HDFC Mudaraba Sukuk Prospectus - Amazon Web …...HDFC MUDARABAH SUKUK ISSUE NO.1 Public offer of 100,000 Sukuk of Maldivian Rufiyaa (MVR) 500 per sukuk, to the total value of MVR

HDFC Mudaraba Sukuk

Prospectus

PROSPECTUS TO THE ISSUE HDFC MUDARABAH SUKUK ISSUE NO.1

Public offer of 100,000 Sukuk of Maldivian Rufiyaa (MVR) 500 per sukuk, to the total value

of MVR 50,000,000 (fifty million), with a semi-annual profit share in the ratio 65:35

Issue date of the prospectus 04/08/2013

Opening date for

application/subscription

25/08/2013

Closing date for subscription 03/10/2013

ISSUER/OFFEROR

Housing Development Finance Corporation Plc HDFC Plc. [incorporated as a state owned enterprise on 28 January 2004 by a Presidential Decree under the Companies Act, Law No: 10/96

,registered as a public company on the 9th of February 2006 and privatized with the signing of a shareholders’ agreement for privatization

between the GOM (49%), IFC (18%), ADB (18%) and HDFC-Investments Ltd.-India (15%) on July 23, 2008 and incorporated in the Republic

of Maldives as a Privatized Company- Registration Number C-2009/021]

Issuer’s Contact Information:

Registered Address: 4th Floor, H.Mialani, Sosun Magu, Male', Rep. Of Maldives.

Telephone: 3338810 / 3315896 / 3315897 Fax: 3315138

Email: [email protected] SHARIAH ADVISOR

Aishath Muneeza

LEGAL COUNSEL

Mazlan & Murad Law Associates 1st

Floor G. Swan Lane, Dharmavantha Magu, Male’, 20-04, Maldives

BANKERS

Maldives Islamic Bank

Bank of Maldives

AUDITORS

KPMG H. Mialani, 2nd Floor, Sosun Magu, Male’, Maldives

Prospectus - HDFC MUDARABAH SUKUK Issue No. 01

Housing Development Finance Corporation Plc, Aug 2013 1

HDFC Plc. PROSPECTUS TO THE ISSUE

HDFC MUDARABAH SUKUK Issue no.1

Published: 04 August 2013

Housing Development Finance Corporation Plc

4th Floor, H. Mialani

Sosun Magu

Male’, Republic of Maldives

Tel: 3338810

Fax: 3315138

Email: [email protected]

www.hdfc.com.mv


2 Housing Development Finance Corporation Plc, Aug 2013

Contents 1. Introduction ......................................................................................................................... 4

1.1. Presentation of Financial Information .......................................................................... 4

1.2. Law & Exclusive Jurisdiction .......................................................................................... 4

1.3. Absolute Responsibility ................................................................................................. 4

2. Responsibility Statement ...................................................................................................... 5

...................................................................................................................................................... 5

3. Report by the directors to confirm due inquiry .................................................................... 6

4. Notice to investors ................................................................................................................ 7

5. About the prospectus ........................................................................................................... 7

6. Details of the Sukuk offered ................................................................................................. 8

7. Mudaraba Sukuk Structure ................................................................................................... 9

7.1. Terms & Conditions ....................................................................................................... 9

7.2. Representation and Warrants ....................................................................................... 9

7.3. Participation in Profits ................................................................................................. 10

7.4. Loss .............................................................................................................................. 10

7.5. Taxation ....................................................................................................................... 10

7.6. Management and Control ........................................................................................... 10

7.7. General Covenants of Mudarib ................................................................................... 11

7.8. Transfers ..................................................................................................................... 11

7.9. Limited Recourse ......................................................................................................... 11

7.10. Negative Pledge .................................................................................................... 12

7.11. Termination ........................................................................................................... 12

7.12. Meeting of Sukuk Holders ..................................................................................... 12

7.13. Force Majeure ...................................................................................................... 13

8. Eligible participants ............................................................................................................. 14

9. Procedure for application ................................................................................................... 15

9.1. Subscription List .......................................................................................................... 15

9.2. Mode of payment ........................................................................................................ 15

9.3. Dematerialized offering............................................................................................... 16

9.4. Allotment ..................................................................................................................... 16

9.5. Acceptance and refunds .............................................................................................. 16

9.6. Payment of Profit and Money at Redemption ............................................................ 16

9.7. Rejection of applications ............................................................................................. 17

9.8. Underwriting and issue costs ...................................................................................... 17

9.9. Paying Agent ................................................................................................................ 17

10. The Project ........................................................................................................................ 18

11. Security ............................................................................................................................. 19

12. Listing ................................................................................................................................ 19

13. Rights of the Sukuk holder ................................................................................................ 19

14. The Issuer .......................................................................................................................... 20

15. Managing Director’s Report .............................................................................................. 30

16. HDFC’s Corporate Governance ......................................................................................... 36



17. Inspection of documents .................................................................................................. 36

18. Risk Factors ....................................................................................................................... 37

19. Material outstanding indebtedness in relation to the issue ............................................. 41

20. Litigation and disputes ...................................................................................................... 41

21. Details of shareholding in the company ........................................................................... 42

22. Staff Details ....................................................................................................................... 42

23. Disclosure of material contracts & conflict of interest of directors ................................. 43

24. Annexes ............................................................................................................................. 44

Annex - 1. Legal due diligence ..................................................................................... 44

24.1. .................................................................................................................................... 44

24.2. Annex - 2. Accountant’s report ............................................................................. 45

24.3. Annex - 3. Extract of Articles of Association ......................................................... 46

24.4. Annex - 4. Performance Guarantee Letter by HDFC ............................................. 47

24.5. Annex - 5. Audited financial statements for the year ended 31.12.2012 ............. 48

24.6. Annex - 6. Capital market development authority’s approval .............................. 49

24.7. Annex - 7. Registrar of the Companies’ approval ................................................. 50

24.8. Annex - 8. Extract of Corporate Governance Code ............................................... 51

24.9. Annex - 09. Declaration of Shariah Advisor .......................................................... 52

24.10. Annex -10. Endorsement of HDFC Shariah Committee ........................................ 53

24.11. Annex -11. Glossary .............................................................................................. 54



1. Introduction We, at HDFC Plc. Maldives believe that safe and secure housing is the no.1 priority for the

progressive Maldivian society.

Therefore, we wish to offer you an investment opportunity with us, and share in our mission to

make every Maldivian’s dream home, a reality through innovative housing finance products.

Housing Development Finance Corporation (HDFC) Plc. was established as a specialized Housing

Finance Company in the Maldives in 2004 under state ownership and privatized in July 2008 through

a Public Private Partnership with a joint foreign investment of 51% shares held by International

Finance Corporation (IFC) of the World Bank Group, Asian Development Bank (ADB) and HDFC

Investments of India. HDFC Plc. is the only specialized Housing Finance Institution in the Republic of

Maldives.

1.1. Presentation of Financial Information

The only sources of Company-specific financial information used in this Prospectus are audited

financial statements of the Company prepared in accordance with the Companies Act (10/96) and

International Financial Reporting Standards except for the financial years 31 December 2007 and 31

December 2008, which were prepared with a modification of the requirements of IAS 39 - Financial

Instrument: Recognition and measurement in respect of loan loss provisioning by MMA’s circular No-

GM-9/96 dated 25 April 1996 on Credit Risk Grading System and Loss Provision Requirements. The

financial statements for years ended December 31, 2004 to 2008 were audited by Ernst & Young

Chartered Accountants and by PricewaterhouseCoopers Chartered Accountants for years ended

December 31, 2009-2012.

1.2. Law & Exclusive Jurisdiction

This Prospectus and the Sukuk shall be governed by and construed in accordance with the laws and

regulations of the Maldives. Each of the parties hereto irrevocably agrees that the courts in the

Maldives shall have exclusive jurisdiction to hear and determine any suit, action or proceeding, and

to settle any disputes, which may arise out of or in connection with this Prospectus and the Sukuk,

and for such purposes irrevocably submits to the jurisdiction of such courts. However, before going

to the Court, the dispute shall be first taken to an arbitration proceeding.

1.3. Absolute Responsibility

Approval to issue these securities has been obtained from the Registrar of the Companies as required

by the companies Act (10/96) and the Securities Act (2/2006). Further HDFC has also obtained

consent from the Capital Market Development Authority (CMDA) to issue these securities.

However, neither the Registrar of the Companies nor the Capital Market Development Authority

takes any responsibility for the accuracy of any statement made thereof or for the financial

soundness of the Company or the value of securities concerned. HDFC Plc takes absolute

responsibility for the accuracy of the information disclosed in the document.



2. Responsibility Statement



3. Report by the directors to confirm due inquiry We, the undersigned as Directors of the Company hereby confirm performance of due inquiry in

relation to the interval between 31st December 2012 (the date to which the last accounts have been

made up) and 04 August 2013 (the date which prospectus is being issued) that:

a) The business of the Company has in our opinion been satisfactorily maintained;

b) There have not, in our opinion, arisen since the last Annual General Meeting of the Company any

circumstances adversely affecting the trading or the value of the assets of the Company or any of

its subsidiaries;

c) The current assets of the Company and of its subsidiaries appear in its books at values which are

believed to be realizable in the ordinary course of business;

d) There are no contingent liabilities by reason of any guarantees given by the Company or any its

subsidiaries; or

e) There are, since the last annual report, no changes in published reserves or any unusual factors

affecting the profit of the Company and its subsidiaries



4. Notice to investors Invitation to Subscribe - The Board of Directors of Housing Development Finance Corporation Plc

(HDFC PLC) on 14 December 2012 passed a resolution approving the company to raise Rf 50 million

through a Sukuk Issuance to the public, financial institutions, public corporations, private entities

and other institutions.

5. About the prospectus

This Issue Prospectus has been drawn up in accordance with the laws of Maldives.The main aim of

this Prospectus is to provide all the information necessary for the investors to make the right

decision regarding this Sukuk Issue. Each investor must study this Prospectus carefully in order to

decide whether it is appropriate to invest in it by taking into consideration all the factors relating to

the status and circumstance. It is solely the responsibility of the Issuer to include any essential and

accurate information or data in this Prospectus.

If any investor is in doubt about the contents of this document he/she should consult a person

licensed under the Securities Act who specializes in advising on the acquisition of shares and other

securities.



