Implementing Regulation for the Takaful Insurance Law (Decision No. 103/2019)

Decision No. 103/2019 On the Issuance of the Implementing Regulation for the Takaful Insurance Law Pursuant to the perusal of the Insurance Companies Law promulgated by Oman Sultani Decree ;No. 12/1979 ;The Capital Market Law promulgated by Oman Sultani Decree No. 80/98 ;The Takaful Insurance Law promulgated by Oman Sultani Decree No. 11/2016 ;The Commercial Companies Law promulgated by Oman Sultani Decree No. 18/2019 The Regulation for Investing Insurance Companies’ Assets issued by Oman Decision No. ;KH/11/2007 The Regulation of the Requirements for Licensing Insurance Company Brokers issued by Oman ;Decision No. KH/28/2016 The Regulation of the Work of Insurance Brokers issued by Oman Decision No. KH/19/2017; Acting upon the approval of the Board of Directors of the Capital Market Authority; and ;The approval of the Ministry of Finance ,and Based on the requirement of the public interest :The following has been decided Article 1 The provisions of the Implementing Regulation of the The Takaful Insurance Law, attached .hereto, shall enter into effect Article 2 Those addressed by the provisions of the attached Regulation shall adjust their situations in accordance with its provisions within a period not exceeding (6) six months from the date of its entry into force, and the Executive President of the Capital Market Authority may extend the .period provided that it does not exceed another (6) six months Article 3 The provisions of the Regulation of the Requirements for Licensing Brokers of Insurance Companies and the Regulation of the work of Insurance Brokers referred to shall apply to .everyone who wishes to be an agent or broker for Takaful insurance companies Article 4 This Decision shall be published in the Official Gazette, and it shall come into force as of the day .following the date of its publication

Issued on: 14 Rabi Al-Thani 1441 H Corresponding to: 11 December 2019 Abdullah Salim Abdullah Al Salmi Executive President of the Capital Market Authority Chapter 1 Definitions and General Provisions Article 1 For the purposes of this Regulation, the terms and expressions contained herein shall carry the same meanings as stipulated in the aforementioned Takaful Insurance Law. Additionally, the following terms and expressions shall bear the meanings assigned to them unless the context :requires otherwise .Law: The Takaful Insurance Law Shareholders' Fund: An account and accounting unit, independent from the Participants Fund, encompassing the rights and obligations of the company's capital. This account does not comprise contributions, surplus, or investment returns for the Participants’ Fund or any of its .associated sub-funds or divisions Participants' Fund: An account and accounting unit, independent from the Shareholders' Fund, wherein the revenues due to the Fund are included in accordance with the provisions of Article (40) of this Regulation. Disbursements are made from it in accordance with the provisions of Article (43) of this Regulation. It consists of (3) three independent accounting funds for each :branch of licensed Takaful insurance branches of the company, as follows .a- General Takaful Insurance Branch Fund .b- Family Takaful Insurance Branch Fund .c- Health Takaful Insurance Branch Fund General Takaful Insurance Branch Fund: A sub-account in the Participants' Fund that is accounting-independent from the Family Takaful Insurance Branch Fund and the Health Takaful Insurance Branch Fund. It includes the proceeds of contributions, surplus, and investment .returns Family Takaful Insurance Branch Fund: A sub-account in the Participants' Fund that is accounting￾independent from the General Takaful Insurance Branch Fund and the Health Takaful Insurance .Branch Fund. It includes the proceeds of contributions, surplus, and investment returns Qard al-Hasan (Interest-Free Loan): A financial loan compliant with Islamic Sharia principles, involving the actual transfer of funds or the immediate injection of cash liquidity from the assets of the Shareholders' Fund to one of the sub-funds of the Participants Fund, subject to approval by the company's board of directors, the Sharia Supervisory Committee, and the appointed .actuary Family Takaful Insurance Branch: This encompasses all categories of Takaful insurance activities characterised by long-term contracts, aiming to insure the participant or their family members .against risks threatening their life or health, such as physical health or old age General Takaful Insurance Branch: This encompasses all categories of Takaful insurance activities aiming to insure potential risks, including fire, transportation accidents, property, liability, and

other categories of activities not falling under the Family Takaful insurance branch, and as .determined by a decision issued by the Executive President Agency Contract: A contract in which the participant appoints the company to manage and operate the Participants' Fund on his behalf, carrying out Takaful insurance activities and .providing benefits and compensation in exchange for an agency fee .Agency Fee: A fee or percentage of subscription to the Participants' Fund Mudaraba Contract: A contract in which the participant, acting as the "capital owner," appoints the company as a “Mudarib” to manage and operate the Participants Fund, by engaging in Takaful insurance activities, providing benefits and compensation, and investing in exchange for .”a specified percentage of the return, referred to as the “Mudaraba Share High Sharia Supervisory Authority: The authority responsible for supreme Sharia oversight, with its formation, powers, working system, member qualifications, and remuneration determined by .a decision of the Board External Sharia Observer: A person appointed by the company to conduct Sharia oversight work, ensuring that all the company's activities comply with the decisions of the Sharia Supervisory .Committee Health Takaful Insurance Branch Fund: A sub-account in the Participants Fund, accounting￾independent from the General Takaful Insurance Branch Fund and the Family Takaful Insurance .Branch Fund, encompassing the proceeds of contributions, surplus, and investment returns Health Takaful Insurance Branch: This encompasses all categories of Takaful insurance activities aiming to insure medical costs, medicines, medical and therapeutic services and supplies, and the management of medical programs. Additionally, it provides insurance against work injuries and personal accidents and includes other categories of activities not falling under the General Takaful Insurance Branch or the Family Takaful Insurance Branch, as determined by a decision of .the Executive President Article 2 The company shall obtain prior written approval before publishing any form of advertising, promotion, brochures, circulars, whether printed or not, or any other means of advertising, in all its forms, and by any means whatsoever, relating to the products, services, or insurance contracts that it offers to the public. The company is prohibited from incorporating any of the :following within its advertisements .Misleading or incorrect information or data pertaining to its business operations -1 Any content that may negatively affect the interests of other insurance companies or the -2 .products they offer Article 3 The Executive President shall issue a decision delineating the procedures, fees, and technical prerequisites necessary for the approval of advertisements submitted by the company. The Authority's approval for advertisement publication shall not be construed as an endorsement of its content, nor as an affirmation of its content. Furthermore, this approval shall not absolve the company from potential liabilities arising from advertisements subsequently found to be in violation of the provisions of the Law and this Regulation or found to contain misleading information. The Authority retains the right to instruct the company to cease the publication of .such advertisements

