1. Cooperative Micro-finance (CMF) The Role of Corporate Legal Counsel Towards Its ( CMF ) Socio-economic Goals CORPORATE LEGAL COUNSEL CONFERENCE - 2012 “Meeting the new challenges of your role as a corporate legal counsel” Safir 2, Ballroom (BR) Level HOTEL ISTANA Kuala Lumpur ASLI Prof. Dr. Mohd. Ma’sum Billah www.drmasumbillah.blogspot.com

2. Key Issues CMF? Its Central Idea CMF, IMF, MC & IMC: Compared Why CMF? The Socio-economic & Cultural Impact CMF: Its Global eco-Alarm CMF: Its Ultimate Goal The Model Structure of CMF Governing Principles of CMF Practicality of CMF Cooperative Micro-bond (CMB)? CMF & the Risk Management The Role of Corporate Legal Counsel Towards Its (CMF) Socio-economic Goals CMF? Its Challenges The Way Forward 2

3. CMF? Its Central Idea debt-free micro-financing with cooperative culture based on true spirit of eco-democracy debt-free micro-financing with cooperative culture based on true spirit of eco-democracy by focusing on underprivileged, low-income group & middle class by focusing on underprivileged, low-income group & middle class in view of creating an enterprising & an entrepreneur based nation with utmost professionalism & eco-prosperity in view of creating an enterprising & an entrepreneur based nation with utmost professionalism & eco-prosperity CMF is thus, an asset based economy with risk sharing techniques, which opposes the existing model of debt-based economy with risk transferring mechanism CMF is thus, an asset based economy with risk sharing techniques, which opposes the existing model of debt-based economy with risk transferring mechanism Hence, CMF dismisses the idea of Micro-credit, which gives a chance to gain at the expense of others Hence, CMF dismisses the idea of Micro-credit, which gives a chance to gain at the expense of others 3

4. CMF, IMF, MC & IMC: Compared CMF (cooperative micro-finance) a debt-free micro-financing on project with risk sharing cooperative management in view of mutual benefits CMF (cooperative micro-finance) a debt-free micro-financing on project with risk sharing cooperative management in view of mutual benefits IMF (Islamic micro-finance) an asset based interest-free micro- financing with risk sharing either unilateral, bilateral or cooperative management basis in view of agreed benefit or sharing the result accordingly IMF (Islamic micro-finance) an asset based interest-free micro- financing with risk sharing either unilateral, bilateral or cooperative management basis in view of agreed benefit or sharing the result accordingly MC (micro-credit) a debt based interest bearing micro-financing with risk transferring technique in view of gaining some thing at the expense of others MC (micro-credit) a debt based interest bearing micro-financing with risk transferring technique in view of gaining some thing at the expense of others IMC (Islamic micro-credit) an interest-free micro-loan (qardh) on Benevolent or on service charge with risk transferring technique IMC (Islamic micro-credit) an interest-free micro-loan (qardh) on Benevolent or on service charge with risk transferring technique Thus… CMF, IMF & IMC are justified under Shari’ah principles while opposing the model of MC on account of unjust eco-treatment Thus… CMF, IMF & IMC are justified under Shari’ah principles while opposing the model of MC on account of unjust eco-treatment 4

5. Why CMF? The Socio-economic & Cultural Impact Socio-benefits Matured Skilled Responsible Visionaries Self-esteemed Laborious Eco-peace & Harmony Cell cycle proteins Creating an Enterprising & an Entrepreneur based Nation with Professionally Self-reliant Cultural-benefits Cooperative Culture Spirit of Brotherhood & Solidarity. Utmost Care & Concern towards Mutual & Common Benefits Eco-benefits Entrepreneur Self-reliant Eco-democracy Eco-prosperity 5

6. CMF: Its Global eco-Alarm ld Phenomena 44% of the total poverty of the World are living in the Muslim Countries. 50% of the total 57 OIC countries are classed under the UN-LDCs. Indicatively about 60% of the World Muslim are Poor basically because of they decline to appreciate any financing facility due the discouraging issues of Riba, Gharar, Mysir and or Shari’ah contrary elements.. Text World Phenomena 44% of the total poverty of the World are living in the Muslim Countries 50% of the total 57 OIC countries are classed under the UN-LDCs Indicatively about 60% of the World Muslim are Poor basically because of they decline to appreciate any financing facility due the discouraging issues of Riba, Gharar, Mysir and or Shari’ah contrary elements CMF Resolves to Target the Underprivileged, Poor, Destitute, Low-income group & Middle Class community Facilitate a Debt-free Asset based financing with a Cooperative Management Culture Help them to be Entrepreneurs with Enterprising Capacity through Mutual Cooperation With an Ultimate Goal of Eco- prosperity enjoying Peace & Harmony based on holistic spirit of eco-Democracy for all humanity 6

