Revenue Participation Contracts

Shariah Fair Revenue Participation Contract:

• A Shariah compliant approach to financing private companies and projects.
• Investors purchase fixed percentage of future revenue streams
• No debt, no interest, and “fair and reasonable participation”
• The companies / projects financed via SFRPCs must be Shariah compliant
• Shariah certification and annual audits are required.

Fair Revenue Participation Contract:

• FRPCs are contractual rights to participate in the revenue of a company.
• FRPCs used to finance non-Shariah compliant companies and projects.
• FRPCs may use of loan guarantees as a part of the transaction, requiring the payment of interest by the company issuing the royalty entitlement to a lender.
• If so, investor assets are pledged to the lender and are released after the company’s obligation fulfillment, with the royalty payments continuing as agreed.
• FRPC may provide lower royalties but may also include minimum cumulative returns

Shariah Fair Revenue Participation Contracts and Fair Revenue Participation Contracts are contractual rights to participate in a company’s or project’s revenues. The terms of these contracts are all standardized, except for the following elements:

1. The amount of capital to be raised (Typically $20 million and above)
2. Percentage of revenue participation (1%, 3%, 5%, etc)
3. The duration of the obligation (10 years, 20 years, 50 years, etc)
4. The critical assets of the company to be used to assure performance of obligations *
5. The banks into which all of the company's revenue deposits will be made, with the banks accepting irrevocable instructions to deduct and remit the agreed amounts the benefit of the royalty owners.

The specifics of the royalty entitlement contracts will be negotiated with the Issuer by the agent of the royalty purchaser(s).