5.1.1. Application

This Chapter applies to an AIFC-Incorporated Takaful Operator.

5.1.2. Overview

(1) The capital requirements for the shareholders’ fund of the Takaful Operator must be reflective of the risks directly borne by the Takaful Operator, whilst the capital requirements for the individual Takaful Funds managed by it must be reflective of the risks borne by those Takaful Funds.

(2) If the Eligible Capital available in a Takaful Fund is not adequate to meet the applicable capital requirements as defined in the TRR Rules, the resulting deficit in capital should be considered as an estimate of the potential Qard that may need to be extended by the Takaful Operator to ensure capital adequacy of the relevant Takaful Fund.

(3) The Eligible Capital available in the shareholders’ fund of a Takaful Operator must only be available to support risks borne by the Takaful Operator as well as any potential Qard it may need to provide to its Takaful Funds, as described in (2) above.

(4) The Eligible Capital available in a Takaful Fund must only be used to support the risk exposures of that Takaful Fund and should be available only to reduce the potential Qard that may need to be extended by its Takaful Operator.

(5) The capital adequacy and other prudential requirements as well as the methodologies for determining them, as specified in the TRR Rules must be applied to the Takaful Operator or to the individual Takaful Funds it manages, as applicable in the relevant context, to achieve the overall objectives of the TRR Rules and to comply with the specific Rules 5.1.2 (1) to (4).

(6) All references to a Takaful Operator or an AIFC-incorporated Takaful Operator in the TRR Rules specifying capital adequacy and other prudential requirements must be read as referring also to a Takaful Fund.