Article 4 The company is obligated to uphold the confidentiality of personal and commercial information belonging to the participant and may not disclose such information except in compliance with the provisions of the Law or following the prior written consent from the participant. Before disclosing this information, the company shall provide written notice to the Authority, specifying .the parties to whom it is disclosed and the reasons prompting such disclosure Article 5 The company is prohibited from accepting or rejecting any insurance application except in accordance with the approved underwriting policy documented by its Board of Directors and the :Sharia Supervisory Committee. This policy shall encompass the following prerequisites .Sustaining the long-term viability of the Participants' Fund -1 .Ensuring regular review of the policy in accordance with market variables -2 Guaranteeing that the risks covered fall within the bounds of assumptions in subscription -3 .pricing Ensuring that subscription or benefits are structured to accommodate significant risks -4 Ensuring that underwriting personnel possess comprehensive knowledge of various policies -5 within the overall framework for risk assessment, the categories of risks, and the limits .associated with each risk type Article 6 The company shall maintain the financial solvency limit separately for each branch of Takaful insurance for which it holds a licence, following the aggregation of shareholders' assets and .liabilities on a proportional basis based on subscription Article 7 A member of the company's board of directors is prohibited from participating in the management of another company related to the insurance sector. However, an exception is made for a member who may be a direct or indirect owner or have an interest in managing the business of an insurance broker. This exception shall be disclosed to the company's board of directors and shareholders, a reasonable time before the member's election, in accordance with .applicable disclosure requirements Article 8 In the event of a financial deficit occurring for two consecutive years in the General Takaful Insurance Branch Fund or the Health Takaful Insurance Branch Fund, the company that operates the General Takaful Insurance Branch or the Health Takaful Insurance Branch shall submit a comprehensive plan to eliminate the deficit. This plan shall outline its causes, the measures taken to rectify it, and the mechanism for transforming it into a surplus in the subsequent year. .The plan shall be appropriate and substantiated Article 9 If a financial deficit persists for two consecutive years in the Family Takaful Insurance Branch Fund, the company operating the Family Takaful Insurance Branch shall assign an appointed actuary to appraise the financial status of this activity. A report shall be submitted to both the company's Board of Directors and the Authority, detailing the reasons behind recurring losses and presenting recommendations to mitigate them. This report shall be delivered within a maximum of two (2) months from the conclusion of the deadline prescribed for submitting the .previous year's budget and final accounts

Article 10 The company shall furnish the Authority with the requirements specified in Articles (8) and (9) of this Regulation within a timeframe not exceeding thirty (30) working days from the date of the Authority's request. The Executive President holds the authority to accept, amend, or reject these proposals within a period not exceeding sixty (60) working days from the date of receipt. .Failure to respond within this period shall be deemed implicit acceptance of the proposals Article 11 The company shall promptly notify the Authority when its paid-up capital falls below the minimum threshold as mandated by the Law. In such a case, the Authority is empowered to take :one of the following actions Impose on the company to take necessary measures to reach the minimum capital -1 requirement within a timeframe not exceeding the submission of the subsequent quarterly report when the available shareholders' equity percentage falls between fifty percent (50%) and ;one hundred percent (100%) of the minimum capital requirements Impose on the company to furnish a comprehensive report detailing corrective measures and -2 their respective timelines to meet the minimum capital requirements. If the percentage of shareholders' equity is maintained between fifty percent (50%) and one hundred percent (100%) of the minimum capital requirements for two consecutive years, a prior written approval shall be ;obtained before implementing the proposed corrective measures Prohibit the company from issuing all or specific types of new Takaful insurance contracts or -3 from renewing all or specific types of existing Takaful insurance contracts if the shareholders' equity percentage drops below fifty percent (50%) of the minimum capital requirements and the company fails to take adequate steps to meet these requirements; or Revoke the company's licence in the event the shareholders' equity percentage falls below -4 .twenty-five percent (25%) of the minimum capital requirements Article 12 If it becomes apparent to the Authority that the company is not serious about implementing the corrective measures mentioned in the detailed report contained in Clause (2) of Article (11) of this Regulation, the Authority may impose on the company to take one or more of the following measures: In the event that the Authority determines that the company is not earnestly pursuing the implementation of corrective measures as outlined in the comprehensive report stipulated in Clause (2) of Article (11) of this Regulation, the Authority may impose on the company to take :one or more of the following measures .Initiate legal measures to augment the capital -1 .Adjust the value of subscriptions -2 .Reduce expenses -3 .Cease the issuance of new Takaful insurance contracts -4 .Decline the renewal of specific types or all concluded Takaful insurance contracts -5 .Liquidate assets -6 .Transfer a defined risk portfolio to another licensed company -7 Dismiss the company's executive management and appoint a committee to manage the -8 .operations