6. Details of the Sukuk offered The following summary should be read in conjunction with, and is qualified in its entirety by the

detailed information elsewhere in the Prospectus. Prospective investors in this Sukuk should see

the section in the prospectus under “Risk Factors” that discusses certain factors that should be

considered in connection with an investment in the Sukuk.

1 Issuer: Housing Development Finance Corporation Plc.

2 Issue Price: MVR 500.00 per Sukuk

3 Issue Date: 04 August 2013

4 Subscription Opening: 25 August 2013, 0900hrs

5 Subscription Closing: 03 October 2013, 1100hrs

6 Settlement Date: Date of Subscription

7 Allotment: Before 05 business days from the closure of

subscription

8 Total Issue: MVR. 50,000,000.00 (100,000 Sukuk)

9 The Project: To fund shari’ah compliant mortgage housing finance

operations under HDFC Amna

10 Tenure / Maturity Date: Ten (10) years from the allotment date

11 Profit: Profit share semi-annually in the ratio of 65%:35%

out of Gross Profit

12 Profit Payment Dates: Every six months after the date of allotment, until the

Maturity Date

13 Next Business Day: The first day following a non-working day.

14 Type of Issue: Dematerialized



7. Mudaraba Sukuk Structure

This Sukuk structure of this issuance is based on the Shariáh principle of Mudaraba (Money

Management). In the Mudarabah concept, one party will be providing the capital (the Rabb al Maal)

and the other party will be managing the capital (the Mudarib) in a proposed Shariáh compliant

project. For the purposes of this Sukuk, the Sukuk holders are collectively the providers of capital

(the Rabb al Maal) that purchase Sukuk certificate from the Issuer. HDFC Plc is the manager of the

capital (the Mudarib). The project managed by the Mudarib is known as the Mudaraba.

7.1. Terms & Conditions

All the relevant requirements and approvals from the regulatory authorities in the Republic of the

Maldives in relation to the issue of this Sukuk have been obtained. Each Sukuk Certificate evidences

an undivided ownership interest in the investment made, subject to these terms and has a limited

recourse obligation of the Issuer. Each Sukuk Certificate ranks pari passu, without any preference or

priority, with all other Sukuk Certificates. Proceeds from the Mudaraba are the sole source of

payments to Sukuk holders pursuant to the Certificates. The Sukuk Certificates do not represent an

interest in the Issuer or any of its affiliates. A meeting with the Sukuk holders can be convened at

the discretion of the Issuer to discuss matters regarding the Mudaraba.

By purchasing Sukuk certificates, the investors/Sukuk holders agree to accept and abide by the

following terms and conditions:

7.2. Representation and Warrants

The Mudarib hereby represents and warrants to the Rabb al Mal, as follows:

a) The Mudarib possesses all necessary powers and licenses to conduct its present business and the

Project.

b) The Mudarib Information provided under ‘The Issuer’ (section 14) is true and correct.

c) The Mudarib is experienced and knowledgeable in all business matters relating to the Project.

STEP 3: AS THE MANAGER/MUDARIB,

USE THE MONEY IN PROVIDING ISLAMIC

HOME FINANCING FACILITY TO ITS

CUSTOMERS

STEP 2: HDFC ISSUES SUKUK

MUDARABAH CERTIFICATE FOR A

MATUARITY PERIOD OF TEN YEARS

(PROFIT RATIO: 65%: 35%)

SUKUK HOLDER

RABB AL MAAL- THE

CAPITAL PROVIDERS

STEP 1- SUKUK HOLDERS BUY

SUKUK CERTIFICATES (MINIMUM

MVR 500)

SHARIAH COMPLIANT

HOME FINANCING

SCHEME UNDER HDFC

AMNA

HDFC PLC

(ISSUER/ORIGINATOR)

MUDARIB-MANAGER

STEP 4- PERIODIC PAYMENTS (BI-ANUALLY) ARE MADE TO THE

SUKUK HOLDERS BASED ON THE PRE-AGREED PROFIT SHARING

RATIO: i.e. 65% OF THE PROFIT TO THE SUKUK HOLDERS & 35%

OF THE PROFIT TO THE MUDARIB FOR HIS WORKMUDARIB



d) The Mudarib has prepared with all due care the information provided under ‘The Project’ on his

experience and knowledge and has completed all reasonable investigation to assure that such are

true and correct and disclose all factors relevant to the Rabb al Mal’s evaluation of the Project.

e) The Mudarib Financials are true and correct according to generally accepted accounting principles

consistently applied accurately representing the Mudarib’s financial status on the dates and the

profit and loss for the periods indicated, and no liabilities, fixed or contingent exist at the indicated

dates other than as appear in the Mudarib Financials;

f) All transactions for the purpose of which this sukuk proceed will be utilised are Shariah-compliant

transactions; and

g) All regulatory, governmental and corporate approvals and consents (including exchange control

approvals) for the due execution and delivery of, and performance of the work intend to carry out.

7.3. Participation in Profits

(a) The participation by Sukuk holders in the profit generated by the Mudaraba will be in accordance

with the following ratio:

i. 35% of the profit will be for Management Services and payable to the Mudarib.

ii. 65% of the profit will be payable to the Rabb al Mal collectively.

(b) Profit will be distributed out of the gross profit generated from the sukuk fund.

(d)The profits generated by the Mudaraba will be paid by the Mudarib to Rabb al Maal collectively

twice every calendar year; until the earlier of the Termination Date and the Maturity Date.

7.4. Loss

(a) 100% of any losses in the Project will be borne by the Rabb al Mal except in case of negligence,

breach of obligation or wilful default by the Mudarib.

(b) The Mudarib will receive no compensation for his Management Services, and will be liable for any

loss in the Project if it is proven that he has breached his obligations or is proven to be failing in

the discharge of his obligations under these terms.

(c) In the event of the Project showing losses during the continuity of this Sukuk issuance, the

Mudarib shall forthwith give notice of such losses to the Rabb al Mal together with all accounts

and details pertaining thereto and such other information and records as may be required by the

Rabb al Mal.

7.5. Taxation

On behalf of the Project, the Mudarib shall be liable for and shall punctually and regularly pay all

taxes, duties and other charges relating to the Project’s business and operations.

7.6. Management and Control

The complete management and control of the Project is exclusively vested in the Mudarib and the

Mudarib shall be solely responsible for the management and control of the Project.



7.7. General Covenants of Mudarib

The Mudarib covenants to the the Rabb al Mal that the Mudarib shall:

a) promptly give notice to the Rabb al Mal of any change in the information disclosed in the

section ‘The Issuer’.

b) undertake the Management Services such as providing Islamic financing facilities to third

parties with due care and all reasonable commercial diligence expected of an experienced

businessman to ensure the success of the Project according to the description of The

Project.

c) utilize the Project assets exclusively for purposes of the Project

d) collect all receivables from third parties arising from the Project or the transfer of Project

assets or other documents requiring payment from third parties directly to the Account

e) maintain all Project assets in the name of the Mudarib, but physically segregated from other

assets of the Mudarib and free and clear of all liens and encumbrances except those in

favour of the Rabb al Mal.

f) maintain true and correct books of account relating to the Project together with all invoices,

records contracts and all other documentation.

g) supply to the Rabb al Mal any information, material or document relating to the Project or

to Mudarib’s financial status, and grant access to the Rabb al Mal or its agents to all books

and relating to the Project and to the Mudarib’s financial statements.

h) immediately disclose in writing to material or document the Rabb al Mal any business

factors of which the Mudarib becomes aware and which might adversely affect the success

of the Project.

i) not effect directly or indirectly any transaction on behalf of the Project in which the Mudarib

or any shareholder of the Mudarib, if a corporation, is interested directly or indirectly

without consent of the Rabb al Mal.

j) under its sole responsibility, conduct the Project in conformity with all applicable civil and

criminal laws.

k) conduct the Project without violation of the principles of the Islamic Shariah.

7.8. Transfers

The Issuer makes no representation that the Sukuk may at any time lawfully be sold in compliance

with any applicable registration or other requirements in any jurisdiction, or pursuant to any

exemption available thereunder, or assumes any responsibility for facilitating any such sale. Persons

into whose possession this Prospectus or any Sukuk may come must inform themselves about, and

observe, any applicable restrictions on the distribution of this Prospectus and the offering and sale

of the Sukuk.

7.9. Limited Recourse

By subscribing for or acquiring the Sukuk, Sukuk holders acknowledge that they will have no

recourse to any of the assets of the Issuer (other than the Mudaraba) to the extent that the Issuer

fulfils all of its obligations under Sukuk. The net proceeds of the realisation of the Mudaraba may not

be sufficient to make all payments due in respect of the Sukuk. If, following the distribution of such

proceeds, there remains a shortfall in payments due under the Sukuk, no Sukuk holder will have any

claim against the Issuer to the extent the Mudaraba has been exhausted.



7.10. Negative Pledge

For so long as any payment remains outstanding under any Sukuk, the Issuer undertakes not to

create or have outstanding any mortgage, charge, lien, pledge or other security interest upon the

whole or any part of the Mudaraba.

In the event of non-payment of profit or principal due on the sukuk, the sukuk holders are entitled to

declare any payment obligation under the sukuk immediately due and payable and such payments

due shall be made to the sukuk holders not less than 10 days. HDFC (issuer) will cancel and will not

resell the sukuk which are redeemed or purchased by the issuer or its subsidiaries or agents of the

issuer.

7.11. Termination

(a) Subject to other provisions of these terms, it is agreed that upon full payment on

Termination Date or earlier, if proceeds have been received, the Mudaraba shall be

redeemed.

(b) The occurrence of an event of default would entitle the Sukuk holders to declare the

Sukuk immediately due and payable without any provision for period of grace, while

provision for remedy may be negotiated to the extent appropriate.

(c) An event of default here means:

(d) (i) default is made in the payment of any Periodic Distribution Amount on the due

date for payment thereof and, in the case of any Periodic Distribution Amount

only, such default continues for a period of a two weeks without any lawful

justification; (ii) the Issuer is (or is deemed by law our a court to be) insolvent or

bankrupt or unable to pay its debts or a moratorium is agreed or declared or comes into

effect in respect of all or any part of the debts of the Issuer;

(iii) it is or will become unlawful for the Issuer to perform or comply with any one or

more of its obligations under the Sukuk;

(e) While the amount invested by the Rabb al Mal must be repaid on the due date,

mentioned above, the accounts of the Mudarabah will be drawn up within 15 days

thereof and the agreed share the Rabb al Mal’s profit will be promptly paid.

