.
The Fund will follow a dynamic allocation policy with investments spread across a diversified range of sectors in the GCC.
Investment Strategy
A tactical asset allocation strategy formulated and backed by Vision’s research based investment approach offers the following:
Vision Al Khair GCC Fund (Shariah Compliant) aims to provide capital appreciation as well as income generation by investing in Shariah Compliant securities in the GCC region, to regional and international investors, by capitalizing on the investment management capabilities of Vision.
Vision has a proven track record of successfully managing Mutual Funds and Discretionary Portfolios in the region. The historic performance of Vision Emerging GCC Fund, Vision Emerging Oman Fund and Vision Real Economy GCC Fund endorses the investment acumen of Vision as an Investment Manager.
Over the past decade, Vision has developed a detailed and in-depth understanding of the GCC equity markets. Vision’s key strength lies in its strong research database combined with a proactive management approach that has aided its Assets Under Management to outperform its peers as well as comparable indices. Its approach to investment is distinct, a well developed philosophy using a top down strategy to identify investment opportunities in each of the six GCC countries and MENA.
The recent growth of Shariah accepted asset class in the region provides an emerging new opportunity that is set to offer an attractive return to investors over the medium to long term time horizon. With the launch of Vision Al Khair GCC Fund (Shariah Compliant), Vision offers its investors, an option to benefit from such emerging opportunity. Vision will continue to pursue a dynamic asset allocation strategy for the Fund, to manage volatility and limit downside risk; a successful strategy followed in other Vision funds as well.
Investment Policy
The Fund will primarily invest in Shariah compliant equity and pre-IPO securities.
The Fund may also invest in Income generating products like Sukuks.
Investment Objective, Strategy & Policy
Ch
ap
ter
8
21
The Fund may also invest, subject to a limit of 15% of its Net Assets at the time of investments, in Shariah compliant securities in other markets in the MENA region. Investment in securities and other financial assets by the Fund shall be done according to the CMA, Shariah Advisor and legislative regulations governing such investments by the Fund.
The Fund will aim to have following broad asset allocation:
Asset Class % Investment Remarks
Shariah Compliant Equity and Equity related securities
50-100Listed and pre-IPO securities in
the GCC region
Listed and pre-IPO securities in the GCC region
0-50Shariah compliant securities
that generate regular returns in the GCC region
The Investment Manager will have the ability to move substantially into cash and cash equivalents in the short to medium term, as an interim investment strategy, if the circumstances so warrant, subject to the CMA guidelines.
22
(a) The investment policies for the Fund would be based on AAOFI (Accounting and Auditing Organization for Islamic Finance) in compliance with Islamic principles. The financial reporting for the Fund would be based on IFRS (International Finance and Reporting Standards).
(b) The Fund shall invest at least 75% of its capital to achieve its main investment objectives.
(c) The Fund shall comply with following rules:
1. The Fund shall not hold more than 10% of the outstanding securities of any issuer.2. The Fund’s investments in any securities issued by any single issuer shall not exceed 10% of the Net
Asset Value of the Fund. 3. The Fund shall not borrow more than 10% of its Net Asset Value.
(d) The Fund shall follow the Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to invest in securities as follows:
The fundamental rule is that of prohibition of acquiring shares of transactions (investment and trading) in the shares of corporations that sometimes undertake transactions in Riba and other prohibited things even when their primary activity is lawful, but from this rule subscription and transaction (investment or trading) are exempted with the following conditions;
1. That the corporation does not state in its Memorandum of Association that one of its objective is to deal in interest, or in prohibited goods or materials like pork (swine) and the like.
2. That the collective amount raised as loan on interest - whether long term or short term - does not exceed 30% of the market capitalization of the corporation, knowingly that raising loans on interest is prohibited whatsoever the amount is.
3. That the total amount of interest taking deposits, whether short, medium or long term, shall not exceed 30% of the market capitalization of total equity, knowingly that interest taking deposits are prohibited, whatsoever the collective amount is.
4. That the amount of income generated from prohibited component does not exceed 5% of the total income of the corporation irrespective of the income being generated by undertaking a prohibited activity, by ownership of a prohibited asset or in some other way. If the source of income is not properly disclosed then more effort is to be exerted for identification thereof giving due care and caution in this respect.
5. Invest in Al Ijarah Sukuk only after obtaining approval from the Shariah Advisor.6. Purification The elimination of prohibited income is obligatory on one who is the owner of the share, whether an
investor or trader at the end of the financial period, even if the payment is due at the time of issuance of financial statements whether quarterly, annual or for other period. Accordingly, elimination is not obligatory for one who sells the shares before the end of the financial period.
The financial impact of the purification process shall be included in the quarterly financial statement of the Fund.
Ideal ratings
The Investment Manager in requirement of providing a prudent screening and monitoring process for its management of Vision Al Khair GCC Fund (Shariah Compliant) has appointed Ideal Rating Agency as its information provider for Islamic Compliant financial instruments.
Ideal Rating is a provider of Islamic Finance information. Ideal Rating shall provide Shariah screening, purification percentage, if any, to the Investment Manager as per the standards of AAOIFI.
Ideal Ratings services are currently used by some of the leading financial institutions worldwide. Ideal Ratings was formed in 2006 by a team of financial services and technology experts dedicated to deliver superior solutions to the marketplace. The organization’s customers are leading global financial institutions, asset managers, index providers, dealers, brokers, who use Ideal Rating service to help innovate and satisfy their investors requirements.The Fund shall be managed and supervised by the Fund’s Management Body elected in the General Meeting in accordance with the provisions of the Articles of Association. There shall be seven members in the Fund’s
Investment Restrictions
Ch
ap
ter
9
23
Management Body, including the Chairman and the Vice Chairman. The Chairman or his deputy shall represent the Fund in courts and in its relations with third parties.
Management of the Fund
The members of the first Fund’s Management Body shall be appointed by the Investment Manager in coordination with the sponsors, provided its term shall not be more than one year from the date of its registration in the Fund’s Register.
The Articles of Association shall determine the term of office of the Fund’s Management Body provided it shall not be more than five years from the date of formation.
Members of the Fund’s Management Body
Mr. ali Malallah ali Habib al Lawati Ali Malallah Al Lawati is one of the leading entrepreneurs in Oman particularly in the area of housing development and real estate. As founder of Al Habib & Co in 1978, he has played a leading role in the development of Real Estate and has since diversified in to a range of companies involved in retail businesses, financial services business as well as industrial enterprises. He has held Board level positions in a number of companies and played a significant role in the development of such enterprises from time to time. In the government arena he has been a Board Member and Honorary Treasurer for the Oman Chamber of Commerce and Industry for a period of six years in addition to holding many senior level positions in the Chamber of Commerce. Ali Malallah is an MBA from the University of Hull, UK.
Mr. ali Mohammed Juma Ali Mohammad Juma is the co-founder and Chief Executive of Vision Investment Services Co. SAOC. Under the leadership of Ali, Vision has established itself as a premier pan GCC Asset Management Company with associates in brokerage, insurance and real estate services. With over 18 years of experience in regional and global markets, Ali has added an impeccable macroeconomic direction to Vision’s investment strategy and also been instrumental in shaping overall investment philosophy of the organization. Ali is also credited with developing innovative financial concepts and product strategies for GCC and International markets. Ali is a Mathematics and Computing graduate and has completed several advanced courses in management and finance from leading European & American Business Schools.
Mr. ghanem Sulaiman al ghenaimanGhanem Al Ghenaiman currently serves as the Deputy General Manager of Investment Affairs at the Kuwait Fund for Arab Economic Development. He holds a bachelor’s degree in Accounting from the University of Kuwait and has completed a graduate program in International Business from Oregon State, USA. He carries with him an extensive work experience of more than 27 years in the field of investments.
Mr. ghassan bin Khamis al HasharGhassan Al Hashar has more than 15 years of experience in finance and investment management. He currently serves as Head of Asset Management – Local in Public Authority for Social Insurance, and serves on the Boards of numerous public and private companies. He is currently the Chairman of Bank Muscat Fund Investors Committee, Board Member of the Omani Qatari Telecommunications Company SAOG and Majan Development Company SAOC. Ghassan Al Hashar holds a Master’s Degree in Finance and Investment Management from the University of Aberdeen, UK.
