5.5.1. Tier 1 Capital not to be reduced without approval

An AIFC-Incorporated Takaful Operator must not reduce the Tier 1 Capital component of its Eligible Capital without the prior written approval of the AFSA.

5.5.2. Capital plan to be provided

When seeking approval for a reduction of its Tier 1 Capital under TRR 5.5.1 (Tier 1 Capital not to be reduced without approval), an AIFC-Incorporated Takaful Operator must provide to the AFSA a capital plan that has incorporated the effects of the proposed reduction and:

• (a) demonstrates that the AIFC-Incorporated Takaful Operator will remain in excess of its MCR for 2 years without relying on new capital issues;
• (b) is consistent with the AIFC-Incorporated Takaful Operator’s business plan; and
• (c) takes account of any possible acquisitions, locked-in capital in subsidiaries and the possibility of exceptional losses.

5.5.3. Notice to be given of proposed reduction of Tier 2 Capital

An AIFC-Incorporated Takaful Operator must notify the AFSA of its intention to reduce its Tier 2 Capital at least 6 months before the actual date of the proposed reduction, providing details of how it will meet its MCR after the proposed reduction.