7.12. Meeting of Sukuk Holders

The Sukuk holders may convene meetings of Sukukholders to consider any matter affecting their

interests, including the sanctioning by Extraordinary Resolution of a modification of the Mudaraba

Sukuk, these Conditions which is also approved by the Issuer. Such a meeting may be convened by

the Issuer and shall be convened by the Issuer upon the request in writing of Sukukholders holding

not less than one-tenth of the aggregate Nominal Amount of such of the Mudaraba Sukuk as are

current as of such date. The quorum at any meeting convened to vote on an Extraordinary

Resolution will be two or more Persons holding or representing at least half of the aggregate

Nominal Amount of such of the Mudaraba Sukuk as are current as of such date or, at any adjourned

meeting, one-quarter of the aggregate Nominal Amount of such of the Mudaraba Sukuk as are

current as of such date.

An Extraordinary Resolution requires the affirmative vote of at least one more Sukukholder than half

of those represented in the relevant meeting in order for it to be passed. Any Extraordinary

Resolution duly passed at any such meeting shall be binding on all Sukukholders, whether present or

not.



7.13. Force Majeure

(a) Any delays in or failure by a Party hereto in the performance of the obligations hereunder if and

to the extent it is caused by the occurrences or circumstances beyond such Party’s reasonable

control, including but not limited to, acts of God, fire, strikes or other labour disturbances, riots,

civil commotion, war (declared or not) sabotage, any other causes, similar to those herein

specified which cannot be controlled by such Party.

(b) The Party affected by such events shall promptly inform the other Party of the occurrence of such

events and shall furnish proof of details of the occurrence and reasons for its non-performance

of whole or part of these terms agreed. The Parties shall consult each other to decide whether

to terminate these conditions or to discharge part of the obligations of the affected Party or

extend its obligations on a best effort and on an arm’s length basis.



8. Eligible participants This issue is open to any individual or corporate legal entity that is permitted to transact on the

Maldives Stock Exchange according to the laws of the Maldives. This would include Public Limited

Liability Companies, Commercial Banks, Pension Authority, Public Corporations and Insurance

Companies.

All supporting documents accompanied with the application should be valid; this includes copies of

national identity cards, passport copies, birth certificates and any other documents validating the

name and date of birth of the applicant.

For Individuals:

A copy of the National Identity Card (only for Maldivians), or Bio-data Pages of current Passport (only

for foreigners)

For Legal Entities:

• A copy of the Certificate of Registration.

• A board resolution/similar document authorizing the investment in HDFC MUDARABAH

SUKUK- Issue No. 1 and the opening and operation of an account with MSD.

• Securities Account on behalf of the entity and authorizing the subscription of shares

• A copy of the Memorandum & Articles of Association and bylaws that govern the operations

of the entity, if any

• A copy of the National Identity Card of the authorized signatories



9. Procedure for application

Applications must be made on the Application Form supplied with this Prospectus. Application can

be also be downloaded from our website http://www.hdfc.com.mv. Applicants using downloaded

forms are requested to inspect the Prospectus, which is on the company website or a hard copy will

be available at HDFC PLC’s Office. All the Application should be submitted directly to HDFC PLC at

the following address;


4th

Floor, H. Mialani

Sosun Magu


9.1. Subscription List

The subscription list will open at 9:00 hours on 25 August 2013 and remain open for 30 market days

and close at 11:00 hours on 03 October 2013. HDFC reserves the right to close the issue prior to the

closing date in the event of an oversubscription following due notice to the public.

Duly completed Application Forms will be accepted by HDFC PLC at its office of business. The

Prospectus and Application Forms will be made available 14 (fourteen) market days prior to the

opening of the subscription list.

9.2. Mode of payment

i. Each application should accompany a check/cash/pay-in-slip for the full payment of the

sukuk applied. The amount payable should be calculated as per the following formula:

� = ��

Where V = full payment of sukuk applied

S = price per Sukuk (i.e. MVR 500)

n = number of sukuk applied

ii. Payments should be made by check, crossed as “Account Payee Only” and made payable to

HDFC Bond -2 or cash to HDFC Bond -2 (7701-143666-102, Bank of Maldives), where the pay-

in slip should be attached to the application form sent to HDFC head office.

iii. All such subscription payments will be deposited to HDFC - Sukuk 1 account on the

‘Subscription Closing’ date and HDFC Plc has all the rights to reject the application if a check

is not honored on its first presentation.

iv. An acknowledgement receipt will be issued for the checks/cash/pay-in-slip received and

Application Forms accepted.

v. Application Forms and the accompanying checks and cash payments which are incomplete in

any way and/or not in accordance with the terms, conditions and instructions set out in this

Prospectus, and application forms which are illegible will be rejected.



9.3. Dematerialized offering

This offering of Sukuk will be carried out in a dematerialized environment. This means that the

sukuk certificates issued by HDFC Plc will be deposited with the Maldives Securities Depository

(MSD). A record of each sukuk holder and sukuk held shall be maintained by MSD, and statements

shall be issued upon request from time to time to evidence the holding. An MSD account opening

form is enclosed with each sukuk application form, and must be perfected by every applicant

subscribing to the Sukuk Issue.

9.4. Allotment

The sukuk will be allotted within 05(five) business days from the ‘Subscription Closing’ date. All the

applications shall be considered for allotment in order of first come first serve basis.

9.5. Acceptance and refunds

Where an application is not accepted in full or in part, the balance of the application money, shall be

refunded to the applicant within 10 (ten) working days from the closure of the issue. The HDFC PLC

reserves the right to accept subscriptions in full or in part from any subscriber.

9.6. Payment of Profit and Money at Redemption

a. The Sukuk Holder, whose ownership of the Sukuk is registered with the MSD, will receive half

yearly profit shared in accordance with pre-agreed profit sharing ratio.

b. Redemption money and profit will only be deposited to the bank account given in the

application form. The bank account should be in his/her/entity’s name and should be in a local

bank in Maldives Rufiyaa (MVR). This account must be live and operational all the time during

the tenor of the sukuk.

c. After the sukuk allotment, MSD should be contacted for any update to the particulars provided

earlier.

d. If any Sukukholder fails to update his/her particulars or refuses to claim and receive payment

of the redemption money payable to such Sukuk holder, the amount due to such Sukuk holder

shall be deposited by the Paying Agent to a separate bank account at the end of thirty days

after the date of maturity and shall be paid to the holder of such Sukuk when a claim is lodged

no later than six months from the date of final maturity.

e. No sukuk, partly or in full, may be redeemed prematurely.



9.7. Rejection of applications

• Incomplete applications will be rejected at HDFC’s absolute discretion.

• Late Applications (delivered after the closure of the Subscription Period) will be

rejected.

• Applications considered as ‘oversubscription’ will be rejected and refunded within 10

working days following the closure of the issue.

The Management and Board of Directors reserve the right to refuse or accept any

application owing to a valid reason.

9.8. Underwriting and issue costs

No underwriter has been appointed for this series of sukuk issue.

All expenses and fees attributable to this series of sukuk issue, including legal fees, authority fees,

advisory charges, Paying Agent fees and bank charges will be borne by the Issuer.

9.9. Paying Agent

Maldives Securities Depository Company Pvt. Ltd. will be appointed as the Paying Agent whose

address is given below;

Maldives Securities Depository Company Pvt Ltd

H. Gadhamoo Building, 3rd Floor, Boduthakurufaanu Magu,

Male’, Maldives.

T: (+960) 3307878, F: (+960) 3305034, email: [email protected]

W: www.mse.com.mv

W: www.msd.com.mv



10. The Project The funds raised by the issue of sukuk will be utilized to give Shariah compliant mortgage

financing facilities under the HDFC Islamic window HDFC AMNA and no amount of the

proceeds will be utilized for any other purpose other than what is stated in the

prospectus. More information about this operation can be obtained through the

following link: <http://www.hdfc.com.mv/hdfc_amna.html>.

HDFC Amna was launched in May 2012 in a ceremony held at Nasandura Palace Hotel,

Maldives. “Amna” is an Arabic word which refers to “security”. Amna is stated in al Quran

to connote peaceful, protected and secure. HDFC Amna is neither a separate company

detached from HDFC nor a subsidiary of HDFC. HDFC Amna is simply and solely an Islamic

window of HDFC offering Islamic home financing facilities to the customers under the

existing license of HDFC to offer home financing products to Maldivians in an affordable

manner.

This Islamic window can be defined as a department of a conventional financial institution

offering Islamic financial services. Hence, HDFC Amna will operate as a department of

HDFC. HDFC Amna will observe the following standards to achieve Shari'ah compliance:

• Complete Segregation of Funds

• Shari’ah Supervisory Board (Shari’ah Committee)

• Products fully based on Islamic Concepts including the contracts

• Management in accordance with Islamic principles

HDFC – Amna has started its operation in December 2012. As at the ended of first quarter

2013, HDFC Amna has a housing portfolio of MVR24 million.

The Sukuk Issue is part of HDFC PLC’s intention to leverage its capital base with a diversified

portfolio of Shariah compliant debt instruments that would include local investors as well.

Another objective of issuing sukuk to the public by HDFC is to create a secured low-risk long-

term Shariah compliant investment avenue for the local takaful /insurance companies,

pension authority, government corporations, companies and the members of public. HDFC

has embraced principles of sustainable and responsible finance in all aspects of operations.

HDFC Sukuk with a listing in the Maldives Stock Exchange will increase vibrancy in the market

by giving opportunities for varying investors to take part in the national housing development

endeavor.



11. Security Performance guarantee from HDFC Plc. is given to this offer in Annex 5

12. Listing The Sukuk offered under this prospectus will be eligible for trading in the Maldives Stock

Exchange. Application for listing has been made.

13. Rights of the Sukuk holder The Sukuk Holder will be entitled to a half yearly profit in accordance with the terms given

in this prospectus. In the event the Sukuk Holder needs liquidity before the Sukuk’s date

of maturity, the Sukuk will be eligible for trading in the Maldives Stock Exchange and the

holder has the right to transfer ownership through secondary market.



14. The Issuer

Housing Development Finance Corporation Plc.

