1. Legal Structure
   

   The ICD will be established with a public purpose as an international institution. It will have juridical personality with the ability to contract, acquire and dispose of moveable and immovable property and institute legal proceedings. It is expected to enjoy immunities, exemptions and privileges akin to the IDB.

2. Capital Structure
   

   The Corporation will have an authorized capital of US$ 1.0 billion and paid-up capital of US$ 500 million. The Islamic Development Bank will subscribe 50% while the member countries will subscribe 30% of the capital. The share of member countries will be paid by IDB by way of bonus shares by capitalizing their dividend out of the profits of IDB. The remaining 20% share will be offered to the public financial institutions of member countries.

   In the initial 5-7 year period devoted to establishing ICD on a strong footing, only the IDB, its member countries and major public institutions of member countries will be approached for soliciting participation in the share capital of the new entity. Participation from the private sector will be solicited at a later stage. The ICD is expected to start its operations as soon as IDB pays the first installment of its share in the capital of ICD.

3. General Assembly
   

   The General Assembly is proposed to be the highest authority of the new entity. It will consist of the representatives of the shareholders. Its main functions will be to lay down the major policies involving changes in the Articles of Agreement and approving the Audited Accounts of ICD.

4. Organization Structure
   

   ICD will be headed by a General Manager (GM). The GM will report directly to the Board of Directors (BOD) and will be appointed by the BOD. However, the first GM will be appointed by the Board of Executive Directors of IDB. The GM will derive his powers from the Articles of Agreement of ICD and will be responsible for day-to-day management of the Corporation.

   A team of highly qualified professionals with proven track-record and knowledge of Islamic banking will assist the GM. In order to ensure high quality management, the compensation packages to be offered to the personnel of ICD will be performance related and competitive with the market.

5. Board of Directors (BOD)
   

   ICD's Board of Directors will consist of not less than 6 and not more than 10 members with the President of IDB as the ex-officio Chairman. The General Manager will also be a member of the BOD, but will have no voting powers.

   Since IDB will hold 50% of the shareholding, it will nominate half of the Board members. The remaining Board Members will either be nominated or elected by the member countries. The composition of the BOD will be reviewed at the time of participation of the private sector in the capital of ICD.

   The Board of Directors will be responsible mainly for the approval of policies, Audited Accounts, budgets, and appointment of the Members of the Shari' ah Committee.

6. Executive Committee
   

   The BOD will appoint an Executive Committee to carry out the operational functions delegated by the BOD and serve as a fast-track decision making body. It will consist of the Chairman of the BOD, the General Manager, the member of the BOD having the largest number of shares and not less than 2 and not more than 4 members from among the BOD. The Chairman of the Board and in his absence, the GM will preside over the meeting of the Executive Committee and will have no vote except a deciding vote in the event of a tie vote.

7. Advisory Board
   

   The Articles of Agreement of ICD also provide for an Advisory Board. It will consist of five members who will be appointed by the General Assembly. The Advisory Board will consist of prominent personalities from the private sector with a proven record of excellence in business leadership and will not necessarily be drawn from member countries, enabling ICD to have access to experts having access to international trends.

8. Shari'ah Committee
   

   ICD will have its own independent Shari'ah Committee. The Committee will consist of three eminent Fiqh scholars of high standing.

   The members of the Sharia'h Committee will be appointed by the Board of Directors.

9. Operational Principles
   

   ICD will provide financing on terms and conditions taking into account the requirements of the enterprises to be financed, the risks to the environment, the risks assumed by the Corporation and the terms and conditions normally obtained by private investors for similar Islamic financing.

10. Confidentiality and Disclosure of Information
    

    Recognizing the need to be open about its activities, ICD subscribes to the fundamental importance of accountability and transparency in the development process. Since it will be dealing with the private sector, which would provide access to confidential information, the Corporation will ensure that no confidential information about its operations is disclosed to the capital market.

11. Dividend Policy
    

    The dividend policy of ICD will be guided by three main considerations:

    • Strengthening the balance sheet.

    • Building a base of equity that will absorb the risk of operations.

    • Engendering confidence in the market to subscribe to commercial papers to be issued by ICD for resource mobilization.

    In view of these considerations, distribution of dividends will be consciously deferred during the early life of ICD.

12. The Islamic Banks' Portfolio, Unit Investment Fund and Business Development Department's relevance to the Islamic Corporation for the Development of the Private Sector
    

    Since the objectives and areas of operations of the Islamic Banks' Portfolio (IBP) and the Unit Investment Fund (UIF) are parallel with the function of ICD, it is proposed that ICD may assume the role of a Sub-Mudarib of IDB for both the IBP and UIE IDB will enter into an asset management agreement with the ICD and transfer its rights as a Mudarib to the new entity. In addition, ICD may also manage the Equity Portfolio of IDB with a view to reorganize and disinvest the portfolio by all feasible means to the market. In all three cases, the ICD will focus only on those areas of operations, which fall within the scope of its operations.

13. Activities and Products
    

    The new entity is expected to carry out the following activities:

    • Finance private sector projects by offering a wide array of Shari' ah compatible products and services.

    • Assist the private sector to mobilize financial resources.

    • Offer advisory services to the private sector and to the Governments of IDB member countries.

    • Provide a wide range of asset and risk management services.

    • Mobilize resources from international financial markets for augmenting its resources.

    Any other function which may fall within its scope of operations.

    
    

14. Involvement of the ICD's Member Countries' Governments in its Operations
    

    It is suggested that instead of getting approval of the concerned member country for each and every operation, it would be advisable to reach a general understanding with each member country through exchange of letters for obtaining no objection.

15. The Proposed Name of the New Entity
    

    The new entity has been named as the Islamic Corporation for the Development of the Private Sector. For the sake of brevity, its abbreviation is proposed to be "ICD".

16. Geographic Scope of Operations
    

    The Articles of Agreement of ICD are designed to enable the Corporation to operate in all member countries of IDB.

17. Unit of Account and Currency of Operations
    

    It is proposed that the Unit of Account of ICD will be the US$. As far as the currency of operation is concerned, and bearing in mind the convenience to clients, ICD may utilize all major currencies for its operations.

18. Commencement of Operations
    

    It is envisaged that ICD will, Insha Allah, commence operations from the first working day of the new Hijra year i.e. Saturday, 3rd Muharram 1421 H (8th April 2000).