BIMB Integrated Annual Report 2017

25. RESERVES (CONTINUED) 25.2 Other reserves (continued) Capital reserve The capital reserve arose out of the issuance of bonus issue in a subsidiary of RM6,863,000. Statutory reserve The statutory reserve was maintained in compliance with Section 57(2)(f) of the Islamic Financial Service Act, 2013 and is not distributable as cash dividends. However, as a result of the issuance of the revised policy document on Capital Funds for Islamic Banks on 3 May 2017, it is no longer required to maintain the statutory reserves. During the financial year, the Group has transferred RM1,124,774,000 from the statutory reserve to retained earnings. Warrant reserve The warrant reserve arose from the Company’s issuance of 426,715,958 free detachable warrants on 11 December 2013. Fair value reserve The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets recognised in other comprehensive income until the investments are derecognised or impaired. Translation reserve The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations and offshore banking operations – Federal Territory of Labuan. Regulatory reserve The regulatory reserve represents the Bank Islam’s compliance with BNM’s Policy on Classification and Impairment Provisions for Financing to maintain, in aggregate, collective impairment allowances and regulatory reserve of no less than 1.2% of total outstanding financing, net of individual impairment allowances. Long Term Incentive Plan (“LTIP”) reserve The LTIP reserve comprises the cumulative value of employee services received for the issue of Restricted Share Plan and Performance Share Plan in Takaful Malaysia. When the LTIP is exercised, the amount from the LTIP reserve is transferred to share premium. When the LTIP expires, the amount from the LTIP reserve is transferred to retained earnings. LTIP is disclosed in Note 26. 25.3 Acquisition reserve The acquisition reserve is the difference between the consideration paid and the 49% equity interest in Bank Islam Malaysia Berhad acquired in December 2013. 26. EMPLOYEE BENEFITS Share-based payments arrangement of Takaful Malaysia At the Extraordinary General Meeting of Takaful Malaysia, held on 24 July 2013, the shareholders approved the establishment of a Long Term Incentive Plan (“LTIP”), which comprises a Restricted Share Plan (“RSP”) and a Performance Share Plan (“PSP”), of not more than 10% of issued and paid-up share capital of Takaful Malaysia (excluding treasury shares) to eligible employees and executive directors of Takaful Malaysia. The LTIP was effected on 25 July 2013 following the submission of the By-Laws for the LTIP to Bursa Malaysia Securities Berhad, the receipt of all required approvals and the compliance with the requirements pertaining to the LTIP. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 228 BIMB HOLDINGS BERHAD Integrated Annual Report 2017