Our Vision

Our vision is to provide decent and affordable homes in a safe and healthy

environment, and work towards uplifting the living standards of all

Maldivians by becoming the market leader for financial services in the

Maldives.

Our Mission

Our mission is to offer financial and social strength to all Maldivians by

providing home finance and other savings and investment products managed

professionally and profitably to the highest International Standards and to

the complete satisfaction of all stakeholders.

Our Pledge

HDFC would strive hard and explore all avenues to:

• Provide a solution to every single customer.

• Process home-finance applications to the highest professional standard

to give a speedy and effective service.

• Manage all aspects of customer relationship with due care,

communication and sensitivity to ensure 100% home-finance

performance.

• To conduct all affairs as a responsible corporate citizen with good

governance, accountability and transparency.

Company Overview

• Housing Development Finance Corporation (HDFC) Limited was incorporated as a

state owned enterprise on 28 January 2004 by a Presidential Decree under the

Companies Act, Law No: 10/96. The commercial operations commenced on March

29, 2004. HDFC was established with technical assistance from the World Bank, and

initially all shares were held by the Government of Maldives (GOM).

• HDFC Plc. was registered as a public company on the 9th of February 2006.

• The HDFC Plc. was privatized with the signing of a shareholders’ agreement for

privatization between the GOM, IFC, ADB and HDFC-Investments Ltd.-India on July

23, 2008. This Public Private Partnership has a joint foreign investment in 51%

shares by International Finance Corporation (IFC) of the World Bank Group, Asian

Development Bank (ADB) and HDFC Investments Ltd of India. The structure of the

shareholding in the privatized HDFC Plc. is given in clause 21 (Detail of shareholding

in the company).



• The July 2008 initiative to restructure the capital and recommence the business of

HDFC Plc. became effective on February 10, 2009 with the first equity disbursement

by the International Shareholders. IFC and ADB’s commitment extended to a multi-

lateral funding facility with seven-year tenure. HDFC Ltd of India, with over thirty

years of experience in mortgage finance, is the technical partner of HDFC Plc. with

assistance from IFC’s Advisory Service Performance Based Grant (ASPBG).

• In March 2013, the company has issued a listed bond of MVR 51.97 million at an

interest rate of 7.5.p.a. Eight individuals and one institution invested with this

bonds issue.

Having restructured its capital, and with new lines of long-term credit, Housing

Development Finance Corporation Plc., Maldives (HDFC) re-entered the market for

mortgage home-finance for housing needs of individuals and families. HDFC is unique as

the only specialized housing finance institution in the Maldives. With six commercial

banks operating in the mortgage housing home-finance market, HDFC’s competitive

long repayment terms and income-pooled home-finance enabled the achievement of a

30% market share by the end of 2010 when the industry home-finance portfolio stood

at Rf. 1 billion. The demand for home-finance continue at a rate of growth that

outstrips the supply of matching funds, and long-term sukuk denominated in MVR is

seen as the way forward to create sustainable housing finance in the Maldives.

The GOM’s policy of improving the infrastructure in focus islands to facilitate economic

development through zonal investment opportunities for Public, Private, Partnership

(PPP) ventures is viewed as a positive factor in going forward with the development of

housing finance. Such an approach would assist sustainable growth in home ownership

based on mortgage security over properties that will appreciate in value to satisfy the

fair value criterion in debt provisioning and managing credit risk. This is very important

as a market characteristic, especially in the light of the financial crisis faced by

developed economies of the world.



HDFC Plc’s Board Advisory Committees and Senior Management

Board of Directors*

Nominee Directors

Ms. Renu Sud Karnad HDFC Investments Ltd. (India)- Chairperson 2009

Mr. Sanjaya Gupta ADB – Chairman 2011 and 2012

Mr. Ismail Ali Manik GOM - Chairman - 2013

Ms. Fareeha Shareef GOM

Alternate Directors

Mr. Conrad D'Souza HDFC Investment Ltd (India)

Ms. Christine Engstrom ADB

Mr. Hamid Sodique GOM

Managing Director

Dr. A. D. Priyanka Baddevithana

Company Secretary

Mr. Adam Athif

Audit and Management Committee

Mr. Conrad D’Souza Alternate Director- HDFC Investment Ltd. - India

Mr. Ismail Ali Manik Director -GOM

Mr. Sanjaya Gupta Director- ADB

Nomination and Remuneration Committee

Mr. Ismail Ali Manik Director - GOM

Ms. Fareeha Shareef Director - GOM

Dr. A.D. Priyanka Baddevithana Managing Director

*Only the Managing Director holds a qualifying share in the stock of HDFC. The Chairman and Board Directors

function in a non-executive capacity.

Shari-ah Committee

Dr. Ibrahim Zakariyya Moosa - Chairman

Dr. Rusni Hassan - Member

Ms. Aishath Muneeza - Member

Senior Management

Dr. A. D. P. Baddevithana - Managing Director

Mr. Ali Shareef - Chief Financial Officer

Mr. Ibrahim Didi - Deputy General Manager & Head of Accounts

Mr. Mohamed Shaafiee - Chief Technology Officer

Ms. Aishath Rasheeda - Senior Manager - Credit

Mr. Adam Athif - Senior Manager – Administration and HRD

Mr. Mohamed Fathy - Senior Manager - IT

Mr. Mohamed Shafeeq - Senior Manager - Business Development & CRM



Profile of HDFC Plc’s Board

The Directors’ Board comprises of five nominee and alternate directors appointed by

GOM, ADB and HDFC Investments- India. The chairman to the Board of Directors is

appointed on rotation, and with a non-voting managing director responsible for

policy implementation and on-going operations. All directors possess a wide range

of talents, skills and experience with proven track records in the field of housing

finance and business administration.

Nominee Directors -

Ms Renu Sud Karnad, 58, is a nominee Director of HDFC Investments Ltd., India,

from the inception of the privatization of HDFC Plc in 2009 and does not hold any

shares in any company in the Maldives that has a conflict of interest with HDFC Plc.

She is the Joint Managing Director at Housing Development Finance Corp. Ltd. in

India, and Home Finance Services India Private Limited. She joined the firm in 1978

and has been its Executive Director since 2000. Ms. Karnad has been Director of ICI

India Limited since August, 2003, HDFC Bank Ltd. since July, 2002 and Motor

Industries Co. Ltd. since April, 2007. She serves as Director of HDFC Asset

Management Co. Ltd., Indraprastha Medical Corp. Ltd., Gruh Finance Ltd., HDFC

Realty Ltd., Ascendas Limited, Credit Information Bureau (India) Ltd. (CIBIL),

Feedback Ventures Ltd., HDFC Chubb General Insurance Ltd., and Mother Dairy

Fruits & Vegetables Limited. She is a Member of the Board of Advisors at Swiss

Technology Venture Capital Fund. Ms. Karnad also holds Pravin Fellowship from

Woodrow Wilson School of International Affairs, Princeton, NJ. She is a Law

Graduate and also holds a Masters degree in Economics from Delhi University. Over

the years, Ms. Karnad has had to her credit, numerous awards and accolades. She

was featured in Business Today magazine’s list of “Most Powerful Women in Indian

Business’ many years, and was among the list of “25 top non-banking women in

finance” by U.S. Banker magazine in 2008 and was chosen as the “Best Woman

Corporate Leader” by Business & Economy magazine for the year 2007-2008. She

was felicitated at the “Women Achievers Award – 2007” by the FICCI Ladies

Organization. In 2006, Wall Street Journal Asia adjudged her among the “Top Ten

Powerful Women in Asia”.

Mr. Sanjaya Gupta, 48, is a nominee Board Member representing ADB since March

2010. He does not hold any shares in any company in the Maldives that has a conflict

of interest with HDFC Plc. As a senior professional with more than 24 years of work

experience, he has coordinated with international financial institutions (IFC, ADB, and

KFW), and with various central and state Government departments to augment the

Indian real estate/ retail mortgage space. Mr. Gupta started his professional career at

HDFC Ltd., as a Management Trainee – since then he moved into various critical

positions, such as Business Head for Middle East, Deputy General Manager at HDFC

Ltd. etc. He also was the Vice President –Business Head Mortgage Operations for

ABN AMRO NV. He was the Chief Executive Officer & Managing Director for American

International Group Inc. He has also co-promoted a housing Finance company, for

the urban poor in India – India Shelter Finance Corporation Ltd. – a first of its type

company in the country. Mr. Gupta holds an MBA from the University of Lucknow

and is a B.Com Graduate. Completed his High School from St. Joseph’s College



Nainital and is a Certified Project Manager by Perot Systems Project Management

Institute. In addition he is also a Certified Housing Finance Trainer by Centre of

Housing Finance – a JV, USAID and HDFC Ltd. He is also a Fellow of the Royal Institute

of Chartered Surveyors - UK.

Mr. Ismail Ali Manik, 37, is a nominee Board Member representing the Government

of Maldives since the inception of the privatization of HDFC Plc. in 2009. He does not

hold any shares in any company in Maldives that has a conflict of interest with HDFC

Plc. He has over 11years of experience in Public Finance in the Government Sector

and has acted as a Consultant to World Bank. He started his Professional career in

Ministry of Finance and Treasury and worked on fiscal policy, national budget

preparation and public expenditure management issues and is currently working as

the Permanent Secretary at Ministry of Finance and Treasury . Mr Manik holds a

Master Degree in Public Administration from Columbia University, Program in

Economic Policy Management, in addition is a Bachelor of Economics, University of

Adelaide, Australia. Further he has participated at various international seminars and

workshops conducted by World Bank, IMF, Summer Institute for the Preservation of

Study of History of Economics, Columbia University and Centre for Central Banking

Studies, Bank of England.

