1. Purpose of this Disclaimer
This Risk Disclaimer (“Disclaimer”) is provided to all prospective and participating commodity buyers (“Participant”) in connection with participation in commodity trading activities arranged under Shari’ah-compliant commodity trading structures.
Participation in commodity trading activities involves significant commercial and operational risks. By participating, the Participant acknowledges that they have read, understood, and accepted the risks described in this Disclaimer.
2. No Guaranteed Returns
The Participant expressly acknowledges and agrees that:
No fixed, guaranteed, or predetermined return has been promised or represented by the Wakil, Commodity Manager, or any affiliated entity.
Any projected returns, target yields, estimated cycle profits, or historical performance figures are illustrative only and do not constitute a guarantee of future performance.
All trading activities are subject to market conditions, trading performance, operational outcomes, and external events beyond the control of the Wakil.
The Participant further acknowledges that profit in Shari’ah-compliant trading structures must be linked to actual commercial activity and risk-sharing principles, and therefore capital preservation or profit generation cannot be guaranteed.
3. Capital Loss Risk
Participation in commodity trading carries the risk of partial or total capital loss. The Participant understands and accepts that:
Commodity prices may decline unexpectedly;
Trading counterparties may default or fail to perform;
Storage, logistics, export, or transportation disruptions may occur;
Political, regulatory, environmental, or economic conditions may adversely affect trading outcomes;
Operational failures, fraud, theft, spoilage, or force majeure events may result in losses.
4. Commodity Price Volatility Risk
Commodity markets are inherently volatile and subject to rapid price fluctuations. Prices may be affected by:
Global supply and demand conditions;
Weather events;
Export/import restrictions;
Currency movements;
Geopolitical instability;
Inflation and interest rate changes;
Transportation and logistics disruptions;
Market speculation and liquidity constraints.
The Participant acknowledges that commodity price volatility is an inherent commercial risk of trading activities and forms part of the accepted risk under this structure.
5. Currency and Foreign Exchange Risk
The commodity trading structure may involve multiple currencies, including but not limited to USD, SAR, UGX, EUR, or other currencies relevant to trading operations. Accordingly:
Exchange rate fluctuations may materially affect profitability and capital recovery;
Currency depreciation in operational jurisdictions may reduce realized returns;
Delays in currency conversion or international transfers may impact distributions.
The Participant accepts all foreign exchange and currency conversion risks associated with cross-border transactions.
6. Liquidity Risk
Participation interests under this structure may have limited liquidity. The Participant acknowledges that:
Purchase amount may not be freely transferable;
Early withdrawal or redemption may not be available;
Capital may remain committed until completion of the applicable commodity trading cycle;
Secondary markets for participation interests may not exist.
The Participant should only purchase what they can afford to commit for duration of the applicable trading cycle.
7. Operational and Counterparty Risk
Commodity trading operations depend on various third parties, including:
Suppliers,
Buyers,
Warehousing operators,
Logistics providers,
Export agents,
Financial institutions,
Commodity managers.
Failures or delays by such parties may negatively impact operations and trading outcomes. The Participant acknowledges the existence of operational, administrative, and counterparty risks, including:
Delayed settlements,
Delivery failures,
Documentation errors,
Fraud,
Theft,
Cybersecurity incidents,
Banking disruptions.
8. Regulatory and Compliance Risk
Commodity trading activities may be affected by changing laws, regulations, licensing requirements, sanctions regimes, tax rules, or governmental restrictions across multiple jurisdictions. Regulatory changes may:
Delay operations,
Restrict fund transfers,
Increase operational costs,
Affect profitability,
Require the restructuring of certain activities.
The Participant acknowledges and accepts such regulatory risks.
9. Force Majeure Risk
Force Majeure events may materially impair or prevent trading activities, logistics operations, storage, export, or commodity delivery. Force Majeure events may include, without limitation:
Natural disasters,
Floods,
Fires,
Epidemics or pandemics,
War,
Civil unrest,
Government actions,
Border closures,
Transportation failures,
Power outages,
Labor disruptions,
Export bans,
Terrorism,
Cyber incidents,
Supply chain disruptions.
10. Risk Allocation and Loss Sharing
No Capital Guarantee
Participants expressly acknowledge and agree that there is no guarantee of capital preservation. The Participant bears the risk of loss in accordance with their ownership interest, capital contribution, and proportional exposure to the underlying commodity transactions.
Proportionate Loss Allocation
Losses arising from commodity trading activities or Force Majeure events shall be allocated among Participants proportionately based on actual ownership interests, capital participation, and exposure at the time the loss occurs.
Actual Exposure Basis
Loss allocation shall reflect the Participant’s actual economic exposure and ownership share in the affected commodities or trading cycle. Participants with larger ownership exposure shall bear proportionately larger losses.
No Liability of Wakil or Commodity Manager
Provided that the Wakil and Commodity Manager have acted in good faith, exercised reasonable care, and have not engaged in misconduct, gross negligence, or fraud, they shall not be liable for losses resulting from market conditions or Force Majeure events beyond their reasonable control.
Perishable Commodity Risk
Where commodities are perishable in nature, the Participant acknowledges that spoilage, contamination, refrigeration failures, storage degradation, transportation delays, or export disruptions may result in partial or total commodity loss.
Such losses shall be allocated according to the applicable ownership interests and Shari’ah risk-sharing principles.
11. No Financial Advice
Nothing contained in this structure, marketing material, communication, or reporting shall constitute financial advice, tax advice, legal advice, or a recommendation to participate. Participants are encouraged to seek independent professional advice before participating.
12. Participant Acknowledgment
By participating in the commodity trading structure, the Participant confirms that they understand the risks described herein; accept the possibility of capital loss; understand that returns are not guaranteed; understand the principles of Shari’ah-based risk sharing; and voluntarily assume the commercial risks associated with commodity trading activities.
I confirm that I have read and understood this Risk Disclaimer and acknowledge that participation involves commercial risk, including possible partial or total loss of capital.