Section 60

under which it will be paid or repaid, with or without profits or at a premium or discount; or

under which it is payable or repayable, either wholly or in part, with any consideration in money or money’s worth, and such payment or repayment being either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it, regardless whether the transaction is described as a financing, an advance, an investment, a saving, a sale or a sale and repurchase, but does not include money paid bona fide—

by way of an advance or a part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services is not or are not in fact sold, hired or otherwise provided;

by way of security for the performance of a contract or by way of security in respect of any loss which may result from the non-performance of a contract;

without prejudice to paragraph (B), by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise; and

Act 705

in such other circumstances, or to or by such other person, as the Authority may specify;

“Islamic building credit business” means the business of providing financing facilities in compliance with Syariah principles to any person for the express purpose of the purchase of immovable property, or the construction, reconstruction or renovation of any building or other structure, for residential, commercial or industrial purposes;

“Islamic commodity derivative instrument” includes, to the extent such instrument is not a derivative financial instrument, commodity futures, commodity forward, commodity swap, commodity option, in compliance with Syariah principles, or other commodity instruments with similar characteristics, that are reasonably possible to be settled in cash or with securities or other derivative instruments;

“Islamic credit token business” means any business in compliance with Syariah principles, where a token, being a cheque, card, voucher, stamps, booklet, coupon, form or other document or thing is given or issued to a person, referred to as “customer”, by the person carrying on the business, referred to as “issuer”, whereby such issuer undertakes that—

on the production of the token, whether or not some other action is also required, the issuer will supply cash, goods or services on credit; or

where, on the production of the token to a third party, whether or not any other action is also required, the third party supplies goods, cash or services, the issuer will pay the third party for goods, cash or services supplied, whether or not deducting any discount or commission, in return for payment to be made thereafter to the issuer by the customer, and for the purposes of this definition, the use of a token to operate a machine provided by the issuer or by a third party shall be regarded as the production of the token to the person providing the machine;

Labuan Islamic Financial Services and Securities 75

“Islamic derivative financial instrument” means futures, forward, swap, or option contract which is in compliance with Syariah principles, or other financial instrument with similar characteristics but shall not include—

all on-balance-sheet receivables and payables, including those that derive their values or contractually require cash flows from the price of some other security or index, such as mortgage-backed securities, profit-only and principal-only obligations, and indexed financial instruments, in compliance with Syariah principles; and

option features that are embedded within an on-balance-sheet receivable or payable, such as the conversion feature and call provisions embedded in convertible Sukuk, in compliance with Syariah principles;

“Islamic derivative instrument” means an instrument the value of which depends upon the value of underlying indices or assets such as currencies, securities, commodities or other derivative instruments, in compliance with Syariah principles, and includes an

Islamic derivative financial instrument and an Islamic commodity derivative instrument;

“Islamic development finance business” means the business of providing capital or other financing facilities, in compliance with Syariah principles, on terms which would require the same to be utilized for industrial, agricultural, commercial or other economic development; and for the purposes of this definition,

“development” includes the commencement of any new industrial, agricultural, commercial or other economic venture or the expansion or improvement of any such existing venture;

“Islamic factoring business” means the business of acquiring debts due to any person in compliance with Syariah principles;

“Islamic financing facilities” means—

any advance, financing or other facility in whatever form or by whatever name called, in compliance with Syariah principles, by the giving of which the person to whom the same is given has access, directly or indirectly, to the funds of the person giving the same; or

Act 705

any liability whatsoever incurred on behalf of any person, in compliance with Syariah principles;

“Islamic leasing business” means the business of letting or subletting of property on hire in compliance with Syariah principles, for the purpose of the use of such property by the hirer, regardless whether the letting is with or without an option to purchase the property, including charters of ships, and for the purpose of this definition, “property” includes any plant, machinery, equipment or other chattel attached or to be attached to the earth and “charters of ships” means bareboat charters only and does not include the transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter;

“Islamic money–broking business” means the business of arranging transactions between buyers and sellers in the money or foreign exchange markets as an intermediary in consideration of brokerage fees paid or to be paid and in compliance with

Syariah principles, but does not include the buying or selling of ringgit or foreign currencies as a principal in such markets;

“Labuan Islamic banking business” means—

the business of receiving deposits on current account, deposit account, savings account or any other account in compliance with Syariah principles as may be specified by the Authority;

Labuan Islamic investment banking business;

Labuan Islamic financial business; or

such other business as the Authority, with the approval of the Minister, may specify, in any currency (including ringgit where permitted by the *Exchange

Control Act 1953 [Act 17] or such other relevant law in force);

“Labuan Islamic financial business” means any of the following business in compliance with Syariah principles:

Islamic building credit business;

*NOTE—The Exchange Control Act 1953 [Act 17] has since been repealed by the Financial

Services Act 2013 [Act 758] which comes into operation on 30 June 2013—see sections 271

and 272 of Act 758.

Labuan Islamic Financial Services and Securities 77

Islamic credit token business;

Islamic development finance business;

Islamic leasing business;

Islamic factoring business;

Islamic money-broking business; or

such other business as the Authority, with the approval of the Minister may specify, conducted in any currency (including ringgit where permitted by the *Exchange Control Act 1953 or such other relevant law in force) and excludes any transaction pursuant to a scheme of financing approved by the Authority as a scheme which is in compliance with Syariah principles, whereby such transaction is strictly required for the purpose of compliance pursuant to such scheme of financing but which will not be required for any other schemes of financing;

“Labuan Islamic investment banking business” means any of the following business:

providing financing facilities in compliance with Syariah principles;

providing consultancy and advisory services relating to corporate and investment matters, including dealing in securities, or making and managing investments, on behalf of any person, in compliance with Syariah principles;

undertaking foreign exchange transactions, profit rate swaps, dealings in Islamic derivative instruments or

Islamic derivative financial instruments which are in compliance with Syariah principles or any other similar risk management activities;

Labuan Islamic financial business; or

such other business as the Authority, with the approval of the Minister, may specify,

*NOTE—The Exchange Control Act 1953 [Act 17] has since been repealed by the Financial

Services Act 2013 [Act 758] which comes into operation on 30 June 2013—see sections 271

and 272 of Act 758.

Act 705

in any currency (including ringgit where permitted by the *Exchange

Control Act 1953 or such other relevant law in force);

“Labuan Islamic licensed institution” means a person who is licensed to carry on Labuan Islamic financial business under