Republic Act No. 6848
AN ACT PROVIDING FOR THE 1989 CHARTER OF THE
AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILIPPINES, AUTHORIZING ITS CONDUCT
OF ISLAMIC BANKING BUSINESS, AND REPEALING FOR THIS PURPOSE PRESIDENTIAL DECREE
No. 264 AS AMENDED BY PRESIDENTIAL DECREE No. 542 (CREATING THE PHILIPPINE
AMANAH BANK)
WHEREAS, the State, in Section 20, Article II of the Constitution,
encourages private enterprise and provides incentives to needed investments;
WHEREAS, under the Constitution, the use of property bears a social
function so that the consequences in law also must be defined by policy
objectives related to property rights in productive enterprises;
WHEREAS, toward this end, the Government has committed itself to the
establishment of an Islamic bank that operates within a legal framework
permitting the investors or participants the rights to equitable or beneficial
share in the profits realized from financing productive activities and other
operations: Now, therefore.
Section 1
Title
This Act shall be known as "The
Charter of the Al-Amanah Islamic Investment Bank of the Philippines"
Section 2
Name, Domicile and Place of
Business
There is hereby created the Al-Amanah Islamic Investment Bank of the
Philippines, which shall be hereinafter called the Islamic Bank. Its principal
domicile and place of business shall be in Zamboanga City. It may establish
branches, agencies or other offices at such places in the Philippines or abroad
subject to the laws, rules and regulations of the Central Bank.
Section 3
Purpose and Basis
The primary purpose of the Islamic Bank shall be to promote and accelerate the socio-economic development of the
Autonomous Region by performing banking, financing and investment operations
and to establish and participate in agricultural, commercial and industrial
ventures based on the Islamic concept of banking.
All business dealings and activities of the Islamic Bank shall be
subject to the basic principles and rulings of Islamic Shari'a within the
purview of the aforementioned declared policy. Any zakat or "ithe"
paid by the Islamic Bank on behalf of its shareholders and depositors shall be
its obligation to appropriate said zakat fund and to disburse it in legitimate
channels to be ascertained first by the Shari'a Advisory Council.
Section 4
Shari'a Advisory Council
There is hereby created a Shari'a Advisory Council of the Islamic Bank
which shall be composed of not more than five (5) members, selected from among
Islamic scholars and jurists of comparative law.
The members shall be elected at a general shareholders meeting of the
Islamic Bank every three (3) years from a list of nominees prepared by the
Board of Directors of the Islamic Bank. The Board is hereby authorized to
select the members of the first Shari'a Advisory Council and to determine their
remunerations.
Section 5
Functions of the Shari'a
Advisory Council
The functions of the Shari'a Advisory Council shall be to offer advice
and undertake reviews pertaining to the application of the principles and
rulings of the Islamic Shari'a to the Islamic Bank's transactions, but it shall
not directly involve itself in the operations of the Bank.
Any member of the Shari'a Advisory Council may be invited to sit in the
regular or special meetings of the Board of Directors of the Islamic Bank to
expound his views on matters of the Islamic Shari'a affecting a particular
transaction but he shall not be entitled to vote on the question presented
before the board meetings.
Section 6
Islamic Bank's Powers
The Al-Amanah Islamic Investment Bank of the Philippines, upon its
organization, shall be a body corporate and shall have the power:
(1)
To prescribe its by–laws and its operating policies;
(2)
To adopt, alter and use a corporate seal;
(3)
To make contracts, to sue and be sued;
(4)
To borrow money; to own real or personal property
and introduce improvements thereon, and to sell, mortgage or otherwise dispose
of the same;
(5)
To employ such officers and personnel, preferably
from the qualified Muslim sector, as may be necessary to carry Islamic banking
business;
(6)
To establish such branches and agencies in provinces
and cities in the Philippines, particularly where Muslims are predominantly
located, and such correspondent offices in other areas in the country or abroad
as may be necessary to carry on its Islamic banking business, subject to the
provisions of Section 2 hereof;
(7)
To perform the following banking services:
(a)
Open current or checking accounts;
(b)
Open savings accounts for safekeeping or custody
with no participation in profit and losses except unless otherwise authorized
by the account holders to be invested;
(c)
Accept investment account placements and invest the
same for a term with the Islamic Bank's funds in Islamically permissible
transactions on participation basis;
(d)
Accept foreign currency deposits from banks,
companies, organizations and individuals, including foreign governments;
(e)
Buy and sell foreign exchange;
(f)
Act as correspondent of banks and institutions to
handle remittances or any fund transfers;
(g)
Accept drafts and issue letters of credit or letters
of guarantee, negotiate notes and bills of exchange and other evidence of
indebtedness under the universally accepted Islamic financial instruments;
(h)
Act as collection agent insofar as the payment
orders, bills of exchange or other commercial documents are exclusive of riba
or interest prohibitions;
(i)
Provide financing with or without collateral by way
of leasing, sale and leaseback, or cost plus profit sales arrangement;
(j)
Handle storage operations for goods or commodity
financing secured by warehouse receipts presented to the Bank;
(k)
Issue shares for the account of institutions and
companies assisted by the Bank in meeting subscription calls or augmenting
their capital and/or fund requirements as may be allowed by law;
(l)
Undertake various investments in all transactions