Mr. Mustafa ahmed JafferMustafa Ahmed Jaffer is one of the co-founders and the Executive Director of Vision Investment Services Co. SAOC. A finance graduate from USA, Mustafa has close to 25 years of experience in the field of finance, investment and insurance which includes eight years experience in PDO as Head of Financial Support for Government Gas projects. With over 15 years experience in the regional markets, he is the main driver behind the growth of the assets under management (that includes mutual funds and managed accounts). The excellent long term performance record that Vision enjoys can be mainly attributed to him.
Management of the Fund
Ch
ap
ter
10
24
Mr. Salah abdullah al ZakwaniSalah Al Zakwani currently serves with the Pension Fund of the Diwan of Royal Court, Investment Department for the past six years. He carries vast work experience in different asset classes in the investment arena. He holds Board membership in a number of companies. He is an MBA from Bedfordshire University, London.
Mr. Talal Said al MamariTalal Al Mamari currently serves as Chief Financial Officer of Oman Telecommunications Company SAOG. He carries with him an extensive experience in the area of financial forecasting and analysis. He has a proven expertise in driving transformation through evaluation of financial management systems and implementation of process improvement. He holds Board level positions in a number of companies. He holds a Bachelor of Science, Accounting from USA and has completed a Senior Executive Program with the London Business School, UK.
responsibilities of the Fund’s Management Body
Members of the Fund’s Management Body are liable to the Unit-holders and CMA, to supervise and oversee the Investment Manager and other service providers primarily to safeguard the interests of the Fund and investors in accordance with the Law.
The Fund’s Management Body shall carry out oversight and supervision of the Fund’s business and shall undertake the following:
• Ensure the Fund is in compliance with the Prospectus, Articles of Association and statutory requirements.• Evaluation of the performance of Investment Manager and other service providers.• Ensure adequacy of the Fund’s systems to safeguard its assets and ensuring that adequate accounting
controls are in place.• Ensure the Investment Manager’s system and controls are adequate to ensure compliance with the
interests of the Fund and investors.• Avoidance of conflicts of interest and ensuring that adequate measures are in place to resolve any conflict
of interest in the best interest of the Fund and investors.• Ensure segregation of function when one company is acting as provider of more than one service to the
Fund.• Approve the transactions with related parties and disclose the same in the financial reports.• Approve the annual report, financial statements and other information, disclose to the public and
investors to ensure that disclosure is fair, timely, transparent and not misleading.• Appointment and removal of service providers and determining their fee.• Ensure that the Fund complies with the criteria as set out by the Shariah Advisor; provide insight and
supervision to the role of the Shariah Advisor.
appointment of Members
The members of the Fund’s Management Body shall satisfy the following criteria:
• Having good conduct and sound reputation.• Not convicted in any crime or an offence involving honesty or breach of trust or a crime stipulated in the
Capital Market Law, Commercial Companies Law or Commercial Law unless rehabilitated.• Not declared as bankrupt.
remuneration of Members
Each member of the Fund’s Management Body will be entitled to a fee not exceeding RO 5,000 per annum including the reimbursement of Fund related expenses, if any and reasonably incurred by them in the execution of their duties. The above mentioned remuneration of members shall be paid as follows:
• A sitting fee of RO 500 per member per meeting shall be payable on attendance.• The balance amount, subject to computation of sitting fees shall be paid at the end of the calendar year,
for an amount not exceeding RO 3,000.
25
Vacation of Office
Where any member’s position falls vacant prior to the end of the term, the other members may co-opt a member as replacement until the end of the term.
Meetings of the Fund’s Management Body
(a) Meetings of the Fund’s Management Body shall observe the following:
1. The number of attending members shall not be less than two-third of the total strength.2. The members shall not take part in discussions 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 Fund’s Management Body shall meet at least four times a year with a maximum time gap of four months between any two consecutive meetings.
(b) Investors who hold at least 5% of the investment units may request the Fund’s Management Body to cancel any resolution adopted by it 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 same body which has issued the resolution, to decide on it.
Custodian
National Bank of Oman has been appointed to provide custodial services to the Fund.
A copy of Custodian Agreement is available for inspection at the office of the Investment Manager.
Assets of the Fund shall be safeguarded with the custodian, whose business is located in the Sultanate of Oman. Assets may be kept outside the Sultanate to facilitate transactions abroad. The custodian may appoint sub-custodian/s to safeguard the assets of the Fund located outside the Sultanate of Oman. Appointment of sub-custodian/s shall not exonerate the custodian of any of its obligations.
Written consent of the Fund’s Management Body shall be obtained for all the contracts concluded with the sub-custodian and such contracts shall provide adequate protection for the assets on terms and conditions commensurate to the contract with the main custodian.
All contracts concluded with the main custodian or sub-custodian shall cover:
• RequirementsthatenabletheFundtoexercisealltherightspertainingtotheassetskeptwiththesub- custodian;
• RequirementspertainingtothelocationwheretheFund’sassetsarekept;• Methodofholdingtheassets;• Reviewandcompliancereports;• Fee,methodofpaymentandtimingofpayment.
No contract concluded with the main custodian or sub-custodian shall provide for creation of any encumbrance on the assets of the Fund, except for claims of payment of fee and charges to the custodian or the sub-custodian for acting in such capacities. The contracts shall not contain any provision that would require the payment of fee or expenses to the custodian or sub-custodian in the form of transfer of ownership of assets belonging to the Fund.
Subject to Article 271 of Executive Regulation of Capital Market Law, Oman, the assets of the Fund shall be registered in the name of the custodian or sub-custodian/s or their respective nominee with an account number or other designation in the records of the custodian or sub-custodian/s or the nominee, to establish that such ownership of the assets is vested with the Fund.
26
The custodian or sub-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.
Custodian Fee
The Fund shall pay custodian and sub-custodian charges on the Net Asset Value of the Fund according to the agreement between the main custodian and the sub-custodian. The custodian and sub-custodian fee shall be accrued on a daily basis and paid on monthly basis.
The Fund shall also pay a fixed fee for each transaction executed.
Shariah advisor
Shariyah Review Bureau W.L.L. has been appointed as the Shariah Advisor to the Fund.
A copy of the Agreement with the Shariah Advisor is available for inspection at the office of the Investment Manager.
The Board shall advise on the applicable jurisprudence related to the Fund, monitor and review the structuring directives of the Fund, audit annually to ensure all activities of the Fund are fully compliant to Shariah principles.
Shariah advisor Fee
The Fund shall pay to the approved Shariah Advisor an annual fee of not more than RO 12,000 for the financial year 2013 and shall determine the subsequent annual fee after due consultation.
administrator
Vision Investment Services Co. SAOC has been appointed as Administrator of the Fund. A copy of the Administration Agreement is available for inspection at the office of the Investment Manager. As per this agreement, fee amounting to 0.15% of the Net Asset Value of the Fund shall be calculated daily and payable monthly to the Administrator.
The duties of the Administrator include the following:
(a) Maintain a record of all Unit-holders of the Fund;(b) Notify the Investment Manager, as per agreed schedule, of all redemption requests received by the
Administrator;(c) Maintain financial accounts of the Fund;(d) Deliver and/or fax to the Investment Manager statements of account at the end of each Business day;(e) Notify the Investment Manager of all notices, reports and other financial information relating to the
particulars of the Fund as and when the Administrator receives it;(f) Calculate the NAV of the Fund and provide the Fund with the Net Asset Value statement at the end of
each quarter;(g) Provide the Auditor, upon receiving a written request from the Fund to that effect and within a
reasonable time from its receipt of such request but at all times no later than the date reasonably requested by the Fund to provide such information as requested;
(h) Provide the Investment Manager a confirmation of the year-end position;(i) Transmit electronically or in any other acceptable form to the Fund, as the Fund will require a list, as at
the date of such list, of all outstanding contributions in the Fund;(j) Maintain accounts for different purposes as may be advised by the Investment Manager and a record of
all transactions under such accounts to be presented to the Fund on its request;(k) Send allotment/refund advices to Unit-holders;(l) Send redemption advices to Unit-holders;(m) Intimate the Investment Manager and Custodian to remit the redemption proceeds to Unit-holders;
27
(n) Arrange for the publication of Net Asset Value of the Fund at the end of each quarter;(o) Arrange for the publication of financial accounts as per the regulations of the CMA.