Chapter 2 Licence Procedures Article 13 An application for a licence to engage in Takaful insurance activities shall be submitted on the form prepared by the Authority. The application shall be accompanied by the following :information, documents, and papers .Completed licence application form endorsed by the company's legal representative -1 .Copy of the company's articles of association and statute -2 Proof of the establishment of a bank account in the company's name, representing the -3 .Participants' Fund .A bank certificate confirming the deposit of paid-up capital not less than the legal minimum -4 .Receipt as evidence of the payment of the application study fees prescribed by the Authority -5 .Contracts entered into with other parties -6 .Economic feasibility study -7 A decision from the actuary certifying the preparation of the family Takaful business plan in -8 .compliance with sound and practicable principles .Policy for handling surpluses and deficits -9 .Qard al-Hasan policy, including terms for repayment and depreciation -10 .Mechanism for segregating the Shareholders' Fund from the Participants' Fund -11 .Method for calculating subscription amounts -12 .The company's investment policy -13 An action plan encompassing data and information as stipulated in Article (14) of this -14 .Regulation .Any other data or certificates demanded by the Authority -15 Article 14 The business plan submitted by the company, as required in Clause (14) of Article (13) of this :Regulation, shall include the following .a- Details about the company's headquarters and branches b- Arrangements concerning the coverage of Re-Takaful risks or substantiated explanations for .not requiring these arrangements .c- Specified insurance activities to be undertaken d- Projections for the anticipated number of employees and a plan for the recruitment and .training of Omanis .e- Expected expenses for conducting the activity and sources of financing f- Projected financial statements for a minimum period of five (5) years for companies intending

to operate in the General Takaful Insurance Branch or the Health Takaful Insurance Branch. For companies desiring to operate in the Family Takaful Insurance Branch, the period is no less than :ten (10) years. These financial projections shall encompass Anticipated budget, profit and loss forecasts, and anticipated expenses for the -1 .Shareholders' Fund, separate from the Participants' Fund Anticipated budget and expected expenses for the Participants' Fund, separate from the -2 .Shareholders' Fund .Revenue forecasts for each type of Takaful insurance operation -3 Anticipated subscription growth, projected claims, and forecasts regarding investments -4 and associated income .Forecasts of technical reserves -5 .Forecasts of surplus distribution, if applicable -6 .Forecasts related to Qard al-Hasan movements, if applicable -7 .Estimates of solvency limit -8 Particulars of the foundations and assumptions used in crafting financial statement -9 .estimates and forecasting activity growth .Vertical and horizontal financial analyses -10 Article 15 If the licence application is approved in compliance with Article (12) of the Law, the company shall be entered in the register of licensed Takaful insurance companies. The decision to issue the licence shall be published in the Official Gazette, and the company shall receive an endorsed certificate valid for a period of five (5) years, commencing from the date of publication in the .Official Gazette Article 16 The company may not establish branches except after obtaining prior written approval from the Authority. The application for branch establishment shall be accompanied by the following data :and documents .Proposed branch location -1 .Estimated rent or purchase cost for the branch -2 The name and qualifications of the proposed branch director or individual responsible for the -3 branch .Expected profit and loss projections for the branch over a three-year period -4 .A commitment to adhere to the applicable Omanisation rates -5 .Any other information requested by the Authority -6 The Executive President issues a decision specifying the conditions, technical requirements, fees, .and procedures necessary for establishing branches Chapter 3 Branches and Categories of Takaful Insurance Activities Article 17 :Takaful insurance activities are categorized into two branches .Family Takaful Insurance Branch -1 .General Takaful Insurance Branch -2

.Health Takaful Insurance Branch -3 Article 18 :The Family Takaful Insurance Branches are determined as follows Takaful insurance contracts covering risks faced by insured individuals, such as injuries -1 resulting from accidents or specific types of accidents, death due to accidents or specific types of accidents, or disability due to illnesses of specific types. These contracts are valid for a period of .no less than five (5) years or an indefinite duration Takaful insurance contracts for persons, whether concluded through the issuance of -2 documents, instruments, or certificates, granting the participant the right to obtain in the future an amount or several amounts in exchange for paying one or more premiums to the insurer, without falling within the scope of Clause (1) of this Article. Industrial Takaful insurance is .excluded from this category Takaful insurance contracts that offer coverage to workers in low-wage industrial fields, with -3 reduced shareholder contributions and benefits compared to Takaful contracts for individuals .outlined in Clause (1) of this Article Article 19 :The following activities fall under general Takaful insurance Takaful insurance against liability: Takaful insurance contracts that encompass risks faced by -1 insured individuals, leading to obligations toward third parties, excluding risks related to the use .of vehicles, ships, aircraft, or the construction, repair, or mooring of ships or aircraft Marine, air and transportation Takaful insurance: Takaful insurance contracts that cover the -2 :following .a- Ships, aircraft, machinery, furniture, or ship and aircraft equipment .b- Goods, commodities, and property transported on board ships or aircraft .c- Freight charges or any interests related to ships or aircraft d- Losses stemming from the use of ships or aircraft, including third-party risks. e- Risks .linked to ship construction, repair, or docking, including third-party risks f- Transportation risks (sea, air, or land), encompassing risks from the initiation of .transportation to the destination .g- Any other risks approved by the Authority Takaful insurance against vehicles: Takaful insurance contracts that cover risks of loss or -3 damage resulting from the use of vehicles, including third-party liability resulting from a traffic accident. This category excludes Takaful insurance contracts related to transportation risks .outlined in clause (2) of this Article Takaful insurance against financial losses: Takaful insurance contracts that cover any of the -4 :following risks a- Risks related to financial losses incurred by the insured due to insolvency, bankruptcy, .inability to repay debt, or default for reasons other than insolvency b- Risks involving losses incurred by the insured due to the fulfilment of previously .concluded insurance contracts c- Risks associated with losses sustained by the insured due to cessation or reduction of their work activities .d- Risks connected to unexpected expenses incurred by the insured e- Risks falling outside the scope of the aforementioned categories and not constituting .activities of other insurance types

