Malaysia legislation

Section 15

of ISLAMIC BANKING ACT 1983

Section 15

(a)

shall maintain a reserve fund; and

(b)

before any dividend is declared shall transfer to the reserve fund out of the net profits of each year, after due provision has been made for zakat or taxation—

(i)

so long as the amount of the reserve fund is less than fifty per centum of the paid-up capital, a sum equal to not less than fifty per centum of the net profits;

(ii)

so long as the amount of the reserve fund is fifty per centum but less than one hundred per centum of the paid-up capital, a sum equal to not less than twenty-five per centum of the net profits.

(2)

If the Central Bank is satisfied that the aggregate reserve fund of an Islamic bank is adequate for its business; it may by order in writing exempt the bank from the provisions of subsection (1) for a period of one year.

Read in full context — ISLAMIC BANKING ACT 1983 →