7.5.1. Application of assets

A Takaful Operator must ensure that, except as provided in TRR 7.5.2 to 7.5.6, assets that are attributable to a Family Takaful Fund are applied only for the purposes of the business attributed to the Family Takaful Fund.

7.5.2. Transfers of assets out of Family Takaful Funds

A Takaful Operator must ensure that assets attributable to a Family Takaful Fund are not transferred so as to be available for other purposes of the Takaful Operator except:

• (a) where the transfer constitutes appropriation of a surplus determined in accordance with TRR 9.1.3(4)(g) (Requirements for Financial Condition Report) and the transfer is performed within four months of the reference date of the Financial Condition Report that this determination forms part of;
• (b) where the transfer constitutes a payment of dividend or return of capital, in accordance with TRR 7.5.4 (Payment of dividends by Takaful Operator constituting a single Family Takaful Fund);
• (c) where the transfer is made in exchange for other assets at fair value;
• (d) where the transfer constitutes reimbursement of expenditure borne on behalf of the Family Takaful Fund and in respect of expenses attributable to the Family Takaful Fund; or
• (e) where the transfer constitutes reattribution of assets attributed to the Family Takaful Fund in error.

7.5.3. Assets of Family Takaful Funds not to be distributed

A Takaful Operator must not make any distribution by way of dividend, or return of capital assets attributable to a Family Takaful Fund, if by doing so that would result in a breach of its obligations under TRR 5 (Capital adequacy requirements).

7.5.4. Payment of dividends by Takaful Operator constituting a single Family Takaful Fund

A Takaful Operator that is deemed to constitute a single Family Takaful Fund may only make a dividend or return of capital where:

(a) the dividend or return of capital constitutes appropriation of a surplus determined in accordance with TRR 9.1.3(4)(g) (Requirements for Financial Condition Report), and either

(b) the payment is made within four months of the reference date of the Financial Condition Report determining that surplus and does not cause the total aggregate amount of the dividends or returns of capital made by the Takaful Operator since that reference date to exceed the amount of that surplus; or

(c) the payment is made more than four months after the reference date of Financial Condition Report determining that surplus and does not cause the total aggregate amount of the dividends or returns of capital made by the Takaful Operator since that reference date to exceed 50% of the amount of that surplus.

7.5.5. Assets not to be lent

A Takaful Operator must not lend or otherwise make available for use for any other purposes of the Takaful Operator, or any purposes of any party related to the Takaful Operator, assets attributable to a Family Takaful Fund.

7.5.6. Certain reinsurance-like arrangements prohibited

A Takaful Operator may not enter into any arrangement, whether or not described as a Retakaful Contract or a Contract of Reinsurance, whereby a Family Takaful Fund of the Takaful Operator stands in the same relation to the Takaful Operator as though the Takaful Operator were the Retakaful Operator in a Retakaful Contract or Contract of Reinsurance in which the Family Takaful Fund is the cedant.