Distributor
Vision Investment Services Co. SAOC has been appointed as Distributor of the Fund. A copy of the Distribution Agreement is available for inspection at the office of the Investment Manager. As per this agreement, fee up to 1.5% of the Initial Subscription shall be payable to the Distributor. The Distributor shall be responsible for promotion of the Fund. The duties of the Distributor include the following:
(a) Make reasonable endeavor to promote and introduce the sale of the Fund to investors, institutions and entities;
(b) Conduct such travelling as shall be reasonably necessary to promote and market the Fund, at its own expense, unless it has received prior written agreement from the Fund regarding specific expenses;
(c) Carry out its duties in good faith and in a proper and efficient manner;(d) Observe and perform the requirements of the Fund issued from time to time in relation to presentation
of the Fund;(e) Not have an authority to bind the Fund in any way and shall not hold itself out either by words or by
conduct as being the agent of the Fund;(f) Not misrepresent the Fund to any person;(g) Shall at all times comply with the laws, rules and regulations of any country in which it promotes and
markets the Fund; and(h) Shall seek sub-intermediaries who may not sign direct intermediary contracts with the Fund or its
associated companies.
auditors
Ernst & Young, Oman, an international auditing and accounting firm, has been appointed as the independent auditor of the Fund.
Legal advisor
Rajab Al Kathiri & Associates (Lawyers & Legal Consultants), has been appointed as legal advisor to the Fund. The Fund’s Management Body may appoint other legal advisors for markets other than Oman.
Bankers
The principal bank will be decided by the Investment Manager later, the main branch of the bank will be based in Oman. The Fund may also open bank accounts with other major banks in the region, if required for the purpose of availing banking services for the Fund in those markets.
The Fund’s Management Body may, subject to the approval of CMA, terminate the services of any of the above service providers or appoint one or more service providers to the Fund, as it may deem fit.
28
The Fund’s Management Body has appointed Vision Investment Services Co. SAOC as the Investment Manager of the Fund vide an Investment Management Agreement between the Fund and the Investment Manager.
Vision Investment Services Co. SAOC is a closed joint stock company incorporated in the Sultanate of Oman in 1998 and holds a valid license from the Capital Market Authority of the Sultanate of Oman to provide a wide range of investment management and financial advisory services. The Company has a paid-up capital of RO 10.5 million (approximately USD 27.25 million).
Vision, a full-fledged financial investment services company, has experience and track record in:
• AssetManagement• InvestmentAdvisory• Marketinganddistributionofinvestmentproducts• CorporateFinanceAdvisoryServicesandIssueManagement
In addition, the company with a view to offer a whole gamut of financial services gathers under its umbrella a number of associate companies operating in different sectors such as brokerage, general & life insurance and real estate, in collaboration with established and well reputed regional players.
Vision’s asset Management Division
Vision’s Asset Management division follows a professional, stable, transparent and highly personalized approach to investments that is built on integrity, close contact and in-depth research.
Under the gamut of services provided in the Asset Management Division, Vision offers:
(a) Mutual Funds
1. Vision Emerging gCC Fund (VEgF) Vision Emerging GCC Fund was launched in May 2005. It was the best performing GCC Fund in the region for 2006 & 2007 respectively (Source: Markaz Report). Additionally, for the three year period, June 2006 - June 2009, VEGF was rated as the top performing fund among conventional funds in the GCC Market. S&P IQ Capital has graded Vision Emerging GCC Fund ”Silver” for the past three consecutive years.
2. Vision Emerging Oman Fund (VEOF) Vision Emerging Oman Fund was launched in August 2007 with an objective to achieve growth through capital appreciation and dividends by investing in equities listed on the Muscat Securities Market. S&P IQ Capital has graded Vision Emerging Oman Fund ”Silver” for the past three consecutive years.
3. Vision real Economy gCC Fund (VrgF)Vision Real Economy GCC Fund was launched in 2010 with an investment objective to capitalize on the growth story of the listed equities in “Real Economy Sectors” of the GCC. The fund invests in the sectors such as goods & services, manufacturing, logistics and any other eligible sectors in the GCC. The fund does not invest in the Financial Services industry. S&P IQ Capital has graded Vision Real Economy GCC Fund ”Silver” for the past three consecutive years.
(b) Managed accounts
Vision’s managed accounts is based on a highly client specific, tailor-made approach; focused on client’s specific investment needs, risk tolerance levels and investment time horizons.
1. Managed accounts for Muscat Securities Market. Over a period of eight years, the MSM portfolios have been outperforming the benchmark index each year.
2. Managed accounts for gCC Vision has recently extended its managed accounts services for the GCC markets.
Investment Manager
Ch
ap
ter
11
29
As of October 31, 2012, the asset under mutual funds and discretionary management of Vision were approximately RO 71 million (USD 184 million).
Investment Philosophy and approach
Vision’s stock picking philosophy is based on rigorous fundamental analysis and identification of companies with sound businesses which can offer total return from strong earnings growth and dividends. Investments are made with a goal of having a successful ownership cycle in the securities of these companies and maximizing the total risk-adjusted returns.
The Buying and Selling of investments in Vision follow a disciplined approach. A Buy or Sell decision is made after undertaking rigorous fundamental analysis of the investment which includes but not restricted to understanding the business, meeting the management, analyzing the key financials and valuing the investment quantitatively and qualitatively. The Investment Manager shall exercise a Buy decision based on the quality of the management of the company in which it seeks to invest with emphasis on established and well managed entities with stable business model. Similarly, a Sell decision would typically take into account factors like overvaluation, deteriorating fundamentals, stock volatility, macro economic factors, etc.
The table below gives the past performances track record of Vision Real Economy GCC Fund , Vision Emerging Oman Fund, Vision Emerging GCC Fund and Discretionary Portfolio Accounts managed by Vision as of October 31, 2012:
Particulars Vision real Economy gCC Fund
Vision Emerging Oman Fund
Vision Emerging gCC Fund
Discretionary Portfolio accounts
Assets Under Management
RO 10.96mn RO 5.27mn RO 8.93mn RO 45.60mn
USD 28.46mn USD 13.69mn USD 23.19mn USD 118.00mn
Launch Year 2010 2007 2005 2002
Total Return Since Inception
18.20% * 2.30% 50.24% **Significant Outperformance
Benchmark Index Since Inception
N/A-12.67%(MSM 30 Index)
-42.04%(S&P GCC)
272.20% (MSM 30 Index)
Source: Vision investment Services
**Adjusted for Dividends and Bonus assuming dividends are reinvested.
*Adjusted for dividends assuming dividends are reinvested.
In addition to asset management in MSM, Vision has a successful track record in providing investment advisory services to its clients for the GCC and other international stock markets. The company relies on its internal resources and its wide network of relationship with brokerage and investment companies, businessmen and large investors to provide the investment advisory services.
The Board of Directors of Vision consists of:
• Mr.RedhaMehdiJawad–Chairman• Dr.TalebAhmedAli–Vice-Chairman(RepresentingIndustrialandFinancialInvestmentCompany(IFIC),
Kuwait)• Mr.AliMohammedJuma• Mr.MohammedAhmedSaeedAlQassimi• Mr.MustafaAhmedJaffer• Mr.RashidDarwishAhmedAlKatbi(RepresentingDarwishAhmed&SonsGroup)• Mr.MahmoudA.AlJafar• H.E.KhadimAbdullahSAlDerai(RepresentingAlBateenInvestmentCompany,AbuDhabi)• Mr.P.R.Ramakrishnan
30
asset Management Team
The asset management team of Vision is comprised of the following personnel:
Mr. ali Mohammed Juma is the co-founder and Chief Executive of Vision Investments Services Co SAOC, one of the leading investment advisory & asset management companies in the Sultanate of Oman. Ali is a Mathematics and Computing graduate and has pursued several advanced courses in management and finance from leading European & American Business Schools. He is the Chairman of Vision Insurance Company SAOC. He is also the Chairman of MJS Group of Companies (A holding company with subsidiaries in Trading, Real Estate and Hospitality sectors) and Al Osool Real Estate Company (ERA Oman).