allowed by Islamic Shari'a in such a way that shall not permit the haram
(forbidden), nor forbid the halal (permissible);
(8)
To act as an official government depository, or its
branches, subdivisions and instrumentalities and of government-owned or
controlled corporations, particularly those doing business in the autonomous
region;
(9)
To issue investment participation certificates,
muquaradah (non-interest-bearing bonds), debentures, collaterals and/or the
renewal or refinancing of the same, with the approval of the Monetary Board of
the Central Bank of the Philippines, to be used by the Bank in its financing
operations for projects that will promote the economic development primarily of
the Autonomous Region;
(10) To carry out financing and joint investment
operations by way of mudarabah partnership, musharaka joint venture or by
decreasing participation, murabaha purchasing for others on a cost-plus
financing arrangement, and to invest funds directly in various projects or
through the use of funds whose owners desire to invest jointly with other
resources available to the Islamic Bank on a joint mudarabah basis;
(11) To invest in equities of the following allied
undertakings:
(a) Warehousing companies;
(b)
Leasing companies;
(c) Storage companies;
(d)
Safe deposit box companies;
(e)
Companies engaged in the management of mutual funds
but not in the mutual funds themselves; and
(f)
Such other similar activities as the Monetary Board
of the Central Bank of the Philippines has declared or may declare as
appropriate from time to time, subject to existing limitations imposed by law;
(12) To exercise the powers granted under this Charter
and such incidental powers as may be necessary to carry on its business, and to
exercise further the general powers mentioned in the Corporation Law and the
General Banking Act, insofar as they are not inconsistent or incompatible with
the provisions of this Charter.
Section 7
Authorized Capital Stock
The authorized capital stock of the Islamic Bank shall be One billion
pesos (P1,000,000,000) divided into ten million par value shares of One hundred
pesos each. All shares are nominative and indivisible. The subscription to and
ownership of such shares, including the transfer thereof to third parties,
shall be limited to persons and entities who subscribe to the concept of
Islamic banking.
Section 8
Classification of Shares
& Features
The Islamic Bank's authorized capital stock shall have the following
classifications and features in relation to its Islamic banking operation:
(1) Series "A" shares shall comprise five
million one hundred thousand shares equivalent to Five hundred ten million
pesos (P510,000,000) to be made available for subscription by the present
stockholders of the Philippine Amanah Bank namely: the National Government, and
such other financial entities as it may designate.
(2) Series "B" shares shall comprise nine
hundred thousand shares equivalent to Ninety million pesos (P90,000,000) to be
made available for subscription by the Filipino individuals and institutions.
(3) Series "C" shares shall comprise four
million shares equivalent to Four hundred million pesos (P400,000,000) to be
made available for subscription by Filipino and foreign individuals and/or
institutions or entities.
Anyone of the shareholders may exercise its preemptive right to
consolidate ownership of the outstanding shares as hereinafter increased:
provided, that the common shares of the Philippine Amanah Bank which have been
issued and outstanding shall form part of the increased capitalization of the
Islamic Bank, subject to the concurrence of the existing shareholders of the
Philippine Amanah Bank.
The Islamic Bank is authorized to reacquire its common shares that are
held privately.
The Islamic Bank may take the necessary steps to have its series
"B" shares listed in any duly registered stock exchange.
Section 9
Board of Arbitration
The Board of Directors, acting as an arbitrator, shall settle by the
majority decision of its members any dispute between and among shareholders of
the Islamic Bank, whether individuals or entities, where such dispute arises
from their relations as shareholders in the Islamic Bank. The Board shall not
be bound in this respect to the procedures of laws on civil and commercial
pleadings, except in regard to the basic principles of due process.
If the dispute is between the Islamic Bank and any of the investors or
the shareholders, a Board of Arbitration shall settle such dispute. In this
case, the Board of Arbitration, consisting of three (3) members, shall be
formed by two (2) parties to the dispute within forty-five (45) days from
receipt of written notice by either party to the dispute. The three (3) members
shall be selected as follows: one (1) arbitrator from each party who shall then
select a casting arbitrator as the third member of the board. The three (3)
shall select one of them to preside over the Board of Arbitration. The
selection by each party of its arbitrator shall be deemed as an acceptance of the
arbitrator's decision and of its finality.
In the event that one of the two parties shall fail to select its
arbitrator or in the case of non-agreement on the selection of the casting
arbitrator or the presiding member of the Board of Arbitration within the
period specified in the preceding paragraph, the matter shall be submitted to
the Shari'a Advisory Council to select the arbitrator, the casting arbitrator
or the presiding member, as the case may be.
The Board of Arbitration shall meet at the Islamic Bank's principal
office and shall set up the procedure of arbitration which it shall follow in
hearing and deciding the dispute. The decision shall include the method of its
execution and the party that shall incur the costs of arbitration. The final judgment
shall be deposited with the office of the Corporate Secretary of the Bank and
the Securities and Exchange Commission.
