Regulation 11

the merchant bank, or the merchant bank’s agent, jointly purchases an asset with the customer at the request of the customer and contributes an amount of money towards the purchase price (the contribution) 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 —

sells a portion of its share of the asset on a periodic basis to the customer for an amount of money determined at the start of the arrangement (the redemption); and

leases the unsold portion of its share of the asset to the customer for an amount of money determined at the start of the arrangement (the rental);

if the asset is not in existence at the time of the joint purchase and the merchant bank, or the merchant bank’s agent, leases the unsold portion of its share of 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 that portion 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 arrangement, the customer must purchase from the merchant bank, or the merchant bank’s agent, the remainder of the unsold portion of the share of the asset of the merchant bank, or the merchant bank’s agent, at a price determined at the start of the arrangement (the early termination price);

upon expiry of the arrangement, the customer must have purchased from the merchant bank, or the merchant bank’s agent, the whole of the share of the asset of the merchant bank, or the merchant bank’s agent, and obtained full ownership of the asset;

the total amount payable by the customer for the asset comprising —

the advance payment;

the redemption;

the rental; and

the early termination price,is greater than the contribution, and the difference between the total amount payable and the contribution 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 (g), except in the circumstances provided in sub‑paragraph (i);

in a case where the customer is unable to pay the merchant bank, or the merchant bank’s agent, the early termination price, the merchant bank, or the merchant bank’s agent, may sell the asset to a third party at a price lower than the outstanding amount payable by the customer.

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

commencement of the business within 14 days after the date of commencement of the arrangement mentioned in paragraph (1).