Mr. Mustafa ahmed Jaffer is one of the co-founders and the Executive Director of Vision Investment Services Co. SAOC. A finance graduate from USA, Mustafa has close to 25 years of experience in the field of finance, investment and insurance which includes eight years experience in PDO as Head of Financial Support for Government Gas projects. With over 15 years experience in the regional markets, he is the main driver behind the growth of the assets under management (that includes mutual funds and managed accounts) and the excellent long term performance record that Vision enjoys can be mainly attributed to him. As an Advisor to Vision Emerging GCC Fund, he has made immense contribution that has resulted in it being one of the top performing funds in the region for two consecutive years (2006 & 2007) according to Markaz.
Mr. Mohammed abdul Hafiez is the Chief Financial Officer for the Vision Investment Services Co SAOC. He is a Certified Public Accountant from Arab Society of Certified Accountant. He carries a vast experience of almost 16 years in the field of finance. He has been associated with Vision since inception and is one of the key members of the team.
Mr. rajesh Venkiteswaran will be the Fund Manager for Vision Al Khair GCC Fund (Shariah Compliant).
Rajesh carries with him asset management experience of 16 years which includes nine years as an Investment Advisor to a Government Pension Fund. Additionally, Rajesh has been consultant Advisor (Part Time) for setting up settlement systems for the Muscat Securities Market and has been a board member of a listed fund. He carries a wide range of Investment experience in GCC Stock markets as well as Private Equity Investments. Rajesh is an MBA from India. At Vision, Rajesh is responsible for the management of its three flagship funds, Vision Emerging GCC Fund, Vision Emerging Oman Fund and Vision Real Economy GCC Fund.
Mr. adeel Sarfraz will be the Assistant Fund Manager for Vision Al Khair GCC Fund (Shariah Compliant).
Adeel is an ACMA from Institute of Cost & Management Accountant of Pakistan, APA with over seven years of experience in portfolio management, compliance, risk management, research and trading experience in managerial positions. At Vision, Adeel is assisting the fund manager, whereby he is entrusted with the duties of analyzing the macro economic variables; in order to contribute towards the asset allocation strategy, whilst also analyzing market trends and competitor behavioral patterns; so as to contribute towards formulating market penetration, customer retention and product development strategies.
Mr. abbas Muslemi is a Portfolio Manager for the Discretionary Portfolio Management
Abbas has been with Vision since April 2008 tracking listed Omani equities in the capacity of a Buy-Side research analyst. A business management graduate having specialized in finance and international finance, he is a CFA and FRM charter holder. Prior to joining Vision, Abbas was an NASD certified Sell-Side analyst, heading a team of four and working with Thomas Weisel (a NASDAQ listed Investment bank) out of their Mumbai office. Prior to the two years he spent with Thomas Weisel, he was employed with JP Morgan, India in their business intelligence group.
Mr. ammar Moosa Ibrahim is the Head of GCC Asset Management and Advisory Brokerage
Ammar has over 10 years of experience in corporate finance and asset management. At Vision, he is heading GCC Asset Management and Advisory Brokerage Division. He was a key member of the team that launched Vision Emerging GCC Fund. Prior to joining Vision, Ammar worked as an Account Relationship Manager at National Bank
31
of Oman (SAOG), handling corporate accounts and providing corporate credit facilities. Between 2002 and 2004, he worked at HSBC Middle East, Oman, where he was involved in the Corporate Finance division and Credit Unit division.
Ammar is an Affiliate of ACCA (Association of Chartered Certified Accountant), UK, Chartered Portfolio Manager (International Academy of Financial Management) and holds a High Diploma in Accounting from the University of Salford, UK.
Mr. Mufaddal Jariwala will be one of the Investment Analysts for Vision Al Khair GCC Fund (Shariah Compliant).
Mufaddal Jariwala has been with Vision since April 2010 tracking the listed companies in Saudi Arabia and UAE. He is a Post Graduate in Finance (MS-Finance) from ICFAI University, Hyderabad, India and is a CFA Level I & CAIA Level II candidate. He has approximately five years of experience in the areas of Equity Research and Fund Management. He has worked as an Assistant Fund Manager & Equity Research Analyst with Sahara Mutual Fund Pvt Ltd., India. Additionally, he worked as an Equity Research Analyst with Asian Markets Securities Pvt. Ltd., India covering sectors like Power, Infrastructure, Construction and Real Estate.
Mr. Krishna Chandramowlee will be one of the Investment Analysts for Vision Al Khair GCC Fund (Shariah Compliant).
Krishna has been with Vision since August 2010 tracking the listed companies in Qatar and Oman. He is an MBA in Finance with engineering background and has an experience of five years in financial services industry. He is also a candidate of Chartered Financial Institute USA Level Two. His immediate past assignment was with BDO Consulting, Oman, as a Senior Business Financial Consultant. He has also been associated with BA Continuum Solutions Pvt Ltd, Mumbai, India (A Non Banking subsidiary of Bank of America) in the corporate finance department specializing in the areas of financial modeling and business analysis.
Mr. Jagdish Jaiswal will be the Fund Administration & Operations Manager for Vision Al Khair GCC Fund (Shariah Compliant).
Jagdish carries with him more than 11 years experience in the financial markets with operational and compliance experience in derivatives markets and other alternative asset classes viz., commodities’ derivatives, forex, OTC derivatives etc. He is an associate member of Institute of Chartered Accountants of India. His recent past assignments include heading country wide operations of commodities’ derivatives in Karvy Group, Hyderabad in India. Prior to his assignment with Karvy Group, he was employed with Vision Commodities Services DMCC and Orion Capital Limited DIFC, Dubai in United Arab Emirates in the forex and commodities’ derivatives and OTC desk.
Mr. Mohammed Mustafa ahmed gouda will be the Compliance Officer for Vision Al Khair GCC Fund (Shariah Compliant).
32
Duties and responsibilities of the Investment Manager
The Fund shall entrust the management of its investment to the Investment Manager.
Investment Manager shall undertake the following:
(a) Manage the portfolio of the Fund in the best interest of the investment objectives of the Fund as stipulated in the stipulated in the Articles of Association;
(b) Take all investment decision or other decisions in the best interest of the Fund and investors;(c) Accurately record all purchase and sale transactions undertaken in favour of the Fund and in keeping
with their time sequence;(d) Shall have an accounting system to classify, monitor and check all transactions in the Fund’s portfolio
which are entered into the system and adjusted to the cash and securities accounts opened in the name of the Fund with the custodian;
(e) Provide liquidity for the Fund to discharge any obligations;(f) Safeguard the Fund from any unnecessary investment risks.
33
The Fund
As per the, Royal Decree No. 28/2009, the income of funds such as the Vision Al Khair GCC Fund (Shariah Compliant) set up as joint investment accounts and registered with the CMA, 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).
Investors
There is no tax on the receipt of dividends from the Fund in Oman, or on the proceeds upon the dissolution of the Fund at maturity. Unit-holders may be subject to taxation if they are subject to taxation in any other jurisdictions.
Investors should consult their professional advisors on the potential tax consequences of subscribing for, purchasing, holding, transferring or redeeming of Units under the laws of their country of citizenship, domicile, residence or incorporation.
Zakat
The responsibility of Zakat payment lies with the Unit-holder of the Fund. The Fund shall pay no Zakat. As a matter of information, the Fund will disclose the Zakat per unit annually.