The Board of Arbitration's decision, shall in all cases, be final and
executory. It shall be valid for execution in the same manner as final
judgments are effected under Republic Act No. 876 otherwise known as the
Arbitration Law.
Section 10
Incentives to Islamic
Banking
Subject to the provisions of Section 74 of the Central Bank Act, the
provisions of the Omnibus Investment Code on the basic rights and guarantees of
investors are made applicable to the commercial operations of the Islamic Bank
in respect to repatriation or remittance of profits from investments, and to
protection against nationalization, sequestrations, or expropriation
proceedings. Any proceedings of judicial or administrative seizure may not be
taken against the said property or investment except upon a final court
judgment.
Section 11
Grants and Donations
The Islamic Bank shall accept grants, donations, endowments, and
subsidies, or funds and/or property offered by individuals and organizations,
who may earmark such grants for a specific purpose or for such other purposes
beneficial to the Muslim communities, without prejudice to the general
objectives of the Islamic Bank.
The financial statement and books of accounts of such funds shall be
maintained separately but may be supplemented to the Islamic Bank's balance
sheet.
Under special circumstances in which the Board of Directors considers
it advisable to promote or facilitate Islamic banking business and commercial
operations, the Islamic Bank may seek financing from governments,
organizations, individuals or banks always without prejudice to the provisions
of Section 43 of this Charter.
Section 12
Non-Interest Bearing
Placements
The Islamic Bank is authorized to accept deposits from governments,
banks, organizations or other entities and individuals from within the
Philippines or abroad which shall form under any of the following non-interest
bearing placements:
(1)
Saving accounts
(2)
Investment participation accounts
(3)
Current accounts and other deposit liabilities
Any deposit received by the Islamic Bank without authorization to
invest shall be treated as current accounts and savings accounts and may be withdrawn
wholly or partly at any time.
All deposits received with authorization to invest for a given period
of time shall form part of the general pool of placements allocated for
investment portfolios of the Islamic Bank and may be added to its working capital
to be invested in any special projects or in general areas of investments or
commercial operations of the Bank.
Section 13
Investment of Funds
The Islamic Bank shall have the capacity of agent or attorney and shall
act with full authority on behalf of the group of depositors in general in
investing their co-mingled deposits without prejudice to the following section
and shall ensure a degree of liquidity to be determined by the Board of
Directors to meet the current obligations of the Islamic Bank including
drawings from savings accounts and current accounts: provided, that such degree
of liquidity shall be subject to the reserve requirement as may be determined
by the Central Bank. The Board of Directors shall determine the period for an
investment participation account. Investment of funds shall be undertaken by
the Islamic Bank acting on behalf of the group of depositors or investors in
selected areas of investment under such terms and conditions as the Board of
Directors may determine by way of mudarabah or other forms of joint investment
permitted by Islamic Shari'a principle.
Section 14
Return on Investment Funds
The depositors or investors in joint investment participation accounts
shall be entitled to a portion of the return on investment according to the
deposit balances and its period. The profits on participation account with
authorization to invest in specific transaction shall be calculated on the same
basis as on the capital funds invested as determined by the Board of Directors
pursuant to Section 35 of this Act.
Section 15
Allocation of Resources
Any provision of law to the contrary notwithstanding, the Islamic Bank
may allocate part of its own investable funds or of the deposits on hand to
finance investment projects and carry on its Islamic banking business directly
or indirectly under its own supervision. For this purpose, it may create and
finance investment companies or affiliates which shall manage investment
projects on behalf of and under the supervision of the Islamic Bank and for its
own account.
The Islamic Bank shall ascertain the viability and soundness of
investment projects which it may directly supervise and those in which it may
participate with part of its own funds, with the general pool of investor’s
funds with authorization. The Islamic Bank shall have the right to inspect and
supervise the projects which it shall finance or in which it is the majority
shareholder. The original capital and related profits shall be remitted in the
same currency it was originally contributed or in one of the convertible
currencies, as the Board of Directors shall determine in accordance with this
Charter.
Section 16
Authorized Banking Services
The Islamic Bank shall exercise all the powers and perform all the
services of a bank, except as otherwise prohibited by this Act: provided, that
no transactions by any customer, company, corporation or firm with the said
Islamic Bank shall be permitted for discounts by the Central Bank of the
Philippines.
Section 17
Authorized Commercial
Operations
Notwithstanding the provisions of any law to the contrary, the Islamic
Bank is hereby authorized to operate an Investment House pursuant to Presidential Decree No. 129, as
amended, and as a Venture Capital Corporation pursuant to Presidential Decree No. 1688 and, by virtue thereof, carry on the
following types of commercial operations:
(1)
The Islamic Bank may have a direct interest as a
shareholder, partner, owner or any other capacity in any commercial,
industrial, agricultural, real estate or development project under mudarabah
form of partnership or musharaka joint venture agreement or by decreasing
participation, or otherwise invest under any of the various contemporary
Islamic financing techniques or modes of investment for profit sharing;
(2)
The Islamic Bank may carry on commercial operations
for the purpose of realizing its investment banking objectives by establishing
enterprises or financing existing enterprises, or otherwise by participating in
any way with other companies, institutions or banks performing activities
similar to its own or which may help accomplish its objectives in the
Philippines or abroad, under any of the contemporary Islamic financing
techniques or modes of investment for profit sharing; and
(3)
The Islamic Bank may perform all business ventures
and transactions as may be necessary to carry out the objectives of its charter
within the framework of the Islamic Bank's financial capabilities and technical
considerations prescribed by law and convention: provided, that these shall not
involve any riba or other activities prohibited by the Islamic Shari'a
principles.