7. The Model Structure of CMF Financing (Bank) Financing (Bank) Micro-market (Participants) Micro-market (Participants) Cooperative Management (Parties) Cooperative Management (Parties) Debt-free Asset Based Financing with Risk Sharing Technique Debt-free Asset Based Financing with Risk Sharing Technique Helpless, Low-income & Middle Class Group Helpless, Low-income & Middle Class Group Participant Bank Rep. & Auditor Local Supervisor Participant Bank Rep. & Auditor Local Supervisor 7

8. Governing Principles of CMF General Operational Ethical Principles of Contract Rules of Compliance Principles of Contract Rules of Compliance Principles of Financial Contract (Pre & Post) Partnership Risk Management Distribution Arbitration Principles of Financial Contract (Pre & Post) Partnership Risk Management Distribution Arbitration Utmost Good Faith Cooperation Trust Utmost Good Faith Cooperation Trust 8

9. Practicality of CMF Pre-contractual Post-contractual End-results Application for the Facility Qualification? Approval Formalization Application for the Facility Qualification? Approval Formalization Bank provides agreed financing Appointment of Local Supervisor Participant operates the project Monitored & Audited by the Bank’s rep Supervised by the Local rep. Bank provides agreed financing Appointment of Local Supervisor Participant operates the project Monitored & Audited by the Bank’s rep Supervised by the Local rep. Sharing the net Income (between the Bank, Participant & Supervisor) Save the Cost & liabilities (Capital, Costs & liabilities including the tax) In case of loss, the deficit is on the Shoulder of the Bank while the Participant shall be discharged with no income Sharing the net Income (between the Bank, Participant & Supervisor) Save the Cost & liabilities (Capital, Costs & liabilities including the tax) In case of loss, the deficit is on the Shoulder of the Bank while the Participant shall be discharged with no income 9

10. Cooperative Micro-bond (CMB) Central Bank (Issuer) Government / SC (Policies & Enforcement) Bank (Fund Manager) Audit & Compliance (Investigation) Project Management (Development) Maintenance Unit (Project Maintenance) Intelligence Unit (Risk Management & Business Plan) Project Board (Decision Making) Project Experts (Advisors) Management (Management & Operation) PROJECT CMB? Central idea * A Debt-free Nation Development Model in the Socio-economic Reality * CMB Facilitates: Public, Private or Semi-government Projects. CMB? Structure Operation Unit (Project Operation) 10

11. CMF & The Risk Management Insurance Cover Takaful Cover All risk policy OR Project risk policy All risk policy OR Project risk policy All risk Takaful OR Project risk Takaful All risk Takaful OR Project risk Takaful 11

12. The Role of Corporate Legal Counsel Towards Its (CMF) Socio-economic Goals s Unskilled Legal Colloquiums Sharing with Law makers & Regulators Media Sharing Legal Awareness Legal Research LPDP Presentation of Thoughts Law, Policies, Standard & Guidelines Advisory & Counseling Services Documentations Judicial Model Procedural Testing Handling Cases with Possible Mitigating Solutions Development of Precedents Upgrading the nature of Justice through Equitable Principles with Humanitarian Concern 12 STEP 1 STEP 2 STEP 3 STEP 4

13. CMF? Its Challenges & Directions Unawareness Unskilled Poor Mechanisms Competitors Public, industrial or regulators’ unawareness on the reality of CMF. Thus, the CHCD shall be continued as the way out Poor-skill of any party specially the participant or the supervisor is the challenge. Thus, the proof of required skill shall be the pre-requisite for any deal Poor planning & due mechanisms may ruin the future of the project. Thus, a standard planning, smart strategies & wise operation shall be observed. MC Debt-financing Thus, a rational designation & smart operation of CMF may be the way to victory. 13

14. The Way Forward STEP 1STEP 2 STEP 3 STEP 4 An entity may lead the idea of CMF in Collaboration with a Bank Concurrently R & D shall be continued A technical group may design the system, manual, policies & the product (CMF) The Bank shall lead to offer the product (CMF) as per the structure Management & operation accordingly Achievement through rationalism & mutual cooperation STEP 5 14

15. Thank You Wassalam 15