Taxation & Zakat
Ch
ap
ter
12
34
Issue Expenses and Setting-Up Costs:
The Fund is expected to incur the following expenses:
(a) Regulatory Fee(b) Registration Fee (c) Legal and other advisory Fee (d) Publicity, Marketing & Advertising expense (e) Distribution Agent Fee (f) Collecting Banks Fee (g) Issue Manager Fee(h) Shariah Advisor Fee (I) Administrator Fee
The Fund intends to appoint Distribution Agents for the distribution and marketing of the Fund and will bear the commission expenses payable to such Distributors. However, the total Issue and setting up costs is not expected to exceed 2% of the Initial Issue. Should the Initial Issue and Setting up cost exceed 2% of the Initial Issue, Vision will bear the costs in excess of 2% of the Initial Issue.
Management Fee
As per the terms of the Investment Management Agreement between the Fund’s Management Body and the Investment Manager, the Investment Manager shall be entitled to receive from the Fund, a Management Fee equivalent to 1.5% per annum of the Net Asset Value of the Fund. The Management Fee shall be accrued on each Business day and paid monthly in arrears.
Performance Fee
The Investment Manager shall be entitled to a Performance Fee of 15% over and above an annual return of 10%, calculated and payable annually in arrears.
For the purpose of financial accounting treatment, the Investment Manager shall make such provisions as necessary, in such times during the course of the calendar year where a Performance Fee is applicable, and such provisions shall be reflected in the Net Asset Value for the relevant period.
Expenses incurred for maintaining accounting records and audit fee
(a) Brokerage commission payable on purchase and sale of securities and other investments and any other technical, legal or consultancy fee payable relating to the assets of the Fund;
(b) Taxes payable, if any;(c) Cost of publishing periodical NAVs and financial accounts;(d) Printing and distribution expenses related to annual accounts and Unit-holders meetings;(e) Any losses incurred as a result of dealing in securities held on behalf of the Fund;(f) Any other expenses directly related to the Fund.
administrator Fee
Vision Investment Services Co. SAOC has been appointed as Administrator of the Fund. A copy of the Administration Agreement is available for inspection at the office of the Investment Manager. As per this agreement, fee amounting to 0.15% of the Net Asset Value of the Fund shall be calculated daily and payable monthly to the Administrator.
The operational expenses of the Fund may be charged against, income and/or capital at the discretion of the Fund’s Management Body in accordance with International Accounting Standards and the treatment may alter from time to time in accordance with those standards.
Charges and Fee
Ch
ap
ter
13
35
general
a) The Fund shall have a financial liability independent from the Investment Manager and the Fund’s Management Body. A separate Bank Account in the name of the Fund shall be maintained for the purpose of financial transactions on behalf of the Fund.
b) An independent and separate bank account for the Fund shall be maintained by the Custodian in Oman and also where necessary outside Oman, for the purpose of making withdrawals and deposits on behalf of the Fund.
c) The Fund shall be treated, in respect of all sales, purchase and any other financial 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 Fund.
d) Accounting records for the Fund shall be maintained independently from the records of the Investment Manager and shall be audited by an independent auditor approved or nominated by the Fund’s Management Body. The Fund’s Management Body has the power to remove or change the Auditors of the Fund during the life of the Fund which should be notified to the CMA.
e) The financial year of the Fund shall be from January 1, to December 31, except for the first financial period which will start on the Date of Incorporation and end on December 31, 2013.
accounting Policy
The accounts of the Fund shall comply with the International Financial Reporting Standards and as required by the Omani Law.
revenues and Expenditure of the Fund
(a) revenues
Revenues of the Fund shall consist of:
1. Profits earned as a result of dealing in securities held on behalf of the Fund;2. Income received from assets of the Fund;3. Any other revenue, directly linked to the Fund and resulting from the investment of the assets of the Fund.
(b) Expenditure
Expenditure of the Fund shall consist of:
1. The initial set up costs of the Fund;2. The fee paid to the Investment Manager;3. Fee paid to the Shariah Advisor & any other related expenses;4. The fee paid to the Custodian and sub-custodian if any;5. Licensing and listing fee of the CMA and any similar charges and expenses;6 Expenses in respect of accounting records and auditing fee;7. Customary brokerage commission and banking fee paid in connection with the sale and purchase of
securities held on behalf of the Fund and any other technical, legal or consultancy fees relating to the acquisition, maintenance and disposal of assets of the Fund;
8. All liabilities of the Fund in relation to taxation, whether due on the assets or income of the Fund;9. Any expenses related to the exercise of rights and duties in respect of the assets of the Fund;10. The cost of preparing, printing, publishing and distributing public notices, annual and interim reports,
valuations, accounts and price lists 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 Unit-holders;
11. Cost of printing any certificates or proxies;12. Any losses incurred as a result of dealing in securities held on behalf of the Fund; 13. The cost of maintaining accounts;14. The 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;
Accounts and Accounting Policies of the Fund
Ch
ap
ter
14
36
15. The cost of holding any meeting of Unit-holders;16. Legal Fee;17. For the purpose of financial accounting treatment, the Investment Manager shall make such provisions
as necessary, in such times during the course of the calendar year where a Performance Fee is applicable, and such provisions shall be reflected in the Net Asset Value for the relevant period;
18. The fee of the Fund’s Management Body;19. Any taxation liability whether advance or deferred on income earned in relation to dealing securities
listed other than on MSM; and20. Any other expenditure directly related to the Fund.
reports and accounts
The Fund’s financial year will be from January 1 to December 31 in each year. However, the first financial year of the Fund will start from the date of incorporation of the Fund and will end on December 31, 2013. The Administrator shall prepare audited financial statements and disclose the same immediately after approval by the Board of Directors, not less than two weeks prior to the Annual General Meeting (AGM). Quarterly un-audited financial statements will be filed with the MSM information centre within 30 days of the end of the relevant quarter and also published in two daily newspapers in Oman, one in Arabic and one in English.
Preparing Financial Statements
The financial statement of the Fund will be prepared in accordance to International Financial Reporting Standards (IFRS) and will include all required information to fairly reflect the financial position of the Fund and its performance during the relevant financial period.
37
The calculation of the NAV is the responsibility of the Administrator and is to be calculated at the close of each Business Day.
After taking advice from the Investment Manager, the Net Asset Value of the Fund will be calculated by the Administrator as the value of the assets attributable to the Fund (including accrued income) less the attributed liabilities (including accrued charges and expenses and provisions for contingent liabilities, if any, where appropriate). The NAV will be calculated by dividing the Net Asset Value of the Fund by the total number of Units outstanding on the relevant Business Day.
All investments, as defined by CMA, shall be valued as per IFRS.
The Fund may suspend the right of the investor to redeem the value of his Units at the occurrence of one or more of the following events:
(a) For any period during which trading is suspended on securities representing at least 51% of the total assets of the Fund.
(b) In accordance with any limits or provisions clearly stated in the Articles of Association of the Fund.(c) In exceptional circumstances approved by CMA.
The Fund that has suspended redemption shall, within the next business day after the date of suspension, send a notice to CMA and shall disclose the same to the Shariah Advisor and the investors.
Publication
Net Asset Value per Unit (NAV) will be published, at the end of each business day, in two Omani daily newspapers, one Arabic and one English.
Net Asset Value
Ch
ap
ter
15
38
This Prospectus constitutes an invitation to investors to subscribe to Units in Vision Al Khair GCC Fund (Shariah Compliant). This Prospectus describes the terms and conditions governing the Issue and Subscription to Units and the subsequent management and operation of the Vision Al Khair GCC Fund (Shariah Compliant).
Eligibility for investment in the Fund
The Fund is open for subscription to both Omani and non-Omani investors including individuals, companies, institutions, Pension Funds, Government and semi-Government organizations.
Prohibitions with regard to the applications for Subscription
The subscribers to the Units issued as mentioned hereunder shall not be permitted to participate in the subscription:
• Trust accounts - Whereas, the brokerage companies would be required to address their customers for the subscription in their personal names.
• applications made under joint names, including the applications made in the name of legal heirs - Whereas, they or their legal attorney would be required to apply in their personal names.
Subscription Form
The Prospectus and Subscription Form for initial subscription can be obtained from the branches of the collecting banks or from the office of the Issue Manager.