Section 18
Employee Share Schemes
The Board of Directors may adopt an employee profit sharing scheme
under any of the following ways:
(1)
Any arrangement under which the directors, officers
and employees of the Islamic Bank receive in addition to their salaries and
wages a share, fixed beforehand, in the profits realized by the Islamic Bank or
by affiliate companies of the Islamic Bank to which the profit sharing scheme
relates; and
(2)
Any arrangement under which the Islamic Bank
facilitates the acquisition by its directors, officers and employees of common
shares of stock either as share-incentives, share-bonus options, or any other
share-saving schemes as the Board of Directors may determine.
No scheme shall be approved by the Board of Directors under this
section unless it is satisfied that the participant in the profit sharing
scheme is bound by a contract with the Islamic Bank by virtue of which an
appropriation of shares has been made for the purpose. The shares so purchased
or appropriated shall be deposited in escrow with the Bank.
The Islamic Bank shall then constitute the trustees of an approved
scheme, whose functions with respect to the common shares held by them are
regulated by Chapter VII of the General Banking Act and other pertinent laws,
and terms of which are embodied in a deed of instrument as the Board may
require.
Section 19
Investment Ceilings;
Business Limits
The Islamic Bank shall observe the following investment ceilings and
business limits in its operations:
(1)
The aggregate credit facilities or any other
liabilities of any customer of the Islamic Bank shall not exceed at all times
fifteen per centum (15%) of the unimpaired capital and surplus of the Bank;
(2)
The aggregate amount of investment portfolios for
any single industry shall at no time exceed thirty per centum (30%) of the
Islamic Bank's investment capacity. Investment capacity of the Islamic Bank
being the Islamic equivalent of commercial lending and overall credit ceilings
shall be defined as the maximum expansion for investments and credits that the
Islamic Bank is authorized to grant or extend as may be determined and computed
by the Central Bank in relation to the unimpaired capital and surplus of the
bank;
(3)
The outstanding unsecured loans or credit
accommodations which the Islamic Bank may extend at any time without security,
or in respect of any advance, loan or credit facility made with the security wholly
or partly, whenever at any time it exceeds the aggregate market value of the
assets constituting the security, shall be limited to Fifty thousand pesos
(P50,000.00) to any person, company, corporation or firm. The term loan
whenever used in this paragraph shall represent qard hasan benevolent loan; and
(4)
The Islamic Bank shall not grant any credit facility
to any person for the purpose of financing the acquisition of the holding of
shares in any company, corporation or firm in excess of fifty percent (50%) of
the appraised valued of the shares at the time the credit facility is granted.
Section 20
Loans to Directors, Officers
or Employees Restrictions
Subject to the limitations provided herein, the Islamic Bank may grant
to any of its officers or employees a loan as provided under its scheme of
service and, whenever the Islamic Bank is satisfied that special circumstances
exist, a loan not exceeding at any one time an amount equivalent to six (6)
months remuneration of each officer or employee on such terms and conditions as
the Islamic Bank deem fit. The Islamic Bank shall not, directly or indirectly,
grant an advance loan or credit facility to any of its directors, officers or
employees, or any other person for whom any of them is a guarantor or in any
manner to be an obligor for money granted by the Islamic Bank. No loan or
credit facility shall be granted by the Islamic Bank to a company, corporation,
partnership or firm wherein any member of the Board of Directors or auditors is
a shareholder, partner, manager, agent or employee in any manner, except with
the written approval of and by the unanimous vote of no less than two-thirds
(2/3) of all the members of the Board of the Directors excluding the director
concerned: provided, that the total liabilities to the Islamic Bank shall be
limited to the director or auditor's outstanding deposits or the book value of
his or her paid-in capital in the Islamic Bank. Any such approval shall be
entered upon the records of the Islamic Bank and a copy of such entry shall be
transmitted forthwith to the appropriate supervising department of the Central
Bank of the Philippines.
The office of any director, officer or auditor of the Islamic Bank who
violates the provisions of this section shall automatically become vacant and
the persons who acted in contravention thereof shall be subject to criminal
prosecution and suffer the penalties provided by law.
Section 21
Special Cash Account
The Islamic Bank shall open a special cash account with the Central
Bank in which its liquid funds shall be deposited. Any transfer of funds from
this account to the other accounts shall be made only upon prior consultation
with the Islamic Bank.
Section 22
Capital Funds Requirement
The Islamic Bank shall maintain its combined capital accounts in
proportion to its assets as prescribed by the Central Banking Act and subject
to the rules and regulations of the Central Bank.
