Podcast
Questions and Answers
Who bears the loss in a manfaah agreement up to the amount of capital contributed?
Who bears the loss in a manfaah agreement up to the amount of capital contributed?
- The investor (correct)
- The client
- Both the investor and the client
- The lessor
What is the Islamic alternative to bonds?
What is the Islamic alternative to bonds?
- Murabahah
- Salam
- Sukuk (correct)
- Istisna
Who regulates the issuance of sukuk in Malaysia?
Who regulates the issuance of sukuk in Malaysia?
- SC (correct)
- SIDC
- Both SC and SAC
- SAC
What do sukuk represent?
What do sukuk represent?
What is the ownership of the leased equipment in a manfaah agreement?
What is the ownership of the leased equipment in a manfaah agreement?
What is the purpose of the Guidelines on the Offering of Islamic Securities 2004?
What is the purpose of the Guidelines on the Offering of Islamic Securities 2004?
What is the role of the SAC in sukuk issuance?
What is the role of the SAC in sukuk issuance?
What is the relationship between the client and the lessor in a manfaah agreement?
What is the relationship between the client and the lessor in a manfaah agreement?
What type of sukuk structure is characterized by a sale transaction with a deferred basis?
What type of sukuk structure is characterized by a sale transaction with a deferred basis?
Which sukuk structure involves the construction or manufacturing of an asset and selling it to the obligor?
Which sukuk structure involves the construction or manufacturing of an asset and selling it to the obligor?
What is the primary characteristic of sukuk structures based on equity and agency relationships?
What is the primary characteristic of sukuk structures based on equity and agency relationships?
What is the role of sukuk-holders in a murabahah sukuk structure?
What is the role of sukuk-holders in a murabahah sukuk structure?
What type of sukuk structure is characterized by a forward sale of a fungible asset?
What type of sukuk structure is characterized by a forward sale of a fungible asset?
What is the primary benefit of combining different forms of sukuk transactions?
What is the primary benefit of combining different forms of sukuk transactions?
What is the primary right of sukuk-holders in an asset-backed sukuk?
What is the primary right of sukuk-holders in an asset-backed sukuk?
Which sukuk structure is based on a lease transaction?
Which sukuk structure is based on a lease transaction?
What is the primary characteristic of sukuk structures based on sale and lease transactions?
What is the primary characteristic of sukuk structures based on sale and lease transactions?
What is the purpose of combining different forms of sukuk transactions?
What is the purpose of combining different forms of sukuk transactions?
What is the relationship between Sukuk-holders and obligor in a Musharakah Sukuk structure?
What is the relationship between Sukuk-holders and obligor in a Musharakah Sukuk structure?
What is the primary source of return for Sukuk-holders in an Ijarah Sukuk structure?
What is the primary source of return for Sukuk-holders in an Ijarah Sukuk structure?
What is the role of the Securities Commission (SC) in the Islamic Capital Market?
What is the role of the Securities Commission (SC) in the Islamic Capital Market?
What is the primary benefit of Sukuk-holders having control of the asset in an Ijarah Sukuk structure?
What is the primary benefit of Sukuk-holders having control of the asset in an Ijarah Sukuk structure?
What type of Sukuk structure involves a partnership between Sukuk-holders and the obligor in a business venture?
What type of Sukuk structure involves a partnership between Sukuk-holders and the obligor in a business venture?
What is the primary source of income for Sukuk-holders in a Mudharabah Sukuk structure?
What is the primary source of income for Sukuk-holders in a Mudharabah Sukuk structure?
What is the key feature of an Ijarah Sukuk structure that ensures the recovery of principal by Sukuk-holders?
What is the key feature of an Ijarah Sukuk structure that ensures the recovery of principal by Sukuk-holders?
What is the primary benefit of Sukuk-holders having a claim on the underlying asset in an Ijarah Sukuk structure?
What is the primary benefit of Sukuk-holders having a claim on the underlying asset in an Ijarah Sukuk structure?
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Study Notes
Sukuk Structures
- Sukuk can be based on sale transactions (murabahah, salam, or istisna`), lease transactions (ijarah), or equity and agency relationships (musharakah, mudharabah, and wakalah).
- Sale and lease transactions have fixed income characteristics, while equity and agency structures are uncertain.
- Many sukuk transactions combine different forms of transactions to create a fixed income sukuk similar to traditional bonds.
Common Sukuk Structures
- Murabahah: Sukuk-holders sell assets to the obligor on a deferred basis, with a return on profit from the sale of the asset.
- Salam: Sukuk-holders buy a fungible asset on a forward basis and sell it to a third party, with a return on profit from the sale of the asset.
- Istisna`: Sukuk-holders construct or manufacture an asset and sell it to the obligor, with a return on profit from the sale of the asset.
- Ijarah: Sukuk-holders lease an asset to the obligor, with a return on rental income.
- Musharakah: Sukuk-holders and the obligor are partners in a venture, with a return on income generated from the asset or venture.
- Mudharabah: Sukuk-holders provide capital to the obligor in a business venture, with a return on income generated from the asset or venture.
Sukuk Overview
- Sukuk are Islamic investment certificates or participation certificates, representing obligations of the issuer to the sukuk holders.
- Sukuk are an alternative to traditional bonds, which violate the Islamic rule of earning money from riba.
- In Malaysia, the Securities Commission (SC) regulates the issuance of sukuk via the Guidelines on the Offering of Islamic Securities 2004, while the Shariah Advisory Council (SAC) regulates the Shariah component.
Regulatory Bodies
- The SC was given a mandate by the Executive Committee of the International Organisation of Securities Commissions (IOSCO) to lead the Islamic Capital Market Task Force (ICMTF).
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