Takaful insurance contracts covering risks faced by insured individuals, such as injuries -5 resulting from accidents or specific types of accidents, death due to accidents or specific types of accidents, or disability due to illnesses of specific types. This category does not include the .subjects covered in Clauses (1) and (2) of this Article Takaful insurance against property: Takaful insurance contracts that cover the risks of loss or -6 damage to physical property. This category excludes marine, air, transportation, and vehicle .Takaful insurance activities Takaful insurance against work-related injuries: Takaful insurance contracts that cover risks -7 arising from injury to the insured at their workplace or contracting occupational diseases, .provided that these contracts do not fall within the scope of Clauses (1) and (2) of this Article Chapter 4 Company's Board of Directors and Executive Management Article 20 Notwithstanding the provisions of the Commercial Companies Law and the Capital Market Law, any member of the company's board of directors shall meet the following conditions, :qualifications, and experience He shall not have been convicted of a misdemeanour involving dishonesty, fraud, a crime of -1 .moral turpitude or breach of trust, or have been involved in any suspicious financial activity There shall be no evidence of his involvement in violations related to the regulations -2 .governing the Capital Market Law and the Insurance Companies Law He shall not have taken part in financial violations or improper practices within the company -3 .that resulted in the cessation of the company's operations .He shall not have previously been convicted of insolvency or bankruptcy -4 .He shall have at least (5) five years of practical experience -5 Article 21 Without prejudice to the provisions of the Commercial Companies Law and the Capital Market Law, anyone occupying a position within the company's executive management shall satisfy the :following criteria He shall not have been convicted of a misdemeanour involving dishonesty, fraud, a crime of -1 .moral turpitude or breach of trust, or have been engaged in any suspicious financial activity There shall be no evidence of their involvement in violations related to the regulations -2 governing the Capital Market Law and the Insurance Companies Law, as determined through investigations or inspections conducted by the Authority or any other regulatory, professional, .or governmental body He shall not have taken part in financial violations or improper practices within the company -3 that resulted in the cessation of the company's operations or have been dismissed from their .position for these reasons .He shall not have previously been convicted of insolvency or bankruptcy -4 He shall not be a member of the board of directors of another company, or own or work -5 .directly or indirectly in another company related to the insurance sector Article 22

In addition to the conditions stated in Article (21) of this Regulation, any individual holding a position in the company's executive management shall possess one of the following qualifications and levels of experience A Fellow's or Associate degree from an insurance authority or institute or any institution -1 specialising in insurance, recognised by the Authority, coupled with technical experience in insurance activities for a period not less than five (5) years in the domain of insurance .underwriting or management of insurance companies A Master's degree in insurance, financial sciences, economics, or a closely related business -2 field, along with technical experience in insurance activities for a period not less than seven (7) .years in the field of insurance underwriting or management of insurance companies A Bachelor's degree in insurance, economic sciences, or a closely related business field, -3 combined with technical experience in insurance activities for a period not less than ten (10) .years in the field of insurance underwriting or management of insurance companies A diploma in insurance, finance, or economics, in addition to technical experience in insurance -4 for no less than thirteen (13) years in the field of insurance underwriting or management of .insurance companies Article 23 The company shall provide the Authority with the names of the company’s executive management within (15) fifteen days from the date of appointment, as per the form prepared by .the Authority Article 24 The Authority retains the right to request the replacement of any member of the company's elected or independent board of directors or anyone occupying a position in the company's executive management if they fail to meet any of the conditions, qualifications, and experience .requirements outlined in this Chapter Article 25 Members of the company's Board of Directors or its executive management may not continue in their positions and attend any company meetings upon receiving the Authority's request for .their replacement Article 26 Without prejudice to the provisions of the Commercial Companies Law, the company shall appoint a replacement to fill any vacated position as requested by the Authority within the .specified timeframe delineated in the replacement decision Chapter 5 Takaful Insurance Contracts Article 27 All Takaful insurance contracts issued in the Sultanate shall be drafted in Arabic or accompanied by a certified Arabic translation. In case of a dispute regarding interpretation, the Arabic version .shall take precedence Article 28 :Takaful insurance contracts shall include the following

.The contract number, which shall be referenced in all associated documents -1 .The names, addresses, and contact information of the participant and the beneficiary -2 .Coverage period -3 .Additional coverage details -4 .Subscription amount -5 .The property or interests covered -6 .The text of the document containing general conditions and exceptions -7 .Rights and obligations of the participant -8 .Principles and rules governing the company-participant relationship -9 The Agency Fee or Mudaraba share obtained by the company from the Participants' Fund -10 .investments .Methods for allocating contributions to the investment portfolio -11 .Surplus distribution policy for participants -12 .Policy for handling deficits -13 .Signature and seal of the company -14 .Any other information deemed necessary by the Authority to be included in the contract -15 Article 29 The company shall inform the insurance applicant of all the terms, conditions, and exceptions of the Takaful insurance contract before its conclusion and signing Article 30 Upon concluding a Takaful insurance contract, the participant shall receive a copy of the contract. As an exception, the company may provide the participant with a temporary coverage notice until the contract is issued, with the issuance period not exceeding one month from the .coverage start date Article 31 It is not permissible to issue a Takaful insurance contract to any member of the company’s board of directors, executive management, or any shareholder owning 5% or more of the company’s capital, or to companies in which they have a stake, or to individuals with up to a second-degree .kinship or affinity, except after full payment of the due subscription Article 32 The company may not show favouritism to any party mentioned in Article (31) of the Regulation when filing claims or seeking compensations due under the Takaful insurance contract concluded therewith. The company shall also notify the compliance officer of any payments or .compensations made in their favour Article 33 The company may not issue a general Takaful insurance contract or a health Takaful insurance contract unless it is proven that the subscription amount has been received or is held under

.acceptable guarantees by the company Article 34 The company's receipt of the subscription is proven when the participant pays it directly to the .company, or to one of its brokers or agents, or to any other party authorised on its behalf Chapter 6 Participants and ' Funds Article 35 The company shall manage the Participants' Fund carefully and in a professional manner .consistent with Sharia principles Article 36 :When managing the Participants’ Fund, the company shall Maintain separate accounting for the assets and liabilities of the General Takaful Insurance -1 .Branch Fund, ensuring that assets consistently exceed liabilities Maintain separate accounting for the assets and liabilities of the Family Takaful Insurance -2 .Branch Fund, ensuring that assets consistently exceed liabilities .Handle revenues and expenses of the Takaful Health Insurance Branch Fund -3 Article 37 Proceeds from contributions, surplus, and investment returns, resulting from family Takaful insurance activities that the company is licensed to practice are distributed into two sections as :per the percentage agreed upon in the family takaful insurance contract a- Participants’ Risk Funds: An account independent of the Participants’ Investment Funds .account, and where the funds allocated to cover the risks insured against are recorded b- Participants’ Investment Funds: An account independent of the Participants’ Risk Funds .account, and where funds allocated exclusively for capital formation are recorded Article 38 The company is prohibited from combining the assets and liabilities of the ' Fund and those of .the Participants’ Fund or delete the same therefrom across all its branches Article 39 The company shall provide Qard al-Hasan when the liabilities of the Participants' Fund or one of .its branches exceed current assets or in the case of a cash shortage in the fund Article 40 Revenues of the General Takaful Insurance Branch Fund or the Health Takaful Insurance Branch :Fund are derived from the following sources Contributions and the subscription share due to the collecting company for Takaful insurance -1 .contracts or Takaful reinsurance contracts .Discounts and commissions collected from Takaful reinsurance companies -2 .Surplus from Takaful reinsurance operations -3

