🌙Takadao Shariah Board Meeting Report 4

Date: 25 November 2023 / 14:00 PM KSA / GMEET

ATTENDEES

Record of Attendance: Reza, Hamid, Akram, Dr Hany, Sharene

AGENDA

- Discuss shariah matters in relation to Waqf, surplus and tabarru'

- Tokenisation

Meeting Summary

During the structured meeting, the participants discussed the crowdfunding campaign with Wahid Ventures and their partnership, focusing on the due diligence process conducted by the Shariah Review Bureau. They explored the structure of the campaign to ensure compliance with Shariah rules and discussed the distribution of surplus to members based on their contributions. Compensation for work and voting were also discussed, with emphasis on the importance of proper governance and the potential benefits of a secondary market for tokens. The participants also discussed the distribution of surplus, ownership of surplus, and various ways to distribute it. Concerns were raised about the classification of tokens as a purchase or a donation. The trading and value of tokens were discussed, as well as the establishment of a surplus treasury. The participants also discussed treasury management activities, the need for ongoing funding and control, and compliance with Shariah principles. The discussion also touched on Waqf, accounting of surplus, trading tokens in a secondary environment, and scheduling regular Shariah board meetings.

1. Crowdfunding Campaign with Wahid Ventures

• They discuss the due diligence process conducted by the Shariah Review Bureau from Bahrain, focusing on yield generation and the insurance DAO Fund.

• The participants mention the crowdfunding campaign with Wahid Ventures and their partnership due to the strong brand, well-known ambassadors, and large community of Muslim investors.

• The participants explore the structure of the crowdfunding campaign to ensure compliance with Shariah rules, discussing the concept of donation, token purchase, and rights associated with tokens.

2. Distribution of surplus

• The concept of distributing surplus to members based on their contributions is discussed.

• Members need to actively participate in the management of the funds to earn tokens.

• Tokens earned by members entitle them to voting and earning surplus.

3. Compensation for work

• Members can be compensated for work that benefits the whole community.

• There can be multiple work units for the same fund as long as all members agree.

4. Voting

• Sharene Lee mentions that voting is something everybody can participate in and emphasizes its importance for proper governance and benefiting the fund.

• The discussion includes topics such as compensating participants with tokens representing the underwriting surplus, the value of the token, and the potential benefits of a secondary market.

5. Distribution of Surplus

• The discussion covers the distribution of surplus, ownership of the surplus, and various ways to distribute the surplus or give tokens back to participants.

• Sharene Lee raises a point of confusion regarding the ownership of surplus

• Dr Hany Helmy explains the process of receiving contributions, the role of tabarru and waqf, and the limitations and possibilities of distributing surplus in the waqf model.

• Dr Hany Helmy mentioned the unlimited applications of the surplus under the Tabarru' model and the flexibility of Shariah rules for Tabarru'.

• Sharene Lee proposed using tokens as receipts to distribute the surplus proportionally based on contributions.

• Sharene Lee and Dr Hany Helmy discussed the confusion about whether the tokens should be considered a purchase or a donation.

• Dr Hany Helmy explained the various possible outcomes of the surplus distribution under Shariah rules for Tabarru'. Sharene Lee restated the process of contributing to the fund, receiving tokens as receipts, and the potential distribution of surplus based on tokens.

• Dr Hany Helmy explains the concept of surplus available for distribution in accounting and the steps involved in announcing and dealing with it.

• Dr Hany Helmy discusses the calculation of fees and profit margins for managing the fund, including examples of underwriting fees and marketing fees.

• Dr Hany Helmy explains different models for compensating the fund manager, including taking a percentage of the surplus and the debate about sharing the surplus from a Shariah perspective.

• A surplus treasury will be established in addition to an operational treasury.

• The discussion focuses on whether the surplus should be separated from the portfolio or remain as part of an invested portfolio. It is mentioned that as long as the accounting figures match the actual holdings, everything is in order.

6. Trading and Value of Tokens

• The tokens represent a receipt of contribution to the fund and can be sold.

• The members raises concerns about the change in risk relation when selling tokens.

• The token is an actual token on the blockchain that can be sold, but its monetary value is not relevant.

• It is decided that the tokens can be contributed back to the fund and their value is reflected in the surplus.

• The discussion revolves around the possibility of the DAO trading tokens in a secondary environment for the benefit of the community. It is mentioned that under the general rules, there doesn't seem to be a problem and there is flexibility in Shariah regarding this.

7. Treasury Management Activity

• Sharene explains that if they invest funds on behalf of the DAO and make a profit, they will take a portion of the profit.

• They discuss investing on behalf of the DAO and the need for clear documentation.

• They discuss the variable sum insured and the flexibility it provides.

• They discuss the need for ongoing funding and control, and the use of accounting to manage surplus and separate underwriting years.

• They discuss the importance of accounting, financial statements, and compliance with Shariah principles.

• They discuss managing the underwriting surplus and staying compliant.

• They discuss managing the treasury on behalf of the DAO and taking yield from investments.

• They discuss the possibility of a separate contract of Mudarabah with participants.

• They discuss the structure and limitation

8. Waqf

• The discussion involves the limitations and debates surrounding the condition of the Waqf. Different opinions are mentioned, with some scholars favoring the Waqf model.