Regulation 10

the merchant bank, or the merchant bank’s agent, purchases an asset at the request of a customer for an amount of money (the original price) for the purposes of financing the use or purchase (or both) of the asset by the customer;

the merchant bank, or the merchant bank’s agent, leases the asset to the customer;

if the asset is not in existence at the time the merchant bank, or the merchant bank’s agent, leases the asset to the customer, an amount of money (the advance payment) may be paid by the customer to the merchant bank, or the merchant bank’s agent, for the subsequent use of the asset;

an amount of money (the rental) is paid by the customer to the merchant bank, or the merchant bank’s agent, for the lease of the asset;

the merchant bank, or the merchant bank’s agent, appoints the customer or a third party, to take on the obligations in connection with the use of the asset, including its maintenance and insurance;

in the event of an early termination of the lease, the customer, or a third party, must purchase the asset from the merchant bank, or the merchant bank’s agent, at a price determined at the start of the lease (the early termination price);

upon expiry of the lease —

where the aggregate of all rental and advance payments made under the lease is greater than the original price, the merchant bank, or the merchant bank’s agent, must, whether with or without consideration, transfer the ownership of the asset to the customer or a third party; or

where the aggregate of all rental and advance payments made under the lease is equal to or less than the original price, the customer or a third party must purchase the asset from the merchant bank, or the merchant bank’s agent, at a sale price determined at the start of the lease (the sale price), which amount is the consideration for the transfer of the asset;

the total amount payable by the customer and such third party mentioned in either sub‑paragraph (f) or (g) (if any) for the asset comprising —

the advance payment;

the rental; and

the sale price or early termination price,is greater than the original price, and the difference between the total amount payable and original price is the profit or return to the merchant bank for providing such financing to the customer;

the merchant bank, or the merchant bank’s agent, does not derive any gain or suffer any loss from any movement in the market value of the asset, including total loss of the asset, other than as part of the profit or return mentioned in sub‑paragraph (h).

intention to commence the business mentioned in paragraph (1); or

commencement of the business within 14 days after the date of its commencement.