Remaining value and recoveries from general Takaful insurance or health Takaful insurance -4 .activities .Shareholder donations -5 Article 41 :Revenues of the Family Takaful Insurance Branch Fund are derived from the following sources Contributions and the subscription share due to the company for family takaful insurance -1 .contracts and family takaful reinsurance contracts .Discounts and commissions collected from Takaful reinsurance companies -2 .Surplus from family Takaful reinsurance operations-3 .Shareholder donations -4 Article 42 :The company may record revenue in the Shareholders' Fund only from the following sources .The company’s capital paid up by shareholders -1 .Agency Fee, or Mudaraba share -2 .Shareholders’ Fund investment returns -3 Article 43 :Disbursements from the Participants' Fund are as follows .The fund’s management expenses, including agency and mudaraba -1 .Expenses and compensations due in implementation of Takaful insurance contracts -2 .Distributing the surplus to the participants’ accounts -3 .Any other expenses approved by the Sharia Supervisory Committee -4 Article 44 :Disbursements from the Shareholders’ Fund are as follows .Costs of issuing a Takaful insurance contract, including commission -1 .Management expenses -2 .General administrative expenses and selling expenses -3 .Taxes -4 Article 45 The company may not distribute the surplus except in accordance with the distributable surplus policy approved by the company’s board of directors, the Sharia Supervisory Committee and the actuary appointed for the company licensed to practice the Family Takaful Insurance Branch. :When calculating the distributable surplus, the company shall take into account the following .The surplus shall be based on audited financial statements -1 .Subscriptions under contracts concluded with participants -2

.Repayment of Qard al-Hasan -3 .Financial solvency of the company and the Participants’ Fund -4 .Adequacy of financial liquidity -5 .Emergency reserves -6 .Expansion reserves -7 The company may not benefit from the distributable surplus in order to avoid any future financial or legal consequences when carrying out Takaful insurance activities or any other objectives determined by the distributable surplus policy. In all cases, the Shareholders' Fund .may not obtain any amount from the distributable surplus Article 46 Distributable surplus shall be disbursed within (4) four months of the company's fiscal year-end, .with public notification on the company's website or by notice sent to participants Article 47 The company shall disburse the distributable surplus within (30) thirty days from the date of the distribution announcement through direct bank transfer to the participant’s account or by .deducting from subscription values Article 48 .The company may not show unjustified favouritism to any participant Article 49 Within (6) six months from the date of the company's announcement of its intention to disburse the distributable surplus, the Authority, or a party appointed by the Authority, is empowered to conduct an assessment. This assessment is conducted to confirm and ascertain the announced level of the distributable surplus, comparing it against the financial data and records of the Participants' Fund. The company shall provide all data required therefrom to make this .assessment Article 50 If an accounting deficit is identified in the audited annual financial statements of the Participants' Fund, the company is required to allocate one or more assets from the Shareholders' Fund. The value of these assets shall match the accounting deficit within (120) one hundred and twenty days from the fiscal year's end to provide the Qard al-Hasan. The company is further mandated to notify the Authority of the allocated assets within (7) seven days from the allocation date. In the case of a continuing accounting deficit for a period of (3) three years, the .company shall take appropriate measures to consider the allocated assets as Qard al-Hasan Article 51 In the event that the General Takaful Insurance Branch Fund, the Health Takaful Insurance Branch Fund, or the Family Takaful Insurance Branch Fund is unable to repay the Qard al-Hasan for a continuous period of (3) three years, or (5) five years for the Family Takaful Insurance Branch Fund, the company is required to categorise that outstanding loan as a doubtful debt. The repayment of the loan after these stipulated periods shall be duly recorded in the .company's financial accounts Article 52

The disbursement of the Qard al-Hasan is permissible solely from the surplus of the Participants’ Fund, provided that such disbursement does not prejudice the company’s financial solvency limit. Approval from the company’s Board of Directors, the Sharia Supervisory Committee, and .the appointed actuary is required if the company engages in family Takaful insurance activities Article 53 The company shall adhere to the principles of agency for underwriting activities and Mudaraba .for investment activities in Takaful insurance Article 54 The company's operations are managed by the executive management in accordance with policies established by the board of directors. The management shall strike a balance between the interests of the participants and the shareholders. In the event of a conflict of interest, priority is given by the board of directors and the executive management to the participants over .the shareholders Article 55 The Agency Fee or Mudaraba share obtained by the company managing the Participants’ Fund via the Agency Contract model or the Mudaraba Contract model shall not exceed (30%) thirty percent of the subscription percentage or the total of this percentage if it is in the form of a fee. This fee or share is designated to cover fund management expenses or other expenses .sanctioned by the Sharia Supervisory Committee Article 56 Should the company intend to impose or modify the Agency Fee, the Mudaraba share, or profit distribution, it shall submit an application to the Authority. This submission shall be accompanied by the approval of the board of directors, the Sharia Supervisory Committee, and the appointed actuary, particularly if the company practices the Family Takaful Insurance Branch. Moreover, the mechanism for determining the level of the Agency Fee and the Mudaraba share, .along with any other required documents, shall be provided to the Authority Chapter 7 The Sharia Supervisory Committee and the Sharia Observer Article 57 Before commencing Takaful insurance operations, the company is mandated to form a Sharia Supervisory Committee with a minimum of (3) three members, the majority of whom to be Sharia scholars. One member shall be an expert specialised in Takaful insurance. Criteria for a :scholar member include A bachelor’s degree in the principles of jurisprudence, and transactional jurisprudence, with a -1 minimum of (5) five years’ practical experience in assessing the legality of commercial .transactions .Familiarity with Islamic banking -2 .Knowledge of regulatory and legal frameworks of practiced insurance branches -3 Not being a shareholder, member of the company’s board of directors, or an employee -4 .therein .Good conduct, reputation, independence, and impartiality -5 Article 58

