Sukuk in various jurisdictions : Shari'ah and legai issues

Abstract EN

Sukük are active Islamic finance instruments offered in various jurisdictions and have experienced various events in the recent years.

Severai sukük defaults in 2009 highlighted a number of Shari'ah and legal issues that are necessary to be discussed.

As a part of the prerequisites to fulfil Shari'ah requirements, compliance to the relevant laws is also a necessity.

Among the issues that will be touched upon is ownership of the asset of the sukük which will include discussion about ‘al Qabd’ (taking possession).

Next, rights of the sukük holders will be discussed to see whether their interests are well protected and in this context the concept of asset backed will be differentiated from that of the asset based securities.

Discussion on the contentious purchase undertaking in sukük dealings will follow in order to highlight its status and cffect on the sukük and parties to the transactions.

Then, the practice of tranching in sukük issuance will be discussed followed by legal documentation of sukük issues.

In the end, the paper will present way forward for sukük, so that these issues are fijrther addressed for better sukük issuance.