5.4.1. Obligation to maintain Eligible Capital at or above MCR

An AIFC-Incorporated Takaful Operator must at all times have Eligible Capital equal to or higher than the amount of its MCR.

5.4.2. Obligation to maintain Eligible Capital at or above PCR

An AIFC-Incorporated Takaful Operator must at all times have Eligible Capital equal to or higher than the amount of its PCR.

5.4.3. Non-Compliance with the PCR

If an AIFC-Incorporated Takaful Operator becomes aware that it does not have, or there is a risk that within the following three months it will not have, Eligible Capital equal to or higher than the amount of its PCR, it must:

(1) immediately inform the AFSA;

(2) within one month, submit to the AFSA for its approval a short-term realistic plan which complies with the requirements of TRR 5.4.6 (Contents of recovery plans and finance schemes);

(3) within six months (or such longer period as the AFSA may specify), take the measures necessary to achieve the re-establishment of Eligible Capital covering the PCR, or the reduction of its risk profile to ensure compliance with the PCR; and

(4) take such steps (if any) as the AFSA may require, which steps may be specified by the ASFA as in addition to, or instead of, the measures in (3).

5.4.4. Non-Compliance with the MCR

If an AIFC-Incorporated Takaful Operator becomes aware that it does not have, or there is a risk that within the following three months it will not have, Eligible Capital equal to or higher than the amount of its MCR, it must

(1) immediately inform the AFSA;

(2) within two months, submit to the AFSA for its approval a short-term realistic plan for infusion of additional Eligible Capital which complies with the requirements of TRR 5.4.6 (Contents of recovery plans and finance schemes);

(3) within six months (or such longer period as the AFSA may allow), take the measures necessary to achieve the re-establishment of the level of Eligible Capital covering the MCR, or the reduction of its risk profile to ensure compliance with the MCR; and

(4) take such steps (if any) as the AFSA may require, which steps may be specified by the ASFA as in addition to, or instead of, the measures in (3).

5.4.5. Other regulatory actions not precluded

The fact that an AIFC-Incorporated Takaful Operator has Eligible Capital equal to or in excess of its PCR or its MCR does not preclude the AFSA from intervention, or from requiring action by the AIFCIncorporated Takaful Operator for other reasons, such as weaknesses in the risk management or governance of the Takaful Operator.

5.4.6. Contents of recovery plans and finance schemes

Any recovery plan or finance scheme must as a minimum include:

(a) estimates of management expenses, in particular current general expenses and commissions;

(b) estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions;

(c) a forecast balance sheet;

(d) information about the AIFC-Incorporated Takaful Operator’s overall policy regarding reinsurance; and

(e) such other information as the AFSA may specify in writing.

5.4.7. Eligible Capital below the level of the Capital Floor

If at any time an AIFC-Incorporated Takaful Operator becomes aware that it does not have Eligible Capital in excess of the amount of the Capital Floor specified in Schedule 4 (Calculation of Minimum Capital Requirement (MCR)), it must immediately

• (a) stop effecting new Contracts of Takaful; and
• (b) inform the AFSA.