A member of the Sharia Supervisory Committee may not concurrently serve in more than one Sharia Supervisory Committee for a Takaful insurance company in the Sultanate unless permitted .by decision of the Executive President, provided both companies do not object Article 59 The company is required to provide the Authority with the decision to appoint Sharia .Supervisory Committee members within (15) fifteen days from the decision's issuance Article 60 Dismissal by the company of any Sharia Supervisory Committee member shall be recommended by the company’s Board of Directors and approved by the Ordinary General Assembly. If a vacancy arises, the company shall appoint a replacement within a period not exceeding (30) .thirty days from the position becoming vacant Article 61 :The Sharia Supervisory Committee has the following responsibilities .Establishing the legal framework regulating the company’s operations -1 Reviewing Takaful insurance contracts, legal documents, and procedures associated with the -2 .company’s activities to ensure adherence to Islamic Sharia provisions and principles .Setting forth the policy and procedures of the Participants' Fund -3 Formulating an investment policy compliant with Islamic Sharia provisions and ratified by the -4 .company’s board of directors .Approving the surplus distribution policy, as sanctioned by the company’s Board of Directors -5 .Endorsing the subscription guide approved by the company’s Board of Directors -6 .Approving the claims settlement manual ratified by the company’s board of directors -7 Proposing actions concerning insurance-related legal violations reported by the compliance -8 .officer Presenting an annual report to the Authority and the company’s annual general assembly, -9 outlining its work and observations on the company’s compliance with Islamic Sharia provisions .and principles Article 62 The Sharia Supervisory Committee shall convene at least (4) four times per year and shall hold at .least once per year a meeting with the company’s board of directors Article 63 Disagreements between the Sharia Supervisory Committee and the company’s board of directors shall be referred to the Authority’s Supreme Sharia Supervisory Board. Decisions made by the .Supreme Sharia Supervisory Board are deemed final and binding Article 64 The company's board of directors shall address any difficulties encountered by the Sharia :Supervisory Committee in fulfilling its duties. The company's executive management shall .Provide the required assistance to the Sharia Supervisory Committee -1

.Enable the Sharia Supervisory Committee to review records and data -2 .Refrain from interfering in the activities of the Sharia Supervisory Committee -3 Avoid providing false, misleading, or incomplete information to the Sharia Supervisory -4 Committee. 5- Submit reports to the Sharia Supervisory Committee on matters likely to affect the .company’s compliance with Islamic Sharia provisions and principles Article 65 If the company fails to adhere to the policies, directives, decisions, and fatwas of the Sharia Supervisory Committee, the committee is required to report the matter to the Authority Article 66 The company shall appoint an External Sharia Observer for each fiscal year. His role is to oversee and ensure that all company activities align with decisions of the Sharia Supervisory Committee .and Takaful insurance laws and regulations stipulated by the Authority Article 67 The External Sharia Observer shall possess the necessary competence to conduct Sharia .compliance reviews Article 68 :The responsibilities of the External Sharia Observer include Assessing the conformity of product wording, contracts, financial transactions, and operating -1 .policies and procedures with Sharia Confirming the implementation of decisions, policies, and directives issued by the Sharia -2 .Supervisory Committee Ensuring the company's compliance with all provisions of the Takaful Insurance Law and its -3 .Implementing Regulation Verifying adherence to decisions and directives by the Authority’s Supreme Sharia Supervisory -4 .Board Article 69 The External Sharia Observer is required to meet with the Sharia Supervisory Committee to .discuss his findings before preparing the report Article 70 :Copies of the External Sharia Observer’s report shall be provided to the following authorities .The company’s Board of Directors -1 .The company’s Sharia Supervisory Committee -2 .(The Authority (alongside annual financial statements -3 Chapter 8 Financial Records and Reports Article 71

:When preparing financial reports, the company shall Comply with international accounting standards, accounting and auditing standards for -1 .Islamic financial institutions, and the requirements sanctioned by the Authority State the accounting policies employed in preparing financial reports in accordance with -2 .international accounting standards and international financial reporting standards Article 72 :The company shall maintain the following records A record of all Takaful insurance contracts issued by the company, encompassing contract -1 serial numbers, issuance dates, names and addresses of participants and beneficiaries, insured .funds, contract durations, and any alterations made to them A record of all claims submitted to the company, documenting submission dates, values, -2 .names and addresses of claimants, payment dates, or date and reasons for refusal to pay .A comprehensive record of all Takaful or reinsurance contracts concluded by the company -3 Article 73 :The company's quarterly financial report shall encompass .The company's financial position -1 .Comprehensive income of the Shareholders’ Fund -2 .Comprehensive income of the Participants’ Fund -3 .Revenues and expenses of the General Takaful Insurance Branch Fund -4 .Revenues and expenses of the Family Takaful Insurance Branch Fund -5 .Revenues and expenses of the Takaful Health Insurance Branch Fund -6 .Change in shareholders’ equity -7 .Surplus or deficit in the Participants’ Fund -8 .Other data required by the Authority -9 Article 74 :The company shall compile an annual report containing the following data The company’s financial position, encompassing the Shareholders’ Fund, Participants’ Fund, -1 .and the company’s overall financial status .Comprehensive income of the Shareholders’ Fund -2 .Revenues and expenses of the General Takaful Insurance Branch Fund -3 .Revenues and expenses of the Family Takaful Insurance Branch Fund -4 .Revenues and expenses of the Takaful Health Insurance Branch Fund -5 .Cash flow to the shareholders’ fund -6 .Cash flow to the participants’ fund -7

