Islamic banks — significant and non-significant investments: an investment that is significant under 4.29 through Additional Tier 1 or Tier 2 instruments, with less than 10% of the common shares, is not covered by 4.43 or 4.45

IBB 4.29 defines a significant investment as an investment of 10% or more in the common shares, or other instruments that qualify as capital, of the entity concerned. Rule 4.43 applies where the Islamic Bank makes a non-significant investment and does not own 10% or more of the common shares; Rule 4.45 applies where it makes a significant investment and owns 10% or more of the common shares. An investment that is significant through Additional Tier 1 or Tier 2 instruments, with less than 10% of the common shares, is outside both rules, and no other rule in 4.40 to 4.46 deducts it: 4.42 covers reciprocal cross holdings only, and 4.45(3) and 4.46 cover common shares and other CET 1 instruments only. The headings of 4.43 to 4.45 do not refer to the shareholding. Take an unconsolidated Islamic Bank whose only instrument other than common shares is an issue of Tier 2 sukuk of USD 300 million, with no reciprocal holding and no pledge: for an Islamic Bank with CET 1 Capital of USD 100 million, a holding of USD 30 million (10% of the issue) with no common shares is not deducted, while a holding of USD 29.7 million (9.9%) leads to a deduction of the excess of USD 19.7 million under 4.44.

Proposed correction

Please consider either testing significance in 4.29 by the holding of common shares only and aligning 4.45(1)(c), or replacing the common-share conditions in 4.43(1)(c) and 4.45(1)(c) with a reference to a non-significant and a significant investment as defined, so that 4.45(2) applies to such holdings (a full deduction, stricter than testing significance by common shares only).

Jurisdiction

Kazakhstan — AIFC

Act

AIFC Islamic Banking Business Prudential Rules

Place

IBB 4.29 Definitions

Record

Discrepancy

Class

Text of the act

Where it arose

The text of the act

Arxo's conclusion

Confirmed

Official text

Unchanged at last check

Last checked

2026-10-25

Evidence

Reproduced by execution. Quotations are verbatim from the official material; translations are ours and marked.

Significant investment, by an Islamic Bank in an entity concerned, means an investment of 10% or more in the common shares, or other instruments that qualify as capital, of the entity concerned.

Non-significant investments—aggregate is less than 10% of firm’s Common Equity Tier 1

an Islamic Bank makes a non-significant investment in an entity concerned;

an Islamic Bank does not own 10% or more of the common shares of the entity concerned; and

an Islamic Bank owns 10% or more of the common shares of the entity concerned.

An Islamic Bank must deduct the total amount of investments in the entity concerned (other than investments in common shares, or other instruments that qualify as CET 1 Capital, of the entity).

How to check it without Arxo's tools

1. Open AIFC Islamic Banking Business Prudential Rules and find IBB 4.29 Definitions; IBB 4.43 heading; IBB 4.43(1)(a); IBB 4.43(1)(c); IBB 4.45(1)(c); IBB 4.45(2). Compare the text with the quotation above. A copy is kept in this register: e8b3c15b1ff574fd-aifc-islamic-banking-business-prudential-rules.pdf (SHA-256 e8b3c15b1ff574fd59504ade7cc9e0488ed5fa6ecfdc7816e3dc603bf4caedeb, copy of the official file).
2. The finding holds if the quoted passages read as shown and the comparison gives the result stated at the top of this page. If it does not, write to us with the record ID.

How this finding was made

AI agents read the official texts, turned the provisions concerned into executable rules and ran the comparison; they also drafted this record. A person at Arxo checked the finding and approved the report before it was sent (2026-10-27).

Responsible institutions

• Astana Financial Services Authority (AFSA) — author of the AIFC Rules

Reported to

Responses

No response recorded.

Documents and reproduction

• AIFC Islamic Banking Business Prudential Rules

Related records

• ARXO-2026-0144 — Significant and non-significant investments: the definition in 4.27, the heading of 4.29(4) and the conditions of 4.29(4)(a) and 4.29(6)(a) classify a holding of AT1 or T2 instruments differently

History

1. 2026-10-25Confirmed by Arxo
2. 2026-10-27Entered in the register
3. 2026-10-27Reported to Astana Financial Services Authority (AFSA) (e-mail)

Cite this record

Arxo Law, Arxo Findings Register, ARXO-2026-0148, https://arxo.io/findings/ARXO-2026-0148/ (status as of 2026-10-25). Data: ARXO-2026-0148.json.