Section 23
Investment Risk Fund
The Islamic Bank shall maintain general reserves appropriations pursuant
to the profit and loss distributions made under Section 35 of this Act. All
amounts appropriated for the Investment Risk Fund out of the net profits of
each year shall be invested for the benefit of the Islamic Bank only in safe
non-interest-bearing transactions by authority of the Board of Directors.
Section 24
Periodic Reports
The Islamic Bank shall, in addition to periodic reports which may be
required pursuant to the provisions of any other law, be required to submit to
the Central Bank a report of any changes relating to the Islamic Bank's
employee profit sharing scheme approved by the Board of Directors.
The Islamic Bank shall likewise make a report to the Central Bank
whenever a change is about to take place in relation to the ownership or
control of the Islamic Bank. The approval of the Monetary Board shall be
required in the following changes:
(1)
Any proposal for the sale or disposal of its share
or business, or other matters related thereto, which will result in a change of
the control or management of the Islamic Bank; and
(2)
Any scheme for reconstruction or for consolidation
or merger, or otherwise, between the Islamic Bank and any other company wherein
the whole or any part of the undertaking or the property of the Islamic Bank is
to be transferred to another corporation.
Section 25
Board of Directors
The Board of Directors composed of nine (9) members duly elected by the
General Shareholders Meeting, as provided for in this Act, shall convene at the
principal office once every three (3) months at the most upon due notice by the
Chairman or, whenever the need arises, upon the request of three (3) members of
the Board of Directors. The Board may convene outside the Islamic Bank's
principal office as the members shall determine in the bylaws of the Islamic
Bank.
Section 26
Powers of the Board
The Board of Directors shall have the broadest powers to manage the
Islamic Bank, except such matters as are explicitly reserved for the general
shareholders meeting. The Board shall adopt policy guidelines necessary to
carry out effectively the provisions of this Charter as well as internal rules
and regulations necessary for the conduct of its Islamic banking business and
all matters related to personnel organization, office functions and salary
administration.
The Board of Directors shall have the power to appoint managers,
authorize agents or legal representatives and shall vest them with signing
authority on behalf of the Bank either severally or jointly in accordance with
the operational procedures of the Bank.
The Board shall cause the preparation of the Islamic Bank's balance
sheet for each financial year within three (3) months at the latest from the
end of each accounting period as well as the profit and loss statement
according to accounting rules established and based on Islamic criteria. Copies
of the audited annual balance sheet, profit and loss account, together with any
note thereon, and the report of the auditor and the director's own report shall
be provided to the shareholders before the date of the general meeting.
Section 27
Chief Executive Officer;
Other Officers and Employees
The Chief Executive Officer of the Islamic Bank shall be the Chairman
who shall be chosen by the Board of Directors from among themselves. All other
officers and employees of the Islamic Bank shall be appointed and removed by
the Board upon recommendation of the Chief Executive Officer which shall not be
subject to Civil Service Law.
The Chief Executive Officer of the Islamic Bank shall, among others,
execute and administer the policies, measures, orders and resolutions approved
by the Board of Directors.n particular, he shall have the power and duty: to
execute all contracts in behalf of the Islamic Bank and to enter into all
necessary obligations by this Charter required or permitted; to report weekly
to the Board of Directors the main facts concerning the operations of the
Islamic Bank during the proceeding week and suggest changes in policy or
policies which will serve the best interest of the Islamic Bank.
Section 28
Business Development Office
The Islamic Bank shall have a Business Development Office which shall
be responsible for the following:
(1)
To conduct periodic economic surveys and studies of
the investment climate and opportunities in the Islamic Bank's sphere of
operations and identify the viable projects which may be sponsored by the
people of the Autonomous Region;
(2)
To offer technical consultancy services in the
preparation of project studies and in meeting other technical credit
requirements of the Islamic Bank, including the provision of the management
consultants at rates to be determined by the Board of Directors to projects
financially assisted by the Islamic Bank; and
(3)
To perform such other functions as may be directed
by the Board of Directors.
Section 29
General Shareholders Meeting
The general shareholders meeting shall convene annually at the latest
within six (6) months following the end of the financial year of the Bank at
the place, date and time fixed in the notice for the meeting. The attendance of
shareholders representing at least sixty per centum (60%) of the capital of the
Islamic Bank shall constitute a quorum to do business.
Section 30
Purpose of General Meeting
The general shareholders meeting shall convene purposely to hear the
Board of Directors' report on the activities of the Islamic Bank, its financial
condition, the auditor's report and to approve the balance sheet for the
financial year ended and the profit and loss statement, to determine the
portion of dividends to be distributed to the shareholders and the method of
distribution, to appoint the auditors, and to elect the members of the Shari'a
Advisory Council.
Section 31
Ordinary and Extraordinary
Sessions
The general shareholders meeting shall be presided over by the Chairman
of the Board of Directors. All resolutions adopted by the general meeting in
ordinary session assembled shall be taken by a vote of majority of the
shareholders represented therein and in case of votes being equal; the Chairman
shall cast his vote to break the tie. The resolutions of the general meeting
adopted in accordance therewith shall be binding on all shareholders including those
not in attendances or opposing the resolution.