.Change in shareholders’ equity -8 .Surplus or deficit in the participants’ fund -9 .Contributions for each category of Takaful insurance activities practiced by the company -10 Claims or compensation for each category of Takaful insurance activities practiced by the -11 .company .Shareholders’ Fund expenses -12 .Participants’ Fund expenses for each branch of Takaful insurance -13 .Takaful reinsurance details -14 .The company’s assets and liabilities abroad for Omani companies -15 .Calculation of the solvency limit -16 .Calculation of technical reserves -17 .Company’s funds held by the Authority as security (lien) for each type of activity -18 .Any other data requested by the Authority -19 Article 75 The company shall submit published audited financial statements and audited regulatory .reports to the Authority thirty (30) days before the company’s general assembly Article 76 An annual report detailing compliance with Islamic Sharia, accompanied by the financial statements, shall be submitted by the company to the Authority. This report shall incorporate .the Board of Directors’ comments on any reservations included Chapter 9 External Auditor and Actuary Article 77 The company, via the General Assembly, shall annually appoint an external auditor to audit the company’s annual reports and financial statements. The appointed auditor shall be from audit .offices accredited by the Authority Article 78 The Authority retains the right to reappoint the external auditor or select a different auditor at the expense of the company if the auditor’s report fails to reflect the company’s actual financial .position Article 79 A company practicing family Takaful insurance activities shall appoint an actuary, subject to Authority approval, to conduct an annual actuarial valuation. A copy of the report shall be submitted to the Authority along with the annual accounts, at least thirty (30) days before the .company’s general assembly

Article 80 At its discretion, the Authority may demand an additional actuarial valuation report or appoint, at the company’s expense, another actuary to conduct the actuarial valuation of the company’s .activities Article 81 :The appointed actuary shall meet one of the following conditions .Fellowship of the Institute and College of Actuaries in the United Kingdom -1 .Membership in the Society of Actuaries in the United States of America -2 .Membership in the Society of Loss Actuaries in the United States of America -3 Article 82 The Authority may, concerning a company practicing general Takaful insurance or health Takaful .insurance activities, request an actuary’s report at its discretion Article 83 :The actuary shall .Review the company’s financial position -1 .Assess the company’s capacity to fulfil future obligations -2 .Review Takaful insurance contracts and formulas -3 .Determine and endorse the company’s technical allocations -4 .Assess the company’s investment policy and provide recommendations -5 .Perform any other competencies determined by the Authority -6 Article 84 :The actuary shall .Not be a party related to the company he is valuating -1 Submit an independent report following best international practice standards adopted in the -2 .actuarial field and relevant to the company's activities Provide the report to the company’s Board of Directors within an appropriate period, allowing -3 board members to study and incorporate its information in the company’s annual report Notify the company’s Board of Directors if there's a matter related to the company’s financial -4 .situation or business requiring their attention Inform the Authority if the matter notified to the company’s Board of Directors hasn’t been -5 .adequately addressed Article 85 :The actuary's report shall include the following

.Significant information that has affected or is likely to affect the company's future operations -1 An estimation of the value of Takaful insurance obligations and the associated assets based -2 .on insurance sector regulations In case of alterations in assumptions or appraisal methods compared to previous assessments, -3 the impact of these changes on General Takaful insurance obligations and their assets shall be .stated .The adequacy, suitability and credibility of the data provided thereto by the company -4 .Measures taken to appraise the efficiency, suitability, and credibility of the data -5 .The models used in the appraisal process -6 .The methodology adopted in assessing estimates -7 .Factors affecting the outcomes of the analysis -8 .Takaful reinsurance arrangements and their adequacy -9 Any significant aspects of Takaful insurance activities, including his opinion on fundamental -10 .differences between actual business and assumptions in the previous appraisal The method and assumptions used by the actuary in the appraisal process, provided that it -11 includes his opinion on the fundamental differences between the assumptions used and the .actual business of the company The surplus and deficit in the Participants’ Fund, a description of the invested assets used to -12 determine returns, and the risk bases relied upon to ascertain the discount rate applied .Proposed surplus distribution to participants -13 .Any other factors that may affect the appraisal -14 Article 86 Should the actuary detect any present or future risks, incidents, or actions violating the Law or its Implementing Regulation by the company, an urgent report shall be submitted to the company's Board of Directors. The Board reviews the report, provides its comments thereon, and .informs the Authority of its observations and actions taken Article 87 The company's executive management shall commit to providing the necessary assistance to the :actuary to ensure that he performs his duties, in particular the following .Allowing access to the company’s records and documents upon request -1 .Abstaining from interfering in the actuary’s work -2 .Abstaining from providing false information or data -3 .Informing the actuary of matters likely to impact the company’s financial position -4 Article 88 :Procedures for terminating the services of an auditor or actuary include -1 a- Submission of a written application to the Authority stating reasons for termination of the services. The Authority shall decide on the application within fifteen (15) days from its

filing. Failure to decide on the application within this period is considered a rejection .thereof b- The company has the right to file a grievance against the rejection decision in accordance .with the procedures stipulated in the Capital Market Law and its Implementing Regulation If the actuary wishes to resign, a notice shall be submitted to the Authority at least thirty (30) -2 .days before the application, along with a statement of reasons In all instances, the company shall appoint a new actuary within thirty (30) days of termination .of the actuary’s services or his resignation Chapter 10 Technical Allocations Article 89 The provisions of the “Limit of Ability to Repay” stipulated in the aforementioned Insurance Companies Law, and the provisions of “Deposit and Solvency Limit” provided for in the Implementing Regulation of the Insurance Companies Law shall be applied to the company. A company practicing family Takaful insurance shall fulfil the same obligations imposed on the insurance company engaged in life insurance business. A company practicing general Takaful insurance activity shall fulfil the same obligations imposed on the insurance company engaged in general insurance business. A company practicing health Takaful insurance activity shall fulfil the .same obligations imposed on the company engaged in health insurance business Article 90 The company shall maintain the following reserves as technical allocations for each branch of :Takaful insurance that it is licensed to engage in Unexpired risk reserves (URR), including unearned premium reserves (UPR) and premium -1 deficiency reserves (PDR). In the case of determining the unearned premium reserve, the method (1/365) shall be used. The company shall test the adequacy of performance of obligations and thus calculate and record the deficit in the premium deficiency reserves for each type of Takaful insurance activities, where the contributions portion that has not been expired is insufficient to .meet future claims and settle other expenses, less Takaful reinsurance measures Outstanding claims reserves (OCR): it is the total estimated value of outstanding claims for -2 each type of Takaful insurance activity with the reserve for claims that have been incurred but .not reported Article 91 A company that practices family Takaful insurance activities shall maintain a general balance throughout the fiscal year at least equal to the net liabilities for all Takaful insurance contracts .as of the date of the appraisal carried out by the appointed actuary Article 92 The company shall deposit assets of no less than the total of its net technical reserves in one of the banks licensed to practice Islamic banking transactions in the Sultanate or any competent authority in the Sultanate, with mortgaging the same in favour of the Authority, along with .delivering a certificate proving the mortgage Article 93 For the purposes of calculating the net technical reserve, the portion of takaful reinsurance or reinsurance expenses that has not expired shall be deducted from the unearned premium .reserve