Ms. Fareeha Shareef, 33, is a nominee Board Member representing the

Government of Maldives since privatization of HDFC Plc in 2009. She has over seven

years of experience in the financial and business advisory services. She has declared

holding of 200 shares of the Bank of Maldives, and also sitting board member of the

Maldives Pension Administration Office. She is the CEO of FJS Consulting Pvt. Ltd, a

leading management consultancy firm based in the Maldives. She has worked with

major organizations including State Trading Organization Plc., Maldives National

Shipping Limited, Maldives Tourism Development Corporation, Housing

Development Corporation Ltd, Bank of Maldives Plc. and developmental agencies

including UNDP, FAO, IFAD, WHO, World Bank and Asian Development Bank. She

has worked in KPMG Ford Rhodes Thornton and Co, Sri Lanka as an Advisor in the

Risk Advisory Section of the firm. She has also worked at Public Enterprises

Monitoring and Evaluation Board of Ministry of Finance. She holds a Masters

Degree in Management Studies (Accounting) from the University of Waikato,

Hamilton, New Zealand in addition to a Bachelor’s Degree in Commerce & a

Bachelor of Commerce and Management (Accounting & Finance) from Lincoln

University, Christchurch, New Zealand. She is a member of Association of Chartered

Certified Accountants (UK), Institute of Internal Auditors (USA), Certified Practising

Accountants of Maldives (CPA Maldives) and a Provisional Member of New Zealand

Institute of Chartered Accountants (NZ).



Alternate Directors -

Mr. Conrad D’Souza, 51, is an Alternate Board Member for HDFC Investments Ltd. India since

the inception of the privatization of HDFC Plc. in 2009. He does not hold shares in any

company in the Maldives that has a conflict of interest with HDFC Plc. He has 27 years of

experience in the field of Housing Finance. He joined Housing Development Finance

Corporation Limited – India in 1984 and is currently Senior General Manager – Management

Services and Investor Relations. His responsibilities include corporate planning and budgeting,

corporate finance and investor relations. He was earlier the Treasurer of HDFC-India and his

responsibilities included resource mobilization both domestic and international and asset

liability management. Mr. D’Souza has also worked earlier in Operations and Management

Services at HDFC-India. He has been a consultant in housing finance to USAID/UNDP and IFC

(Washington) and has undertaken assignments in Asia, Africa and Eastern Europe. He is a

member of the National Stock Exchange of India Limited’s Committee on Currency Derivatives

and is also a governing council member the Association of Finance Professionals of India. Mr.

D’Souza has a Master’s Degree in Commerce, a Master’s Degree in Business Administration

and is Senior Executive Program (SEP) graduate of the London Business School.

Ms. Christine A. Engstrom, 45, is an alternate Board Member representing the Asian

Development Bank (ADB) since the inception of the privatization of HDFC Plc in 2009. She

does not hold any shares in any company in Maldives that has a conflict of interest with HDFC

Plc. As a Principal Investment Specialist at the ADB with more than 18 years of work

experience, Ms. Engstrom is currently the Unit Head of Financial Institutions at ADB where she

heads a team providing debt, equity and guarantees to financial institutions in Asia. Ms.

Engstrom started her career at the International Finance Corporation (IFC), Washington, D.C.,

working in the Asia Department before moving to the Overseas Private Investment

Corporation (OPIC), in Washington, D.C. as Senior Investment Officer. Ms. Engstrom was

employed at Fannie Mae from 2001 to 2006 as Deal Structuring Manager in Single Family

Mortgages before assuming the post of Senior Transaction Manager in Fannie Mae’s Capital

Markets group. She is currently based in Manila. Ms. Engstrom holds an MBA from

Georgetown University as well as M.A, International Affairs from University of Virginia in

addition to B.A. in Political Science from the University of Washington.

Mr. Hamid Sodique 37, is an alternate Board Member representing the Government of

Maldives since May 2012. He does not hold any shares in any company in Maldives that has a

conflict of interest with HDFC Plc. He has over 15years of experience in Consultation work and

Project and Management area and was a member of the Maldives Pension Administration

Office and served in the Investment Committee of the Board until August 2011. He started his

Professional career in the Maldives Monetary Authority in 2006 and since then has worked at

prominent positions in well know Organization such as UNESCO, SAARC, AAA and is currently

working at a private consulting firm. He has executed many national and international projects

on business management, strategic planning, Entrepreneurship Skills Training and Mentoring.

Mr. Sodique holds a Master Degree in Business Administration from the University of

Adelaide, Australia in addition to a Bachelor’s Degree in Business Administration from

University of Brunei Darussalam.



Managing Director

Dr. A. D. P. Baddevithana, 54, holds a qualifying share at HDFC Maldives, and does not

hold shares in any company that has a conflict of interest with HDFC Maldives. He

counts more than 30 years of experience, with 20 years in senior management

positions in Housing Finance, Banking, and Business Administration in the UK, Sri

Lanka, and Maldives. Prior to taking up the position of Managing Director of HDFC

Maldives in September 2008 he served the HDFC Bank of Sri Lanka as its Head of

Credit, Operations and Marketing over a period of six years. He began his career in

1977 as a management trainee of the Peter Robinson Group in the UK, and his

employment record includes Kensington and Westminster District Finance Office, the

Housing Corporation of England and Wales, Clerical Medical Investment Ltd. of the

Halifax Group UK, and in Sri Lanka in 1997 as the founder General Manager of the first

private sector building society known as Nations Building Society, a position he held

until he joined the HDFC Bank of Sri Lanka in 2002. He is a Life Member of the

Association of Professional Bankers of Sri Lanka, a Certified Professional Marketer of

the Asia Pacific Marketing Federation, Fellow of the Sri Lanka Institute of Marketing,

and holds academic qualifications of Ph.D., MBA, MA and BA. He has attended many

international seminars and conferences in the UK, USA, Germany, Singapore, India,

Malaysia and Indonesia covering banking, corporate governance and housing finance.

He has been a key resource person and adviser for a number of state, international

and private sector led ventures including, HACAS UK, the Commonwealth Institute,

ADB, World Bank and the Central Bank of Sri Lanka, and has served as an accredited

resource person for programs of the Institute of Chartered Bankers of the UK.



Profile of HDFC Plc’s Shariáh Advisory Committee

The HDFC Amna department is managed and systematized to ensure proper Shari’ah governance

mechanisms both within the department and among its stakeholders. A Shari'ah Committee

consisting of three members will be established to advise the Board of Directors of HDFC on Shari'ah

related matters. The members of the Shariah Committee are:

Dr Ibrahim Zakariyya Moosa (Chairman), 56, holds a PhD in Fiqh and Usulul Fiqh and a M.A

in Islamic Revealed Knowledge from International Islamic University Malaysia. He obtained

his Bachelor’s Degree in Islamic Shariáh from Islamic University of Medina, Saudi Arabia.

Currently he is the Rector of College of Islamic Studies. He also served as a Parliament

Member for nine years (from 1989 to 1999); was a Member of the Special Majlis for thirteen

years (from1990 to 2004); was a Member, Supreme council of Islamic Affairs. (from 1995 to

2004); and also was a Member of Quran translation committee (from 1995 to 2004). He has

attended seminars and published articles on different matters related to Shariáh.

Assoc. Professor Dr Rusni Hassan, 46, is an Associate Professor at the Ahmad Ibrahim

Kulliyyah of Laws (AIKOL), International Islamic University Malaysia (IIUM). She graduated

with LLB (Honours) and LLB (Shariah) (First Class), Master of Comparative Laws (MCL) and

Ph.D. in Law. Her area of specialization includes Islamic Banking, Finance and Islamic

Documentations, Islamic Capital Market, Takaful and Islamic Law of Transactions. She is a

Board Member and PhD Selection Committee at IIUM Institute of Islamic Banking and

Finance. Presently she is a member of Shariah Advisory Council of Central Bank of Malaysia

(Bank Negara Malaysia). She was a member of Shariah Committee for HSBC Amanah

Malaysia, HSBC Amanah (Takaful) Malaysia and a registered Shariah Unit Trust Advisor with

the Securities Commission. She has presented numerous research papers on Islamic finance

in national and international conferences and she has also written books of Islamic finance

related subjects. She is the co- author of the winning essay of the worldwide Islamic finance

essay competition organized in Kuala Lumpur Islamic Finance forum (KLIFF) of 2010 for

research: “Take It or Leave It! The Iniquitous Islamic Banking Documents” and has won a

gold medal and a silver medal in IIUM Research Invention and Innovation Exhibition 2012 for

her research on Islamic banking and finance.

Aishath Muneeza, 27, is currently the Head of Islamic Finance of Capital Market

Development Authority (CMDA), which is the regulatory body for the capital markets of

Maldives and the chairperson of the Capital Market Shariáh Advisory Committee of CMDA.

She sits in the National Fiqh Academy (National Fatawa Council) of Maldives. She also serves

as the Islamic finance Consultant for Housing Development Finance Corporation PLC (HDFC)

of Maldives. The Islamic wing of HDFC, HDFC Amna was set up under her direct guidance.

She is also a registered Shariah Advisor at Securities Commission of Malaysia to advise on

non-ringgit shariah compliant products. She delivers public lectures and conducts training on

Islamic Finance related areas for government officials and private institutions. She has

presented numerous research papers in national and international conferences and has

spoken about Islamic finance related matters in different parts of the world including France,

India, Tunisia, Mauritius, Australia, Brunei, Indonesia and Malaysia. She has published

academic books and papers on Islamic banking and Finance. As an Attorney, she also drafts

documentation for Islamic products for Islamic financial Institutions. She holds a LL.B (HONS)



degree and a LL.M (Banking) from International Islamic University Malaysia. Currently she is

doing her PhD.

Profile of other members of the senior management team.

Company Secretary, Senior Manager Administration and HRD - Mr Adam Athif, 41,

joined HDFC Plc. in December 2004. He does not hold any shares in the company or in

any company in the Maldives that has a conflict of interest with HDFC Plc. Mr Athif

started his career in the Government of Maldives in 1990 as a Secretary since then he

has worked his way up the ladder and has worked in areas related to Administration

and Human Resources in the Private Sector as well as the Government. He holds a

Diploma in Business Administration and is well versed with local Housing Market

having attended various workshops in relation to Housing Finance.

Chief Financial Officer - Mr. Ali Shareef 31, joined HDFC Plc in October 2012. He does

not hold any shares in any company in Maldives that has a conflict of interest with

HDFC Plc. He has over 11years of experience in Finance in the Government Sector and

has acted as a Consultant to local firms. He started his Professional career in the Public

Enterprises Monitoring and Evaluation Board at the Ministry of Finance and Treasury

and worked on due diligence of SOE’s, Financial reviews of PE’s, advice PE’s on

budgets, business plans & Policies. Mr. Shareef holds a BA (Hons) Accounting from

University of Hertfordshire, UK/ through Inti College Malaysia and is an Affiliate

Member of the Association of Chartered Certified Accountants of the UK since 2008.