An extraordinary general meeting shall be required to pass resolutions
related to the increase or decrease of capital of the Bank, the extension of
its legal existence or matters affecting amendment of the Charter. Resolutions
of the extraordinary general meeting shall be deemed adopted when a majority
vote of at least sixty-six and two-thirds plus one per centum (66 & 2/3 +
1%) of the capital shares shall have been cast.
In no case shall the general meeting resolve to modify the object of
the Bank as an Islamic Investment Bank.
Section 32
Bank Auditor: Reports
Notwithstanding the provisions of any existing law to the contrary, the
Islamic Bank is hereby authorized to appoint an external auditor approved by
the general shareholders meeting whose qualification and remunerations shall be
fixed by the Board of Directors. The external auditor appointed under this
section shall assume his functions from the date of his appointment until the
date of the next general shareholders meeting. In case a vacancy occurs at any
time during the year for any reason, the Board of Directors shall immediately
appoint a replacement.
The duties of the auditor shall be to conduct an audit of the accounts
of the Bank and to make a report to the Board of Directors.
In the exercise of his auditing functions, all Bank books, accounts and
documents shall be made available to the auditor for inspection to ascertain
the Bank's assets and obligations. Copies of the latest audited balance sheet,
profit and loss statement, together with any note thereon, and the reports of
the auditor to the Board of Directors shall be forwarded by the Islamic Bank,
within the prescribed time to the Central Bank.
Section 33
Confidential Information
Banking transactions relating to all deposits of whatever nature are
confidential and may not be examined, inquired or looked into by any person,
government official, bureau or office except as provided in the preceding
section, or upon written permission by the depositor, or in cases where the
money deposited or the transaction concerned is the subject of a court order.
It shall be unlawful for any official or employee of the Islamic Bank
or any person as may be designated by the Board of Director to examine or audit
the books of the Bank to disclose or reveal to any person any confidential
information except under the circumstances mentioned in the preceding
paragraph.
Section 34
Accounting Period
The Financial Year of the Islamic Bank shall be based on the Gregorian
calendar, but the corresponding Islamic Hijra date shall be mentioned on all
correspondence, contracts, printed materials, forms and records of the Islamic
Bank. The accounting period shall commence from the first day of January and
close at the end of December each year.
Section 35
Determination of Profits and
Losses
At the close of each financial year, the Islamic Bank shall determine
the results of its operation, in the determination of which the portion of
profits due to the Islamic Bank and the inventors shall be allocated pursuant
to the provisions of this Act.
The Board of Directors shall, after deducting the general and
administrative expenses of the Bank and all its operating expenses including
remunerations of the Board of Directors and the Shari'a Advisory Council,
determine annually what part of the income shall be appropriated to reserves,
investors and shareholders.
All accounts relating to financing and joint investment operations
shall be kept separately from the accounts from that of the other banking activities
and services offered by the Islamic Bank. The same rule in respect to the
accounts of specific investments shall apply where such specific projects may
have a separate account.
Allocation of joint investment profits shall be made after deducting an
amount equal to ten per centum (10%) of the profits realized from various
operations during the financial year to be transferred to a reserve account
known as Investment Risk Fund for
the purpose of meeting any losses exceeding the total profits derived from
investments of that year: provided, however, that should the accumulated
reserves equal the authorized capital of the Islamic Bank, the Board of
Directors may reduce the amount of the annual deduction to a minimal percentage
until the aggregate reserves become double the amount of the capital after
which the herein authorized deductions shall cease to accrue to the reserve
account.
Losses incurred, if any shall be deducted from the total profits
realized for the financial year in which such losses are incurred but any
excess of losses over the profits which have been actually realized during that
year may be deducted from the Investment Risk Fund opened for covering the
risks of investment: provided, that should the total profits realized in the
year together with the reserves accumulated from previous year be insufficient
to cover the losses incurred, the Islamic Bank shall carry out a comprehensive
assessment to arrive at estimated profit and loss based on market rates, from
operations which are financed by mudarabah funds and which have not reached the
stage of final settlement by the end of the financial year.
Section 36
Sharing Between the Bank and
the Investors
Not later than the end of the first month of each financial year, the
Board of Directors shall determine and publish the general percentages of
profit to be allocated to the total funds participating in joint investments of
the Islamic Bank.
The Islamic Bank as a joint venturer (mudarib) shall be entitled to
certain percentage after deducting the amount allotted to investors. The Bank
shall likewise be entitled to a share in the profits of joint investments in
proportion to its own invested funds.
For the purpose of calculating funds employed in financing operations
priority shall be given to joint investment accounts and the holders of
muquaradah bonds.
All zakat due the shareholder's capital and reserves represented by the
pecuniary value of shares and the zakat due on the investor's funds or profits
accruing to every depositor shall be paid to the zakat fund, subject to their
instructions.
Section 37
Tax Exemption
The Islamic Bank assets,
profits distributions and all contracts, deeds documents and transactions
related to the conduct of business of the Islamic Bank shall be exempted from
all taxes under the National Internal Revenue Code to commence from the first
taxable year, following its actual Islamic banking operation as certified by
the Central Bank, to the extent as herein made allowable:
(1)
One hundred per centum (100%) for the first five (5)
years; and
(2)
Seventy-five per centum (75%) for the sixth through
the eight year: provided, however, that said exemption shall apply only to such
taxes, fees, charges and assessments for which the Islamic Bank would otherwise
be liable, and shall not apply to the taxes, fees, charges or assessments
payable by persons or other entities doing business with the Islamic Bank.
