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DEFINITIONS

The following definitions are intended to give readers a general understanding of the terms used in this document. It is by no means an exhaustive list.

Islamic collective investment scheme (ICIS)Please refer to page 2,
Investment risk reserve (IRR)IRR is the amount appropriated by the ICIS out of the income of ICIS Investors, after allocating the Mudarib’s share, in order to cushion against future investment losses for ICIS Investors.
MudarabahA Mudarabah is a contract between the capital provider and a skilled entrepreneur whereby the capital provider would contribute capital to an enterprise or activity, which is to be managed by the entrepreneur as the Mudarib (or labour provider). Profits generated by that enterprise or activity are shared in accordance with the terms of the Mudarabah agreement, whilst losses are to be borne solely by the capital provider unless they are due to the Mudarib’s misconduct, negligence or breach of contracted terms.
Profit equalization reserve (PER)PER is the amount appropriated by the ICIS out of the Mudarabah income, before allocating the Mudarib’s share, in order to maintain a certain level of return on investment for ICIS Investors and to increase owners' equity.
Restricted investment accountThe accountholders authorize the IIFS to invest their funds based on Mudarabah or agency contracts with certain restrictions as to where, how and for what purpose these funds are to be invested.
Stakeholders

Those with vested interest in the well-being of ICIS, including:

(i)employees;
(ii)customers (including IAH and normal depositors);
(iii)suppliers;
(iv)the community (particularly the Muslim ummah); and
(v)supervisors and governments, based on the unique role of ICIS in national and local economies and financial systems.
Unrestricted investment accountsThe accountholders authorize the ICIS to invest their funds based on Mudarabah or Wakalah (agency) contracts without laying any restriction. The ICIS sometimes commingle these funds with their own funds and invest them in a pooled portfolio.