He served as Technical Advisor to the Minister in the Public Enterprises Monitoring

and Evaluation Board, Ministry of Finance and Treasury prior to joining HDFC Plc.

Deputy General Manager and Head of Accounts – Mr. Ibrahim Didi, 35, joined the HDFC

Plc. in June 2008. Other than 83 shares in the Bank of Maldives, he does hold any shares in

any company in the Maldives that has a conflict of interest with HDFC Plc. He began his

career in the Ministry of Planning in August 1998, and his service record includes reputed

organisation such as Island Aviation Service Ltd. and Wataniya Telecom Maldives Pvt Ltd.,

where he was the Finance Operations Manager for three years prior to joining HDFC Plc. He

is a passed finalist of the Managerial Level of CIMA. He attended many local and

international seminars and workshops on Business Administration, Banking and Islamic

Finance.

Chief Technology Officer- Mr. Mohamed Shaafiee 35, joined HDFC Plc., in July 2012. He

does not hold any shares in the company or any other company in the Maldives that has a

conflict of interest with HDFC Plc. He started his career as Interim Chief Information Officer

at Makmal Komersial Holdings Sdn. Bhd., Malaysia, in March 2000, during which time he

lectured at APIIT College and provided consultancy to the partner start-up Cyanix

Computers. He has worked with a number of reputable local firms in top-level management

capacity, including Wataniya Telecom Maldives and Focus Computers Pvt Ltd. Clients who

have benefited from his consultancy services over the past decade include Maldives Police

Service, Crown Company Pvt Ltd, Attorney General’s Office and Damas Company Pvt Ltd.

Prior to joining HDFC he was working for the President’s Office, Maldives, as their Head of IT,

with a stint at the 17th SAARC Summit as the Project Director for IT assigned by the

Government of Maldives. He holds a Master’s degree in Software Engineering from

Staffordshire in addition to a Bachelor’s of Science degree in Computing. One of the

outstanding achievements in his area of interest is the development of a non-von-Neumann

Programming Language, Symlah, which is one the first Turing-complete programming

language developed by a Maldivian.



Senior Manager - IT- Mr. Mohamed Fathy, 37, joined the HDFC Plc. in March 2004 as part of

the initial team and holds one share in the company. He does not hold any shares in any

company in Maldives that has a conflict of interest with HDFC Plc., except at Bank of

Maldives Plc at which he holds 50 Shares. Mr. Fathy began his career 2001 in the field of

audit and gained experience at local firms and with the experience gained got engaged in

providing consultancy services as a freelance consultant. While at HDFC he has headed the

Internal Audit Division as well as the IT Division, in addition to numerous contributions

provided in the development internal controls and systems, he holds Bachelor of Commerce

from Banglore University of India and M.Sc. in IT Management from Asia Pacific University

(A.P.U), Malaysia.

Senior Manager for Credit- Ms. Aishath Rasheeda, 42, joined the HDFC Plc. in March 2008

and holds one share in the company. She does not hold any shares in any company in

Maldives that has a conflict of interest with HDFC Plc. Ms. Rasheeda began her career with

the Maldives Monetary Authority in July 1990, and counts continuous 14 years of experience

at the Central Bank, which made her a founder staff member as Manager Credit of HDFC Plc.

in 2004. She holds AAT Diploma and has attended many national and international training

programs, workshops, and seminars related to both conventional and Islamic Housing

Finance.

Senior Manager- Business Development & CRM - Mohamed Shafeeq, 34. Joined HDFC Plc.

In July 2009 and does not hold any shares in the company or in any company in the Maldives

that has a conflict of interest with HDFC Plc. He began his career in 1997 with Society for

Health Education (SHE), a reputed nation-wide non-profit non-government organization in

the Maldives, and was promoted as its Finance Director in 2008. He holds a Master in

Business Administration from the University of Ballarat, Australia in addition to a BA (Hons)

Accounting and Finance awarded by University of East London, UK. He is a member of

Association of Chartered Certified Accountants (UK), and also a senior member of Certified

Practising Accountants of Maldives (CPA Maldives) He attended many local and international

seminars and workshops on Business Administration, Marketing, Banking and Finance.



15. Managing Director’s Report We are pleased to present this report to the sukuk prospectus of HDFC Plc. with extracts

from the Audited Accounts for the year ended December 31, 2012 while the full audited

financial statements complete with the auditor’s report is annexed:

The nine-year financial landscape shows that HDFC has grown with each passing year to reach

stability and sustainability.

Year

2004 (9

months) 2005 2006 2007 2008 2009 2010 2011 2012

Gross income 1.8 12.8 20.0 20.3 21.0 34.3 39.6 61.1 90.9

Net income (0.2) 4.9 9.3 14.3 15.6 25.5 30.4 43.6 62.4

Operating

profit/(loss) (1.3) 4.6 8.9 14.1 10.4 19.1 23.5 38.0 57.9

Since its establishment by the Maldives Monetary Authority in 2004, HDFC has played an unmatched

role in the life of the nation by helping Maldivians live their dream of having a decent home in a safe

and healthy environment. It is the only specialized housing financial institution in the Maldives for

mortgage home loans, the majority shareholding of which, upon privatization, was taken up by

international investors comprising International Finance Corporation (IFC) of the World Bank Group,

Asian Development Bank (ADB) and HDFC Investments Ltd. of India. The nine-year financial

landscape shows that HDFC has grown with each passing year to reach stability and sustainability.

HDFC’s transformation into a Public Private Partnership in 2008 was carefully designed to create a

stable housing finance solution that is both affordable and sustainable. Moving to a new phase by



embracing responsible finance with its principles of client protection, HDFC has not only served the

housing needs in the Male’ region, but has made great strides towards giving access to finance to

tens of thousands who live in the far-flung atolls with its Island Outreach Programme. The

performance of the year under review surpassed the key performance indicator benchmarks set at

the beginning of the period despite the country situation in 2012, and the obstacles HDFC had to

face during a period viewed by the international investors

as the most volatile and turbulent one in the history of the Maldives. HDFC was able to record an

impressive growth in the operational profit of MVR 57.9 million for the year ended 2012, which was

a 52% increase over 2011 with an year-over-year loan portfolio growth of 33%. HDFC has strived to

reach greater heights of excellence with each passing year, and 2012 was no exception. Therefore, it

would be remiss not to mention the commitment and passion of one of the finest teams of

professionals I have been privileged to work with, right across the board, from HDFC’s Chairman and

Board of Directors who have set effective policies and charted a course to take the organization from

strength to strength, and its management and staff who have made it possible for us to record yet

another landmark year of growth and sustainability in 2012. We thank our valuable customers

whose commitment to performance of their financial obligations has established a sound credit

culture as the bedrock of HDFC’s success thus far. They have given much needed investor confidence

to expand operations in order to offer access to finance and financial inclusion to many Maldivians

living in the remote atolls to the north and the south of the Male’ region. We take this opportunity

to express our sincere gratitude to our regulators, the Maldives Monetary Authority led by its

Governor Dr. Fazil Najeeb, and the respective teams that have assisted HDFC by their supervision to

achieve continuous improvement in policies and processes towards the development of a robust

organization, built to last. We also appreciate the government and private agencies who have been

our partners and well-wishers, especially the housing ministry and the finance ministry, and their

respective ministers, and the CEO and management of Capital Market Development Authority for

the active interest they have taken in furthering HDFC’s cause of providing homegrown solutions in

housing finance to the masses in an affordable and a sustainable manner.

Lending Operations and the Social Impact

HDFC’s inclusive business model has developed a range of products and services that involve the

cottage industries in the value chain as suppliers of building material such as compressed cement

blocks and carpentry work carried out at an island level to reduce the cost of construction. The total

number of beneficiaries at the bottom of the pyramid exceeds 10,000 during the 9-year existence of

HDFC. A comprehensive range of products and services have been innovated to serve the customers

better. Effective counselling service and CRM have helped in achieving best-fit product development

through customer feedback.

Total loans approved and disbursed under various product categories serve to profile HDFC’s direct

contribution to the housing finance market. Since its inception, total housing finance injected to the

market stood at MVR 1.2 billion as at the year ended on December 31, 2012. Approximately 6,000

customers under the pooled application process participated in HDFC’s growth. As at the year end,

the total outstanding capital stood at MVR 800 million profiled as below:



Country Report on Housing and Housing Finance

Having re-structured its capital in February 2009, and with new lines of long-term credit, HDFC has

re-entered the market for mortgage loans for housing needs of individuals and families. HDFC is able

to offer long repayment terms in a market where the demand has grown at a pace outstripping the

supply of matching funds. The privatization has transformed the institution to face the future as a

commercially viable, private sector-led company that can grow and develop effective solutions to

the urgent housing problems of the Maldives. The Maldives consist of approximately 1,200 islands

covering an area of 90,000 sq. km. of the Indian Ocean, set in an Exclusive Economic Zone (EEZ)

covering 859,000sq km. The island nation has 196 administrative islands designated for habitation,

in addition to which over 100 islands are allocated as resort properties and 35 islands designated for

industry and agriculture. Maldives is home to approximately 350,000 citizens living in a dispersed

manner with only thirteen islands outside of Male’ region recording a population of more than 5000

inhabitants. This presents a formidable challenge to a housing finance institution which intends to

operate at a national level due to the diverse needs of the population that is thinly spread in some

regions, with the exception of the post-tsunami phenomenon of concentration through in-migration,

where the stress of housing is felt the most in the Male’ Atoll. The nation’s capital Malé, with around

2.5 sq. km. of total land area, has over one third of the entire population, while approximately

seventy percent of the rest of the inhabited islands have less than 1000 inhabitants. Maldives has a

relatively young population with almost forty percent under 15 years of age and around three

percent over 65 years of age. This demographic profile translates to a growth in demand for housing

in the foreseeable future as the young population matures to full-fledged participation in the

economy. With regard to human development trends, the country ranks high among the Asia-Pacific

countries.