The Fund shall be open for subsequent subscription on any business day, 30 days from the date of publication of the first NAV of the Fund. The Subscription Form for subsequent subscription can be obtained from the Administrator’s office.
Subscription Price
The Initial Subscription Price is Rial 1.000 plus Subscription Fee of 20 Baisa per Unit.
Subscription on behalf of minor children
• Anypersonofanagelessthan18yearsasonthedateofsubscriptionshallbetreatedasminor.• Onlythefathermaysubscribeonbehalfofhisminorchildren.• If thesubscription ismadeonbehalfofaminorbyanypersonother thanthe father,he/sheshallbe
required to attach a valid legal Power of Attorney issued by the competent authorities authorizing him/her to deal in the funds of the minor through sale, purchase and investment.
Subscription Period
The Initial Subscription Period shall commence on 10/01/2013 at 8.00 am (GMT +04.00), and end on 10/02/2013 at the closure of the bank’s normal working hours.
Units will be available for subsequent subscription on submission of the Subscription Form on any Business day, 30 days from the date of publication of the first NAV of the Fund. The duly filled Subscription Form shall be submitted to the Administrator along with the payment.
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.
Terms of the Offer and Subscriptions
Ch
ap
ter
16
39
Minimum Subscription
The minimum subscription to the Fund shall be 100 Units for each subscriber and in multiples of 100 Units thereafter.
Maximum Subscription
As per the current regulations of CMA, there is no maximum limit on the Unit-holding by a single investor.
Particulars of the bank account
• Subscribersshallberequiredtofurnishtheparticularsoftheirbankaccount(registeredinthenameofthe applicant). The subscriber shall not use the bank account number of any other person except in case of minor children only.
• Subscribers shall be required to submit a document in evidence of correctness of the bank accountparticulars as provided for in the application. This can be done by submitting any document from the bank of the subscriber furnishing therein account number and name of the account holder like the upper portion of the Account Statement issued by the bank containing these particulars only or a letter or any document issued by the said bank containing the said information. The subscriber shall ensure that the evidence submitted is clearly readable, contains account number and full name of the account holder.
• The application for subscription containing the bank account number of a person other than thesubscriber shall be rejected, with the exception of the applications made on behalf of minor children that contain bank accounts particulars of their father.
Documentation required
• Submissionofadocumentconfirmingcorrectnessof thebankaccountnumberasprovidedfor in theapplication for subscription.
• CopyofavalidPowerofAttorneydulyendorsedby thecompetent legalauthorities, in theevent thesubscription is on behalf of another person (except in case of the subscription made by a father on behalf of his minor children).
refund of the sums pertaining to the rejected applications
During the initial subscription, the Issue Manager undertakes to refund the sums covered under the applications for the subscription that are rejected, through the banks receiving the subscription by transferring them to the subscriber’s respective bank account provided for in the Subscription Form, within 15 (fifteen) business days from the Closing date upon the allotment of Units. However, if the Issue Manager fails to refund the funds, he shall undertake to pay penalty in the form of interest as per the rates applicable to the Bank Deposits for the total period of delay until the date of transfer.
Mode of Subscription
• Thesubscribersshallberesponsibleforfurnishingalltheirparticulars,ensuringcorrectnessandvalidityof the information provided for in the Subscription Form.
• Thesubscribersshallberequired,beforefillingtheSubscriptionForm,toperusetheProspectusandreadthe conditions and procedures governing the subscription with total care and importance.
• ThesubscribersshallberequiredtofillinthecompleteSubscriptionFormandfurnishalltheirparticularsas required in the form, including the civil status number, Birth certification number in case of minor children, Commercial Registration number in case of companies, etc.
• ThesubscribersapplyingforUnitsshallberequiredtosubmittheSubscriptionFormtooneofthebanksreceiving the subscriptions (as referred to in the Prospectus) and make payment towards the Units before the closing date as specified in the Prospectus; ensuring that the documents in support of the information furnished referred to above are enclosed.
• In case of payment of the value of the subscriptionby cheque/demanddraft, it shall be in favour of“Vision al Khair gCC Fund”.
40
receiving Subscriptions
The Subscription Forms for the initial subscription shall be accepted at all branches of the following banks during their official working hours only:
• NationalBankofOman• BankSohar• AhliBank
The bank receiving the subscription shall be required to accept the Subscription Forms after confirmation of compliance with the procedure and subject matter, in line with the requirements as provided for in the Prospectus. Hence, the bank shall instruct the subscribers to comply and fulfill any requirement that may appear in the application submitted.
The subscribers shall be responsible for submission of their Subscription Forms to one of the banks receiving the initial subscription before closing of the Initial Subscription Period. In this regard, the bank shall have the right not to accept any application for subscription that reaches after the official working hours on closing date of the Initial Subscription Period.
acceptance of the applications for Subscription
The banks receiving the initial subscription shall neither receive nor accept the applications for subscription under the following circumstances:
(a) If the Subscription Form does not bear the signature of the subscriber;(b) In case of failure to pay the full value of the Units subscribed in accordance with the conditions provided
for in the Prospectus;(c) If the value of the Units subscribed is paid through cheque and if the same is dishonoured for whatever
be the reason;(d) If the Subscription Forms are submitted under joint names;(e) If the subscriber is a Trust Account;(f) If the subscriber has subscribed through more than one Subscription Form in the same name;(g) If the supporting documents referred to in the Prospectus are not enclosed with the Subscription Form;(h) If the application does not contain all the particulars of the bank account of the subscriber;(i) If any particulars of the bank account held by the subscriber as provided for in the Subscription Form are
noted to be incorrect;(j) If the particulars of the bank account provided for in the application are found to be not relevant to the
subscriber, with the exception of the applications submitted in the name of minor, who are allowed to make use of the particulars of the bank accounts held by their father;
(k) In case of failure to have the Power of Attorney attached with the application 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);
(l) If the application has not complied with the legal and organizational requirements as provided for in the Prospectus.
Promoter’s Commitment
The promoters of Vision Investment Services Co. SAOC have committed to participate in the Fund by subscribing to 5% of its Initial Units, and have further committed not to redeem any Units for three years from the initial opening date of the Fund.
During the Initial Subscription, if the subscription bank observes, after receipt of the application and before expiry of the time schedule prescribed for handing over of the applications in a final manner to the Issue Manager, that the application has not complied with the legal requirements as provided for in the Prospectus, due effort would be taken for contacting the Subscriber so as to correct the mistake detected. In case of failure to have the mistake corrected within the period referred to, the bank receiving the subscription shall be required to return the application for the subscription to the subscriber, together with the subscription value before the expiry of the period specified for handing over of the applications to the Issue Manager.
41
refusal of Subscription applications
In case of initial subscriptions, the Issue Manager may reject the subscription applications under any of the conditions referred to above, after securing the approval of CMA and submission of a comprehensive report furnishing the details of the subscription applications that are required to be rejected and reasons behind such rejection.
If, in case of initial subscriptions, it is observed by the Issue Manager that there are subscription applications that bear the same civil status number or the same bank account number (with the exception of minor children) all such applications shall be rejected treating them as repeated.
Enquiry & Complaints
During the initial subscription, the subscribers who intend to seek clarification or file complaints with regard to the issues related to the allotment or rejected applications; may contact the branch of the bank where the subscription was made. In case of absence of any response from the branch, the subscriber may contact the person concerned as hereunder:
National Bank of Oman Bank Sohar ahli Bank
Persons to be contacted
Koukab Ali Said Al Hasni
Nadia Al Balushi Sulaiman Ali Al Hinai
Email ID [email protected]@
banksohar.netsulaiman.alhinai@
ahlibank-oman.com
Phone No +968 24778757 +968 24730221 +968 24577081
Fax No +968 24778993 +968 24662156 +968 24567841
If the bank receiving the initial subscription fail to arrive at a solution or settlement with the person who has subscribed, it shall refer the subject matter to the Issue Manager, and keep the subscriber posted of the progress and development in respect to the subject matter of the dispute. The subscriber shall also keep in touch with the bank receiving the subscription to know the decisions arrived at. The investor may also contact the person named hereunder, at the office of the Administrator of the Fund:
Mr Jagdish JaiswalTel: +968 2472 6020 Fax: +968 2472 6010E-mail: [email protected]
Notice regarding allotment
During the initial subscriptions, the Issue Manager will issue allotment advice to the investors within 15 (fifteen) days from the Closing date, upon the allotment of Units. The Issue Manager shall send notices with regard to the allotment to all the subscribers concerned, by post, as per the addresses specified in the Subscription Form, immediately on receipt of the approval of CMA concerning the allotment.