An investment in Islamic banking business to the extent of actual
participation in profit and loss sharing scheme, paid in cash or property,
shall be granted an exemption from all taxes under the National Internal
Revenue Code, except income tax: provided, that an investment tax allowance
shall be permitted as a deduction from taxable income under such transactions to
the extent that the Islamic Bank pays out zakat on the income of investors
capital and surplus reserves for the duration of the joint investment period.
Section 38
Exemption from Customs
Duties
Within the first five (5) years of operation of the Islamic Bank, all
importations by the Bank of machinery, equipment, calculators and computers and
accompanying spare parts, as may be necessary for its operation, shall be
exempted from customs duties and compensating taxes payable thereon: provided,
however, that same shall not be disposed of domestically unless payment is made
of all duties thereof at the tariff rates and according to their condition at
the time of disposal and upon compliance with all import and exchange
procedures.
Section 39
Non-Applicability of
Selected Acts
In order to achieve the international and domestic objectives of
Islamic banking business, the provisions of the following acts and laws shall
not apply to the Islamic Bank to the extent as herein rendered inoperative:
(1)
The provisions of the Central Bank Act and the
General Banking Act with particular reference to the determination of bank
interest rates, loans and discounts, and any interest-bearing instruments or
charge: provided, that nothing contained herein shall be construed to impair
the powers of the Central Bank to supervise and regulate the activities of the
Islamic Bank;
(2)
The General Auditing Act and any other enactments
thereon inconsistent with this Act; and
(3)
The provision of Republic Act Numbered Three thousand
five hundred ninety-one, as amended, and all laws, regulating insurance
companies: provided, however, that nothing contained herein shall preclude the
Islamic Bank from the establishment of contemporary Islamic tafakul (solidarity
services) free of riba premiums or interests.
Section 40
Employment of Foreign
Nationals
Subject to the provisions of Section 29 of Commonwealth Act No. 613,
and the Anti-Dummy Law, as amended, the Islamic Bank may employ foreign
nationals in supervisory, technical or advisory positions for a period not
exceeding five (5) years extendible for limited periods upon the recommendation
of the Governor of the Central Bank.
Foreign nationals under employment contract within the purview of this
Act, their spouses and unmarried children under twenty-one (21) years of age,
who are not excluded by Section 29 of Commonwealth Act No. 613, shall be
permitted to enter and reside in the Philippines during the period of
employment of such foreign nationals.
Section 41
Training of Technical
Personnel
The Islamic Bank shall promote and sponsor the training of technical
personnel in the field of Islamic banking, finance and insurance. Towards this
end, the Islamic Bank is hereby authorized to defray the costs of study, at
home or abroad of outstanding employees of the Islamic Bank, of promising
university graduates or of any other qualified persons who shall be determined
by proper competitive examinations. The Board of Directors shall prescribe
rules and regulations to govern the training program of the Islamic Bank.
Section 42
Terms of Legal Existence
The legal existence of the Islamic Bank shall be for a period of fifty
(50) years, from and after the date of the approval of this Act, renewable upon
resolution of the general shareholders meeting called for said purpose.
At the expiration of the Islamic Bank's corporate existence or in the
event of its dissolution before this date, the general shareholders meeting
shall, upon the request of the Board of Directors, define the method of
dissolution as provided for in its bylaws.
Section 43
Application of the Islamic
Shari'a
The Monetary Board of the Central Bank of the Philippines shall
formulate the necessary rules and regulations to carry out the provisions of
this Charter for the purpose of providing adequate credit facilities primarily
to the people of the Autonomous Region, and supervise the operation of the
Islamic Bank in accordance with the universal principle of the Islamic Shari'a.