Article 94 The company may not withdraw any of the assets mortgaged to the Authority for use except .after obtaining prior written approval from the Authority Article 95 The company shall separate the assets mortgaged in favour of the Authority for the Family Takaful Insurance Branch, the General Takaful Insurance Branch, and the Health Takaful .Insurance Branch Chapter 11 Takaful Reinsurance Article 96 The company shall entrust Takaful reinsurance operations to Takaful reinsurance companies. Should this not be feasible, the company may engage in transactions with reinsurance .companies after obtaining approval from the Sharia Supervisory Committee and the Authority Article 97 :The Takaful reinsurance company shall maintain the following records .A record of the details of Takaful reinsurance contracts -1 A record that includes all claims received by the Takaful Reinsurance Company regarding -2 shares from the ceded agreements, the names of the subscribers with claims and the agreement in question, the amount held by the company, its share, date of payment, and the reserve .allocated to meet the claim Chapter 12 Dissolution of the Company and Cancellation of the Licence Article 98 If the reasons for dissolving and liquidating the company are materialised in accordance with the provisions of the Commercial Companies Law, the liquidator, or his representative, shall transfer the remaining part of the Participants’ Fund to another Takaful insurance company, pursuant to the provisions of the Law, and the Shareholders’ Fund shall be responsible for contributing the amount of the accumulated deficit to the Participants’ Fund before the transfer. For this .purpose, an actuarial appraisal of the family Takaful insurance business shall be carried out Article 99 After the Takaful insurance activities are transferred to another company, the Authority issues a decision to cancel the licence, following which the Shareholders' Fund is dissolved and liquidated .pursuant to the provisions of the Commercial Companies Law Article 100 Without prejudice to Article (15) of the Law, the Authority shall cancel the licence in the :following cases If the company does not practice any category of activities it is licensed to practice within (1) -1 .one year from the date of issuance of the licence If the company does not offer its shares for public subscription within the period specified in -2

.the Commercial Companies Law If the company does not make sufficient arrangements to ensure its commitment to working in -3 accordance with the provisions and principles of Islamic Sharia, including appointing members of .the Sharia Supervisory Committee .If the company ceases to practice Takaful insurance activities or if the company so requests - 4 Chapter 13 Administrative Penalties and Fees Article 101 Within the scope of applying the provisions of this Regulation, the penalties stipulated in Article .(53) of the Law shall be imposed by a decision of the Executive President Article 102 The grievance filed by the concerned parties against the decisions issued by the Executive President in implementation of the provisions of the Law and its Implementing Regulation shall be in accordance with the provisions of the Capital Market Law and its Implementing .Regulation Article 103 The competent department in the Authority shall undertake investigation procedures into violations of the provisions of the Law, its Implementing Regulation, and the decisions and rules .issued in implementation thereof Article 104 The Board may reach a reconciliation with the violator on violations of the provisions of Articles (4) and (44) of the Law by making a financial settlement with the violator, provided that the amount of the reconciliation is not less than the minimum prescribed for the administrative fine .stipulated in Article (53) of the Law Article 105 :The fees collected by the Authority are determined as follows :Service fees -1 Fee (Fees (in OMR Studyingthe licence application two thousand (2,000) Grantingalicence for the family Takaful insurance branch one thousand and five hundred (1,500) one thousand and five hundred (1,500) Grantingalicence for the generalTakaful insurance branch Grantingalicence for the health Takaful insurance branch one thousand and five hundred (1,500) alicence forall branches ofTakaful insurance Four thousand five hundred (4,500) – one thousand and five hundred for the family (1,500) – Takaful insurance branch one thousand five hundred for the general (1,500) – Takaful insurance branch one thousand five hundred for the Takaful (1,500) – Health Insurance branch four thousand five hundred forall branches of (4,500) – Takaful insurance Licence renewal for each category Data modification twenty (20)

Opening branches five hundred (500) Request to peruse documents and records twenty (20) Copies or extracts twenty (20) :Supervision and control fees -2 a- (0.3%) of the total value of insurance contracts that fall under the family takaful .insurance branch b- (0.6%) of the total value of insurance contracts that fall under the general Takaful insurance branch c- (0.6%) of the total value of insurance contracts that fall under the health Takaful .insurance branch :Insurance emergency fund fees -3 a- (0.25%) of the total value of insurance contracts that fall under the family Takaful .insurance branch b- (1%) of the total value of insurance contracts that fall under the general Takaful .insurance branch .c- (1%) of the total insurance contracts that fall under the health Takaful insurance branch Article 106 The company shall pay to the Authority the fees referred to in Article (105) of the Regulation, which are deducted from the Participants’ Fund and calculated on the total contributions due .and collected in the previous year Article 107 In the event of delay in renewing the licence in accordance with the time limits specified in the Law, the Executive President shall impose an administrative fine equal to (5%) five percent of the amount of the fee due for each week of delay, provided that it does not exceed the maximum .fee