Purpose and Islamic Compliance
- Aims to promote socio-economic development of the Autonomous Region.
- Engages in banking and investment activities compliant with Islamic Shari'a.
- Zakat (tithe) payments on behalf of shareholders/depositors to be disbursed per Shari'a Advisory Council oversight.
Shari'a Advisory Council
- Composed of up to five Islamic scholars and jurists.
- Members elected every three years by shareholders from Board-nominated list.
- Provides guidance and reviews Islamic compliance of bank operations without direct operational involvement.
Corporate Powers and Banking Operations
- Islamic Bank is a corporation with powers to:
- Prescribe by-laws, use corporate seal, sue and be sued.
- Borrow money, own and manage properties.
- Employ personnel preferably from qualified Muslim sector.
- Offer comprehensive banking services such as savings, checking, investment accounts.
- Conduct foreign exchange, letters of credit, collection agency services.
- Provide financing through leasing, sale-leaseback, cost-plus profit sales.
- Issue investment certificates and engage in permissible investments.
- Act as official government depository.
- Facilitate joint investment operations (mudarabah, musharaka).
- Invest in allied enterprises like warehousing and leasing companies.
Capital Structure
- Authorized capital stock: PHP 1 billion, divided into 10 million shares at PHP 100 par value.
- Share classes: Series A (government and financial entities), Series B (Filipino individuals/institutions), Series C (Filipino and foreign individuals/institutions).
- Share transfer limited to those subscribing to Islamic banking principles.
- Shares may be reacquired and Series B may be listed on stock exchange.
Dispute Resolution
- Board of Directors acts as arbitrator for disputes between shareholders.
- Separate Board of Arbitration for disputes involving the bank and shareholders.
- Arbitration procedures include appointment of arbitrators and enforcement of binding decisions.
Investor Incentives and Funding
- Protected under Omnibus Investment Code for repatriation and protection against expropriation.
- Can accept grants, donations, and seek financing to support Islamic banking objectives.
Deposit and Investment Accounts
- Authorized to accept non-interest bearing deposits (savings, investment participation accounts, current accounts).
- Investments made on profit and loss sharing basis, following Islamic principles.
- Board sets investment periods and profit sharing ratios.
Profit and Loss Sharing
- Profits allocated between bank and investors annually after expenses.
- Ten percent of profits set aside as Investment Risk Fund for loss coverage.
- Carryover losses may be covered by reserve funds.
- Zakat paid from profits as required by Islamic law.
Management and Governance
- Board of Directors consisting of nine members with quarterly meetings.
- Board empowered to manage operations, appoint managers, and adopt policies.
- Chairman of the Board serves as Chief Executive Officer.
- Business Development Office tasked with economic surveys and project consultancy.
- Annual general shareholder meetings with quorum and voting rules prescribed.
Audit and Confidentiality
- External auditors appointed by shareholders to audit financial accounts.
- Banking transactions confidential; disclosure only allowed with depositor consent or court order.
Tax and Duty Exemptions
- Islamic Bank enjoys tax exemptions on assets, profits, and operations for a specified period.
- Exempt from customs duties on importations of essential equipment for operation.
Regulatory and Supervisory Provisions
- Subject to Central Bank supervision, except for adherence to Islamic Shari'a principles.
- May employ foreign nationals in supervisory, technical, or advisory roles with Central Bank approval.
- Encouraged training programs for employees in Islamic banking.
Legal Existence and Charter
- Islamic Bank authorized for 50 years, renewable by shareholders.
- Charter replaces prior Presidential Decrees relating to Philippine Amanah Bank.
- By-laws adopted within 60 days of the Act's effectivity.
Prohibited Acts and Limitations
- Exempt from certain banking and auditing laws inconsistent with Islamic banking.
- Restrictions on loans to directors, officers, and employees to prevent conflicts of interest.
- Investment ceilings and business limits imposed to maintain financial prudence.
Penalties
- Violations by officers or employees subject to fines up to PHP 10,000 and/or imprisonment up to 5 years.
Transition and Miscellaneous
- Assets and liabilities of Philippine Amanah Bank transferred to new Islamic Bank.
- Reorganization to commence within six months after the Act.
- Act effective 15 days post-publication in two newspapers.
This comprehensive overview encapsulates the key provisions, operational scope, governance, investor protections, and regulatory framework governing the Al-Amanah Islamic Investment Bank of the Philippines under Republic Act No. 6848.