Section 44
Definition of Terms
For the purposes of this Act, the following definition of terms is
hereby adopted:
(1) Islamic Bank means the bank created
under this Act;
(2) Islamic banking business means banking business
whose aims and operations do not involve interest (riba) which is prohibited by
the Islamic Shari'a principles;
(3) Shari'a has the meaning assigned to
it by Islamic law and jurisprudence as expounded by authoritative sources; in
the context of this Act, it is construed by reference to pertinent Quranic
ordinances and applicable rules in Islamic jurisprudence on business
transactions;
(4) Riba has the meaning assigned to it by Islamic
law and jurisprudence as expounded by authoritative sources; in the context of
banking activities, the term includes the receipt and payment of interest in
the various types of lending and borrowing and in the exchange of currencies on
forward basis;
(5) Zakat has the meaning assigned to it by Islamic
law and jurisprudence as expounded by authoritative sources; in the context of
this Act, it represents an annual "ithe" payable by the Bank on
behalf of its shareholders and investors in compliance with Islamic Shari'a
principles;
(6) Depositor means a person or entity who
has an account at an Islamic Bank, whether the account is a current account, a
savings account, an investment account or any other deposit account; unless the
context requires another meaning, a depositor corresponds to an investor in
joint investment of the Islamic Bank;
(7) Current account liabilities in relation to Islamic
banking services means the total deposits at the bank which are repayable on demand;
(8) Savings account liabilities in relation to Islamic
banking services means the total deposits at the Islamic Bank which normally require
the presentation of passbooks or such other legally acceptable documents in
lieu of passbooks as approved by the Central Bank for deposit or withdrawal of
money;
(9) Investment account liabilities in relation to
Islamic banking services means the total deposit liabilities at the Islamic
Bank in respect of funds placed by a depositor with that bank for a fixed
period of time under an agreement to share the profits and losses of that bank
on the investment of such funds;
(10) Other deposit
liabilities in relation to an Islamic Bank means the deposit
liabilities at that bank other than savings account, investment account,
current account liabilities and deposit liabilities from any Islamic Bank or
any other licensed bank;
(11) Participation in
relation to Islamic banking and commercial operations means any
agreement or arrangement under which the mode of joint investments or specific
transactions shall not involve the element of interest charge other than as
percentage share in profits and losses of business;
(12) Share means share in
the capital of the Bank or a corporation and includes a stock, except where a
distinction between stock and share is expressed or implied.
Section 45
Penalties for Violation
Any director, officer, employee, auditor, or agent of the Islamic Bank
who violates or permits the violation of any provision of this Act shall be
punished by a fine not exceeding Ten thousand pesos (P10,000.00) or an imprisonment
of not more than five (5) years, or both at the discretion of the court.
Section 46
Supervision and Regulation
by the Central Bank
The Islamic Bank shall be under the supervision and regulation of the
Central Bank. All provisions of this Act, except those which pertain to the
principles of Islamic Shari'a, shall be subject to all banking and pertinent
laws of the Philippines and Central Bank Rules and Regulations which shall
include proper safeguards to depositors and investors in the investments,
partnerships, agencies and other operation of the bank.
Section 47
Privatization
Nothing in this Act shall be construed to preclude the Islamic Bank
from privatizing its ownership. For this purpose, any limitation on the
transfer of shares shall not be applicable with respect to the shareholdings of
the National Government, Social Security System, Government Service Insurance
System, Philippine National Bank and Development Bank of the Philippines.
Section 48
Transformation to Islamic
Banking Business
Upon approval of this Act, all the assets, liabilities and capital
accounts of the Philippine Amanah Bank are hereby transferred to the Al-Amanah
Islamic Investment Bank.
Nothing in this Act be construed to preclude the Islamic Bank from
transforming its investment portfolios, accounts or assets for the conduct of
Islamic banking business, for any reason, such portfolios, accounts or assets
granted under the authority of the Philippine Amanah Bank Charter are not
eligible for this purpose, the same may be transferred, swapped, sold or
otherwise disposed of in any manner deemed feasible following the effectivity
of this Act.
Section 49
Reorganization of the Bank
The Islamic Bank shall commence its reorganization within six (6)
months from the date this Act takes effect. The present personnel complement of
the Philippine Amanah Bank shall in the interim continue to discharge their
respective functions. Officials and personnel whose services may be dispensed
with as a result of this reorganization shall be paid the usual gratuities to
which they may be entitled under the existing laws.
Section 50
Statutory Articles of
Incorporation
This Act, upon its effectivity, shall be deemed accepted for all legal
intents and purposes as the Statutory Articles of Incorporation of the
Al-Amanah Islamic Investments Bank of the Philippines; and that notwithstanding
the provisions of any existing law to the contrary, said Islamic Bank shall be
deemed registered and duly authorized to do business and operate as an Islamic
Bank as of the date of approval of this Act.
Section 51
By-laws
Within sixty (60) days upon effectivity of this Act, the by-laws of the
Islamic Bank for its organizational, functional and operational government and
procedure shall be adopted by affirmative vote at the general shareholders
meeting representing a majority of all subscribed capital stock entitled to
vote, whether paid or unpaid, subject to certification by the Monetary Board
pursuant to Section Ten of the General Banking Act.
The by-laws, duly certified by the Monetary Board as aforesaid, shall
be signed by the shareholders voting for them and shall be kept in the principal
office of the Islamic Bank, subject to the inspection of the shareholders
during office hours, and a copy thereof, duly certified by a majority of the
directors and countersigned by the Corporate Secretary of the Islamic Bank,
shall be filed and registered with the Securities and Exchange Commission.
Section 52
Repealing and Separability
Clauses
Presidential Decree No. 264, as amended by Presidential Decree No. 542,
creating the Philippine Amanah Bank is hereby repealed.
All acts, executive orders, administrative orders, proclamations, rules
and regulations or parts thereof inconsistent with any of the provisions of
this Act are hereby repealed or modified accordingly.
If any provision or section of this Act or the application thereof to
any person, association or circumstances is held invalid, the other pertinent
provisions or section of this Act and their application to such person,
association or circumstances shall not be affected thereby.
Section 53
Effectivity
This Act shall take effect fifteen (15) days after its publication in
at least two (2) newspapers of general circulation.
Approved:
January 26, 1990
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