42
Expected time schedule for completion of the Initial Subscription procedure:
Procedure Date
Commencement of Subscription 10/01/2013
Closing of Initial Subscription 10/02/2013
Due date for the Issue Manager to receive the Subscription Forms from collecting banks
14/02/2013
Notifying CMA of the outcome of the subscription and proposal with regard to the allotment
16/02/2013
Approval of CMA with regard to the proposal for the allotment
19/02/2013
Completion of the allotment procedures and refund of the money received on applications rejected
21/02/2013
Incorporation of the Fund As per the CMA approval
Publication of First NAVTen Business days from the date of CMA approval
Commencement of subsequent subscription of Units30 days from the date of publication of the first NAV of the Fund
responsibilities & Obligations
The Issue Manager, the banks receiving the initial subscription and the Administrator, shall abide by the responsibilities and functions specified pursuant to the instructions and regulations laid down by CMA. The said bodies shall also abide by any other responsibilities that are provided for in the agreements entered into between them and the body issuing the securities.
The parties concerned shall be required to take remedial measures with regard to the damages arising from any negligence committed in the performance of the functions and responsibilities assigned to them. The Issue Manager shall be the body responsible before the Surveillance Authorities in taking suitable steps and measures for repairing such damages.
Subsequent Subscription
The Fund shall be open for subsequent subscription on any business day, 30 days from the date of publication of the first NAV of the Fund. The Subscription Form for subsequent subscription can be obtained from the Administrator’s office.
Units may be subscribed on each business day. Subscription requests shall be addressed to the Administrator and may be given in writing or by tele-fax (if the Fund has previously received a completed Indemnity with respect to faxed instruction) at the Administrator’s registered office. To be effective, the request must refer to the Fund and contain full details, the number of Units to be subscribed, bank details and attached with such other Know Your Customer (KYC) documents as may be required by the Administrator.
Subsequent Subscription requests for any subscription day must be received by the Administrator, at the latest, by 4.00 pm, Oman Time (12.00 noon GMT).
The minimum amount for a subsequent subscription shall be Rial One hundred (RO 100). However, there is no limit on maximum subscription requests. Administrator shall maintain a register for all subscriptions.
43
Subsequent Subscription Price
The Unit-holder(s) shall pay the amount of requested subscription of Units immediately or at a date no later than three (3) days from the date on which the subscription price was determined. However, Administrator may accept the subscription amount in advance.
Subsequent Subscription Fee
For the Units to be subscribed, the Fund reserves the right to charge up to 3% Subscription Fee deductible from the subscription price and will be retained by the Administrator. The level of fee may be amended at the discretion of the Fund’s Management Body.
redemption of Units
Every Unit-holder has the right to redeem his/her holding of Units in the Fund. An investor can redeem the Units held on any business day 30 days from the date of the publication of the first NAV. The Units can be redeemed at the NAV of the Units of the Fund derived after paying dividend, if any less Redemption Fee.
Units may be redeemed at the end of each business day of a calendar year. Redemption requests should be addressed to the Administrator. Redemption requests may be given in writing or by tele-fax (if the Fund has previously received a completed Indemnity with respect to faxed instruction) at the Administrator’s registered office. To be effective, the request must refer to the Fund and contain full registration details, the number of Units to be redeemed and the bank details for the payment of the redemption proceeds.
Redemption requests must be received in original by the Administrator, at the latest, by 4:00 pm Oman Time (12 noon GMT).
The Redemption price per Unit will be the NAV per Unit at the end of the relevant Business Day less, where applicable, a Redemption Fee as described below.
redemption Fee
Redemption of any Units held by a Unit-holder will be subject to deduction of a Redemption Fee of 1% of NAV payable to Investment Manager. The level of the fee may be amended at the discretion of the Fund’s Management Body.
No redemption “in-specie”
Units may only be redeemed for cash and there will be no Redemption in exchange for the transfer of interests in the securities and other assets of the Fund.
Settlements
Settlements will normally be made by electronic bank transfer. Payment will normally be made within three (3) working days from the relevant Redemption Day. Settlement amounts may be subject to bank charges levied by the Unit-holders’ own (or a correspondent) bank.
44
The Fund’s Management Body shall dissolve and liquidate the Fund at an EGM for any of the following reasons including:
(a) Expiration of the term of the Fund;(b) Accomplishment of the objective for which the Fund was established pursuant to the Articles of
Association and the Prospectus;(c) Reduction of the Net Asset Value of the Fund to less than RO 500,000; (d) The Fund stops carrying out its business without legitimate reason;(e) Reduction in the Net Asset Value to the extent that expenses incurred by the investors are unreasonably
high;(f) On recommendation by the Investment Manager;(g) On request by CMA.
The general meeting shall issue the resolution to dissolve and liquidate the Fund including appointment of liquidator, setting its fee and the liquidation process. The powers of the Fund’s Management Body and service providers shall end immediately on appointment of the liquidator.
The proceeds of the liquidation shall be used to discharge the due and payable obligations of the Fund, after payment of dissolution and liquidation expenses. The balance shall be distributed to investors on pro rata basis according to their holdings.
Dissolution and Liquidation of the Fund
Ch
ap
ter
17
45
The Unit-holders jointly hold the assets of the Fund, each holding an indivisible proportionate share, the proportion being equal to the proportion of the total number of Units in issue that is represented by the number of Units each holds.
All Unit-holders shall have the following rights inherent in the ownership of the Units, namely:
(a) the right to receive such profits after expenses as may be derived from the investment activities of the Fund and as may be, within discretion of the Fund’s Management Body, distributed to Unit-holders from time to time;
(b) the right to share in the distribution of the Fund’s assets upon liquidation of the Fund;(c) 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 relating to the Fund;(d) the right to receive notice of and the right to participate and vote in any meeting of the Unit-holders;(e) the right to apply for the annulment of any decision by a meeting of the Unit-holders or the Fund’s
Management Body or the Investment Manager which is contrary to the law of the Sultanate of Oman or this Prospectus;
(f) the right to institute actions against the Fund’s Management Body, the Investment Manager or the Auditors of the Fund on behalf of the Unit-holders; and
(g) the right to request quarterly, half yearly and yearly financial accounts of the Fund.
Investors who hold at least 5% of the investment Units may request the Fund’s Management Body to cancel any resolution adopted by the Fund’s Management Body 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 same body which has issued the resolution, to decide on it.
Limit of Liability
Once the issue price has been paid in full, a Unit-holder has no further financial liability to any party in respect of the Units or the liabilities of the Fund. The liability of the Unit-holders shall be limited to the value of their contributions.
Voting rights
Each Unit-holder has a right to exercise a vote at any meeting of Unit-holders. Each Unit will represent one vote.
accounts and reports
The Fund’s financial year will be from January 1 to December 31 in each year. However, the first financial year of the Fund will start from the date of Incorporation of the Fund and will end on December 31, 2013. The Administrator shall prepare audited financial statements and disclose the same immediately after approval by the Fund’s Management Body, not less than two weeks prior to the Annual General Meeting (AGM) together with the following reports:
(a) Fund’s Management Body Report(b) Auditor’s report on audited financial statements
Audited financial statements along with the above reports shall be filed with .MSM information centre within 60 days of the end of the relevant audit year and also published in two daily newspapers in Oman, one in Arabic and one in English.
Quarterly un-audited financial statements will be filed with the MSM information centre within 30 days of the end of the relevant quarter and also published in two daily newspapers in Oman, one in Arabic and one in English.
Unit-Holders’ Rights
Ch
ap
ter
18
46
register of Unit-holders
The Administrator will maintain the Unit-holders’ Register.