In order to provide a sustainable solution to the limitation of suitable land to develop much needed

housing stock in the Male’ Atoll, land reclamation in a viable manner began at the turn on the

century with the Hulhumale project spearheaded by stateown Hulhumale Development Corporation

(renamed as Housing Development Corporation or HDC in 2009). Another recent project under the

umbrella of Global Projects Development Company (GPD) to reclaim the Gulhi Falhu reef-basin has

also met with a degree of success. There is special emphasis on developing these two projects to

provide modern and sustainable communities. Here the challenge would be to provide housing

development finance to match the rapid pace of development as Hulhumale is scheduled for a

second phase of reclamation in 2013. The government’s concept of developing focus islands that will

create a demand for housing is also a positive trend. It will assist sustainable development of home

ownership based on mortgage financing of properties that would appreciate in value to maintain a

positive equity scenario. The underlying real estate value and market value of homes being

developed from HDFC mortgage loans is a highly significant factor as a market characteristic,

especially in the light of the 2008 financial crisis faced by the developed economies of the world,

where subprime home lending and a property bubble that burst had contributed to a financial

meltdown. The statistics of households according to UNFPA (United Nations’ Population Fund-2008

survey updated for 2012) are as follows:

Households :

Male’ 15,000

Atolls 33,000

Total 48,000

Therefore, the density in Malé is around eight members per household with 60,000 people per sq.

km., which is one of the highest in the world. In the outer atolls, this figure is reduced to around six.

However, it is the constraints on buildable land that has made Male’ one of the most densely



populated capital cities. A desirable family size per unit of four would lead to an additional housing

requirement for the Male Atoll estimated at present to be 10,000 units, which can be absorbed by

the combined infrastructure of Hulhumale and Gulhi Falhu developments. Therefore, HDFC’s

solution for financing sustainable housing development in the Maldives is linked to the strategies of

the Housing Development Corporation (HDC) of Hulhumale, and GPD of Gulhi Falhu. Their Joint

Venture Partnerships with a number of international property developers should yield

approximately 2000 units of housing per annum and, with an additional role as a social landlord in

Hulhumale’, the HDC has shown their commitment to addressing the housing problem facing the

Male’ Atoll

Maldives’ Economic Landscape

The national housing policy for outer atolls is one that is linked with the GOM’seconomic

development policy. Typical of an island nation, development in Maldives is also constrained by the

absence of land based mineral resources. There is limited scope for expansion of the agriculture

sector. Certain areas possess vulnerability to natural disasters and environmental hazards. The major

industries driving the Maldivian economy are fisheries and tourism with the supporting industries of

transport, construction, boat-building, fish processing and finance. Tourism, fishing and transport

are the major sources of foreign exchange earnings and government revenue, and which together

directly account for about 60 percent of gross domestic product. In terms of employment, these

three sectors along with construction industry account for more than 50% of total employment. A

large expatriate workforce plays a key role in the development of the Maldivian economy. Their

needs of accommodation have created a vibrant market for rental income from foreign employment

categories that include teachers, accountants, medical personnel and other business and technical

professions including civil construction and infrastructure development. The Government’s support

for the development process is seen from the large number of employees in the public sector, which

accounts for approximately one third of the working population. The public sector consists of the

government and state owned enterprises (SOEs) covering a wide range of activities including fuel

supply, banking, air and sea transport, international shipping, communications and the provision of

electricity and utilities, fisheries operations, tourism and importing and distributing a large share of

essential foodstuff. The Maldives’ narrow financial sector is dominated by the banking sector, which

consists of one locally owned commercial bank, BML, the recently established Maldives Islamic Bank,

MIB, branches of three Asian commercial banks, SBI, Habib, MCB, and a branch of a global bank,

HSBC. Non-bank financial institutions, known as OFIs (Other Financial Institutions) include players in

the general insurance market, Maldives’ Finance Leasing Company, (MFLC), and the only housing

finance institution, HDFC. MMA is the primary source of domestic financing for the Government’s

fiscal operations. The commercial banks mobilize savings and provide credit and foreign exchange to

the private sector. Currently work is underway to promote the Maldives Stock Exchange for raising

much needed capital for economic development. Capital Market Development Authority (CMDA)

facilitates trading arrangements. There is limited secondary market trading activity with shares of

the Bank of Maldives (BML), and two other state owned public companies, namely the Maldives

Transport and Contracting Company (MTCC) and the State Trading Organization (STO), playing the

lead role out of the six listed entities. The recently passed Securities Act paves the way for the

establishment of a formal capital market, with HDFC taking the lead by issuing the first ever rated

bond to be listed in the Maldives Securities Exchange in February 2013.



The open economy of the Maldives has a narrow export base with high dependence on imports for

most of its economic activities. Imports have averaged around 61% of the GDP in recent years, while

domestic exports, consisting primarily of fish and fish products have ranged between 11-15% of the

GDP. Net surplus on services and transfers has averaged around 34% of the GDP. Service receipts

come from tourism and related activities. There is a significant outflow of transfers from the

economy owing to the large expatriate workforce. Medium and long-term debt flows and inflows of

capital for direct investments dominate the capital account of the balance of payments. There is no

exchange control legislation in the Maldives. Foreign direct investment in the country needs prior

approval of the government and a negotiated annual royalty is payable. There are no restrictions on

transferring of profits.

The construction sector continued to remain robust in 2012, with 8% growth during the year.

According to a World Bank report published in 2012, Maldives’ economy has recovered from the

debacle of 2009 where the GDP had contracted by 4.74% (negative) to achieve 7.46% growth by the

end of 2011 as depicted below:

GDP growth in 2012 was limited to 3.4% despite coming close to the anticipated performance from

tourism and construction sector during the year. This may be attributed to a reality check on the

recovery efforts after the 2009 negative GDP, which cast a long shadow into the future impacting

the structure of the national debt and budget deficit. The European debacle reflected in the global

economic and financial conditions in 2012 would impact on the Maldives tourism, but the continued

success of reaching across the globe for all-year-round tourism and innovation to capture new

market segments are positive signs for future growth. Maldives is proactively seeking other avenues

of GDP growth from a diversified field of economic activity, and it signals a future that would reduce

Maldives’ over-dependence on tourism.

Acknowledgements

The privatized HDFC Maldives has completed 4 years of growth to lay a firm foundation of

sustainable development to address the housing needs of the Maldives. To help achieve the

aspirations of the people, there is an urgent requirement to upgrade substandard housing and build

up a new housing stock in this emerging economy. In building capacity of HDFC to meet these

challenges, the greatest asset at our disposal is the commitment and professionalism of all our

employees towards realizing the mission and vision of HDFC Maldives. I am immensely grateful to

our dedicated staff for their valuable contribution. Our valued customers are essentially the citizens

of Maldives, and the raison d’être and the core of HDFC’s continued motivation to improve their

lives through access to affordable housing finance so that they can live in decent homes, in safe and

healthy environments. We thank them for forging a lifelong relationship with an institution they can

call their own.

We appreciate the enabling and regulatory environment created by the Maldives Monetary

Authority, Ministry of Finance and Treasury, Ministry of Housing and Infrastructure, Male’ City

Council, Ministry of Economic Development, Judiciary and all other government agencies, as well as

the officials of international shareholders and investors who monitor and mentor our progress. In

my personal capacity, as the Managing Director, I would like to place on record my profound

appreciation to all the stakeholders, especially our staff, shareholders, customers, chairman and the

board of directors for their support and cooperation extended to me. The outgoing Chairman of

2012, Mr. Sanjaya Gupta has been a tower of strength in concluding a successful year. He was ably

supported by his fellow directors Ms. Renu Sud Karnad, Mr. Subrata Data Gupta, Mr. Ismail Ali

Manik, Ms. Fareeha Shareef, and alternate directors Mr. Conrad De Souza, Ms. Christine Engstrom,

and Mr. Hamid Sodique. We also welcome the appointment of Mr. Ismail Ali Manik as chairman for



2013. We extend our very sincere gratitude to the outgoing director and IFC nominee Mr. Subrata

Dutta Gupta for completing a three and a half year directorship of HDFC that came to an end on

December 31, 2012. He has left an indelible mark as a pioneer of the privatized HDFC’s progress, and

will always be remembered for his yeomen service towards the success of the early years following

privatization. We wish him well in all future endeavors. We also thank our legal counsel Mazlan and

Murad Law Associates as well as PWC Maldives for their professional input, and our Consultant on

Islamic Finance, Ms. Aishath Muneeza, for her passion and dedication to establishing an Islamic

Finance Window at HDFC.

No National Housing Finance Institution could hope to grow and sustain a sound loan portfolio that

adds value to the lives of the people it serves without the participation of sound investment

partners. In this regard, we thank the IFC, ADB, FMO of Netherlands, the country’s very own Bank of

Maldives, Allied Insurance Company of Maldives, Maldives Post Ltd., and Amana Takaful (Maldives)

PLC for their support in making 2012 a successful year for HDFC. Going forward, a great deal is

expected of HDFC’s partnership with national and international players to usher an era of model

living for Maldivians in decent homes in an environment as clean, green, and breathtaking as the

ocean paradise that defines the Maldives.



16. HDFC’s Corporate Governance The essence of corporate governance at HDFC Plc. is the relationship between the board

of directors, management and the shareholders to act in the best interest of the all the

stakeholders. Corporate Governance ensures that companies are directed and managed

at Board and management level in a fair and transparent manner. HDFC’s corporate

governance is planned and implemented at the Board level and led by the Board. It

provides guidance on how the objectives of the company are set and achieved, how risk

is monitored and assessed, and how performance is optimized. It is concerned with the

organization’s policy direction and implementation in a fair and transparent manner by

the board of directors, the management and the staff of HDFC. The code of corporate

governance provides guidance on how to set the objectives of the company for optimum

performance while managing and monitoring the risks in order to achieve:

i) Creation of value (through entrepreneurism, innovation, and development)

ii) Implementation of effective control systems commensurate to the risks involved

iii) Accountability and transparency

Corporate governance refers to internal disciplines or systems, which govern the

relationships among the 'key players' or entities that are instrumental in the performance

of the organization. The details of which is provided in Annex 9.

17. Inspection of documents

The Memorandum and Articles of Association of HDFC Plc., Shareholders Agreement and

all other documents including audited accounts from inception of the Company referred

to in this Prospectus may be inspected at any time during normal business hours at the

Registered Office of HDFC Plc. until the end of the subscription period.

The Registered office of HDFC Plc;


4th

Floor, H. Mialani, Sosun Magu


Tel: 3338810, Fax: 3315138

Email: [email protected]



18. Risk Factors

Risks Related to the Issuer

HDFC activities primarily relate to the provision of mortgage home-finance for

the construction and purchase of residential properties. The company’s activities

are exposed to a variety of financial risks and those activities involve analysis,

evaluation, acceptance and management risk or combination risk.