Profits & Dividend Distributions
The Unit-holders are entitled to the net returns (profits) of the Fund after deducting all liabilities, including fees, expenses, purification and tax. The Fund’s Management Body in consultation with the Investment Manager may pay cash/stock dividends, subject to the availability of distributable profits. However, the Fund’s Management Body may also opt to reinvest such profits without distributing them to the Unit-holders.
The Fund’s Management Body may declare dividend in respect of any financial period, to be paid to the Unit-holders.
Dividend distribution would be within the rules and regulations of CMA.
Dividend announcements and Payment
Dividend and distribution announcements will be published in two daily newspapers in Oman, one in English and one in Arabic. Holders of Units may elect in writing to receive a dividend by electronic bank transfer, net of bank charges. Unless specified otherwise, payment will normally be made in Omani Rial. If requested, payment may be made in any other major currency freely convertible into Omani Rial at the prevailing rate of exchange and subject to any applicable charges.
general Meeting
(a) The General Meeting is the highest authority of the Fund and shall comprise of all Unit-holders.
(b) Every Unit-holder or his proxy carrying a written authorization may attend the General Meeting and shall have one vote for every investment Unit held.
(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 an investor who hold 10% or more of the Fund’s Units subscribed. However, in case of all of the following issues, the Extraordinary General Meeting shall be convened to consider:
1. Amendment to the Articles of Association.2. Change of main investment objectives of the Fund.3. Change in the frequency of calculation of NAV.4. Reducing the frequency or limits on redemption.5. Change of the Funds’ status such as a merger, spinoff or conversion or other.6. Dissolution and liquidation of the Fund.
(d) Where the Fund’s Management Body 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 investor 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 in the meeting.
(e) The Fund’s Management Body shall establish the agenda of the General Meeting or it may be established by Investment Manager if the meeting is convened by the Investment Manager. The agenda shall also include proposals by any investor who holds at least 5% of the Unit subscribed, at least two weeks prior to the date of sending the notice to the Unit-holders to attend the meeting. The General Meeting shall not consider any issues that are not included in the agenda.
47
(f) Investors 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 investors or proxies representing at least 50% of the investment 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 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 investment units.
(h) Resolutions of the Ordinary General Meeting and Extraordinary General Meeting shall be adopted by absolute majority unless the Articles of Association of the Fund provides for a higher percentage.
(i) The General Meeting shall be chaired by the chairman of the Fund’s Management Body 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) 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.
48
Risk Factors
Ch
ap
ter
19
Investor’s attention is invited to the following risks which should be considered before arriving at an investment decision in the Fund.
Market risk
The Fund investments are subject to market fluctuations and to the risks inherent in all investments. Therefore, the price of Units may go up as well as down and the value of an investor’s investment may be subject to sudden and substantial falls and rises.
However, the Fund will strive to minimize this risk by diversifying its investment across different asset classes and geographical regions.
Historical Track record
The Fund is newly formed and therefore has no operating history or track record. Neither the past performance of Vision’s discretionary portfolios, nor the investment performance of the Investment Manager, nor the past performance of the GCC and Regional stock markets may be construed as an indication of the future results of an investment in the Fund.
However, Vision has substantial experience in investment management and investment advisory services in the local and international markets. Vision has been managing substantial investments for its clients since the last ten years.
Political and Economic risks
The value of Units and the income generated by the Fund may be affected by uncertainties such as political 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 risks of expropriation, nationalization and confiscation of assets and changes in legislation relating to the level of foreign ownership.
However, Vision will be considering the above risk factors while arriving at an investment decision for the Fund.
Investment risks
GCC and the regional markets are relatively less liquid when compared with developed markets.
The Fund shall follow AAOFI standards for the purpose of investment. Any change in the standards may affect the performance and/or the objectives of the Fund.
However, the Fund will attempt to focus on the more liquid stocks in these markets, but there can be no guarantee that this objective can be achieved at all times. Furthermore, overall liquidity has improved dramatically in the regional markets over the last few years due to the shift in focus to regional markets from the international markets. The Fund will strive to continously monitor any changes in AAOFI standards for its impact to the operations of the Fund and minimize the risk to the Unit holders.
accounting Practice
Accounting standards in the countries where the Fund may invest may not correspond to International Financial Reporting Standards in all material respects. In addition, auditing requirements and standards in those countries may differ from those generally accepted in the international capital markets and consequently information which would be available to investors in developed capital markets is not always obtainable in respect of companies in the relevant jurisdictions.
However, the Fund will strive to obtain maximum information before deciding on any investment.
Legal risk
The rate of legislative change in certain of the countries where the Fund may invest is extremely rapid and the impact of the proposed legislation when eventually adopted into Law is difficult or impossible to predict. Such proposed legislation may have an adverse effect on foreign investment. It is similarly difficult to anticipate the impact of legislative reforms on securities in which the Fund will invest.
However, given the recent positive measures taken by the regional governments to encourage private and international investment, any adverse change in the regulation seems unlikely.
Taxation
Tax law and practice in countries in which the Fund may invest is not as clearly established as that of the developed nations. It is possible therefore that the current interpretation of the law or understanding of practice may change or, indeed, that the law may be changed with retrospective effect. Accordingly, it is possible that the Fund could become subject to taxation in the countries in which the Fund may invest that is not anticipated when investments are made, valued or disposed off.
Exchange and Currency risk
The Fund expects to invest primarily in securities denominated in RO or currencies whose value will not fluctuate against the RO but some investments may be denominated in other currencies. Accordingly, a change in the value of the RO against the relevant currencies can result in a corresponding change in the Net Asset Value. Changes in exchange control regulations and economic or monetary policies can also impact the Net Asset Value. The Fund’s Management Body does not intend to hedge foreign exchange risk and, accordingly, investors will bear the risk of any adverse movements in the local currencies/foreign exchange rate.
However, since most of the regional currencies are under a fixed rate peg vis-à-vis the US dollar, the inter-currency fluctuation risk is minimized.
The Fund may be unable to obtain direct exposure to securities in certain of the target countries (other than Oman) or be able to obtain direct exposure only at a cost that the Fund’s Management Body considers unreasonable in light of the costs of indirect exposure. In such circumstances the Fund may obtain exposure through a debt or other liability of a bank or financial institution (which may include the Custodian) the size of which will depend on the value of an identified portfolio of securities. In these circumstances the Fund may be at risk in the event of the insolvency of the bank or financial institution.
However, the Investment Manager and the Fund’s Management Body will take this factor into account when considering whether to approve any such arrangement for indirect exposure to securities.
49
50
Due Diligence Certificate by the Issue Manager
ap
pen
dix
i
According to the responsibilities prescribed in Article (3) of Capital Market Law, its Executive Regulation and Instruction issued by CMA, we have examined all relevant documents and other materials in connection with the finalisation of the offer documents pertaining to Vision Al Khair GCC Fund (Shariah Compliant) whose issue manager is Vision Investment Services Co. SAOC. On the basis of such examination and the discussions with the Issuers Company, its directors and other officers, other agencies, independent verification of the of the Prospectus concerning the objects of the Issue, price justification and the contents of the documents mentioned in the Annexure and other papers furnished by the Company,
We confirm that:
We have carried out the required due diligence to ensure that the information included in the offer document forwarded to CMA are in conformity with the documents, materials and papers relevant to the issue.
All the legal requirements connected with the Issue under reference have been duly complied with.
The disclosures made in the offer documents (and its unofficial translation in English) are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue. We confirm that the Prospectus does not contain any misleading information or any material information, the omission of which may, make the Prospectus misleading.
Vision Investment Services Co. SaOCLead Manager
Stamp Date 28/12/2012
Certificate of Legal advisor
The legal advisor whose name appears below confirm that all non-financial data and the issue procedures are consistent with the rules and regulations currently in force in the Sultanate of Oman and, insofar as the legal advisor is aware, based on the information supplied to him, confirm that no material information has been omitted, omission of which will render the Prospectus misleading.
Rajab Al Kathiri & Associates(Lawyers & Legal Consultants) Signature Stamp