HDFC’s total Balance Sheet value as at the year ended December 31, 2012 stood

at MVR 797.7 million of which, borrowings (see Note 28 to the Audited Financial

Statements in Annexure 4) MVR 349.5,million was represented by:

Million

Bank Overdraft 36.02

International Finance Corporation (IFC) 85.15

Asian Development Bank (ADB) 73.60

Corporate Sukuks 40.30

Netherlands Development Finance Company (FMO) 94.45

Wakala Facility 20.00

HDFC is exposed to the following risks;

1. Exchange Rate Risk

2. Equity Risk

3. Market Risk

Exchange Rate Risk

Foreign exchange risk is mitigated through a hedging mechanism by entering

into a ‘Currency Swap Agreement’ between HDFC and State Trading

Organization Plc.

Equity Risk

Since the stock of HDFC Plc. is not listed on the Maldives Stock Exchange and held

between International Shareholders and the Government of Maldives, the company

does not have an equity risk.

Market Risk

Market risk is the risk that the fair value or the future cash flows of the financial

instruments will fluctuate because of the changes in market prices. HDFC has a

significant concentration of fair value risk on the properties taken as mortgage security

for home -finance.

Due to the very nature of the assets funded under the portfolio, it makes the company

exposed to the risks associated with economic standing of the Maldives particularly as it

relates to the cost of construction, rental market for residential properties, real estate

values and sales.

Market risk is mitigated by:

• Strict credit criteria that preserves the margin of the amount funded versus

the cost/value on any property.

• Prudential criteria that would ensure that the ability to repay debt is

reasonably assured by customer’s financial circumstances and credit history.



• Regular review and assessment of market factors that affect the quality of the

mortgage portfolio.

Risks Related to the Issue

Before making an investment decision, prospective purchasers of Sukuk should

consider carefully, in the light of their own financial circumstances and investment

objectives, all of the information in this Prospectus.

The Issuer believes that the factors described below represent the principal risks

inherent in investing in the Sukuk, but the inability of the Issuer to pay any amounts

on or in connection with the Sukuk may occur for other reasons and the Issuer does

not represent that the statements below regarding the risks of holding any Sukuk

are exhaustive.

There may also be other considerations, including some which may not be presently

known to the Issuer or which the Issuer currently deems immaterial, that may

impact any investment in the Sukuk.

1. Payment risk is the risk that the issuer will default on payment of yield and

principal. HDFC’s liquidity management process ensures that it has sufficient

liquidity to pay its creditors and lenders when they fall due.

2. Difficult macro-economic and financial market conditions could materially

adversely affect Issuer’s business, results of operations, financial condition

and prospects.

3. The Sukuk will not be guaranteed by the Government of the Republic of the

Maldives.

4. A more competitive environment in the Republic of the Maldives may

adversely affect the Issuer’s business and results of operations

5. The Issuer’s business may be adversely affected if there is any disturbance

to its operational systems or a loss of business continuity.

6. Future events may be different from those reflected in the management

assumptions and estimates used in the preparation of the Issuer’s financial

statements, which may cause unexpected losses in the future

7. Absence of secondary market/limited liquidity - there is no assurance that a

secondary market for the Sukuk will develop or, if it does develop, that it will

provide the Sukuk holders with liquidity of investment or that such

secondary market will continue for the life of the Sukuk. Accordingly, a

Sukuk holder may not be able to find a buyer to buy its Sukuk readily or at

prices that will enable the Sukuk holder to realize a desired yield. The

market value of the Sukuk may fluctuate and a lack of liquidity, in particular,



can have a material adverse effect on the market value of the Sukuk.

Accordingly, the purchase of the Sukuk is suitable only for investors who can

bear the risks associated with a lack of liquidity in the Sukuk and the

financial and other risks associated with an investment in the Sukuk. An

investor in the Certificates must be prepared to hold the Sukuk for an

indefinite period of time or until their maturity.

8. The Sukuk are limited recourse obligations - The Sukuk are not debt

obligations of the Issuer. Instead, the Sukuk represent an ownership interest

solely in the Mudaraba. Recourse to the Issuer in respect of the Sukuk is

limited to the Mudaraba and proceeds of the Mudaraba are the sole source

of payments on the Sukuk.

9. The Shariah Advisor and the CMDA Shariah Advisory Committee have issued

an opinion in respect of the Sukuk. However, an opinion is only an

expression of the view of the Shariah Advisor and the CMDA Shariah

Advisory Committee board based on their experience in the subject and is

not a binding opinion. There can be no assurance as to the Shariah

permissibility of the structure of the issue and the trading of the Sukuk and

none of the advisors to the Issuer makes any representation as to the same.

Sukuk holders are reminded that, as with any Shariah views, differences in

opinion are possible. Sukuk holders are advised to obtain their own

independent Shariah advice as to whether this Prospectus and the Sukuk

meets their individual standards of compliance and make their own

determination as to the future tradability of the Sukuk on any secondary

market.

Risk management policies

The other risk management policies and processes adopted by HDFC are given

below:

Credit Risk

The company takes on exposure to credit risk, which is the risk that counterparty

will cause a financial loss for HDFC by failing to discharge an obligation. Credit risk is

the most important risk for HDFC’s business; management therefore carefully

manages its exposure to credit risk. Credit exposures arise principally in lending

activities that lead to home-finance and advances. There is also credit risk in off-

balance sheet financial instruments, such as home-finance commitments.

Credit policies were formulated covering HDFC's credit activities and establishment

of individual limits of authority for initiating, reviewing and approving credit.

Prudential due diligence on customers’ creditworthiness is assessed using the

Maldives Credit Information Bureau, physical verification, background screening.



Liquidity Risks

Liquidity risk is the risk that HDFC is unable to meet its payment obligations

associated with its financial liabilities when they fall due and to replace funds

when they are withdrawn. The consequence may be the failure to meet

obligations to repay depositors and fulfill commitments to lend.

HDFC’s liquidity management process, as carried out within HDFC and

monitored by the senior management in HDFC, includes:

• Day-to-day funding, managed by monitoring future cash flows to ensure

that requirements can be met. This includes replenishment of funds as

they mature or are borrowed by customers;

• Maintaining a portfolio of deposits with that can easily be liquidated as

protection against any unforeseen interruption to cash flow

• Monitoring balance sheet liquidity ratios against internal requirements;

and

• Managing the concentration and profile of debt maturities.

• Monitoring and reporting take the form of cash flow measurement and

projections for the next week and month respectively, as these are key

periods for liquidity management. The starting point for those

projections is an analysis of the contractual maturity of the financial

liabilities and the expected collection date of the financial assets.

• HDFC also monitors unmatched medium-term assets, the level and type

of undrawn lending commitments and undrawn borrowings.



Capital Management of HDFC

HDFC’s objectives when managing capital, which is a broader concept than the

‘equity’ on the face of balance sheets, are:

� To comply with the capital requirements set by the lenders

� To safeguard HDFC’s ability to continue as a going concern so that it can

continue to provide returns for shareholders and benefits for other

stakeholders

� To maintain a strong capital base to support the development of its

business

� Capital adequacy and the use of regulatory capital are monitored daily by

HDFC’s management, employing techniques based on the guidelines

developed by the Basel II Committee, for supervisory purposes.

The risk-weighted assets are measured by means of a hierarchy of five risk

weights classified according to the nature of – and reflecting an estimate of credit,

market and other risks associated with each asset and counterparty, taking into

account any eligible collateral or guarantees. A similar treatment is adopted for

off-balance sheet exposure, with some adjustments to reflect the more

contingent nature of the potential losses.

19. Material outstanding indebtedness in relation to the issue As at December 31, 2012 HDFC PLC does not have any debts in the Company’s balance

sheet that cannot be serviced from its ordinary course of business.

20. Litigation and disputes At the date of publication of this Prospectus, to the best of the Company’s knowledge and

understanding, there is no significant on-going litigation by or against HDFC or any of its Directors.

There has not been any litigation against HDFC or any of its Directors in the past 05 (five) years, nor

are there any penalties imposed by any regulatory authority or judicial decision.



21. Details of shareholding in the company

22. Staff Details At the date of publication of prospectus the company has 29 staff members. Broad

categories are appended below;

Categories No

Managerial 16

Operational 11

Support 02

Total 29

DETAILS OF SHARE HOLDING IN THE COMPANY (INCLUDING DIRECTORS OF THE BOARD)

Authorized Share Capital of the Company - MRF 318,750,000 (Issued MRF 159,375,000)

MRF 100 par value

Name Capacity/Designation Value of Share(s)

held

No. of

Share(s)

held

Government of Maldives Shareholder 78,092,800 780,928

International Finance Corporation Shareholder 28,687,500 286,875

Asian Development Bank Shareholder 28,687,500 286,875

HDFC Investment Ltd. Shareholder 23,906,200 239,062

Mr. Ibrahim Naeem Shareholder 100 01

Ms. Raheema Saleem Shareholder 100 01

Mr. Hamid Yoosuf Shareholder 100 01

Mr. Mohamed Shahudy Shareholder 100 01

Ms. Aishath Rasheeda Shareholder 100 01

Mr. Mohamed Fathy Shareholder 100 01

Mr. Mohamed Hamdhan Fahumy Shareholder 100 01

Mr. Ahmed Anwar Shareholder 100 01

Mr. Nahid Idrees Shareholder 100 01

Dr. A.D. Priyanka Baddevithana Managing Director 100 01



23. Disclosure of material contracts & conflict of interest of directors



24. Annexes

24.1. Annex - 1. Legal due diligence



24.2. Annex - 2. Accountant’s report

(To be submitted)



24.3. Annex - 3. Extract of Articles of Association



24.4. Annex - 4. Performance Guarantee Letter by HDFC



24.5. Annex - 5. Audited financial statements for the year ended

31.12.2012



24.6. Annex - 6. Capital market development authority’s approval

(To be obtained)



24.7. Annex - 7. Registrar of the Companies’ approval

(To be obtained & submitted later)



24.8. Annex - 8. Extract of Corporate Governance Code



24.9. Annex - 09. Declaration of Shariah Advisor



24.10. Annex -10. Endorsement of HDFC Shariah Committee



24.11. Annex -11. Glossary