Exposure Draft
Shari’a Standard No. (18)
Investment Sukuk
Ramadan 1423H - November 2002
Accounting and Auditing Organization
For Islamic Financial Institutions
Contents
Page Number
Preface
3
Statement of the exposure draft
4
1.
Scope of the Standard
4
2.
Definition of investment sukuk
4
3.
Types of investment sukuk
4
4.
Characteristics of investment sukuk
6
5.
Shari’a rulings and requirements
7
6.
Effective date
13
Adoption of the exposure draft
14
Appendices
(a)
Brief history of the preparation for the exposure draft
15
(b)
Basis of the Shari’a Rules
16
(c)
Definitions
17
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In the name of Allah, the Benevolent, the Most Merciful
Praise be to Allah and peace be upon His messenger, and his family and the companions
Preface
The aim of this standard is to clarify the Shari’a ruling on issuance and trading of
Investment sukuk (certificates or bonds). It also clarifies the characteristics, Shari’a
requirements and conditions that govern the issue and trading in investment sukuk
so that they can be used by Islamic financial institutions (institution/institutions)(1).
(1) Referred to hereafter as institution or institutions to describe Islamic financial institutions including Islamic
banks.
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Statement of the exposure draft
1. Scope of the Standard
This standard is applicable to investment sukuk. It covers sukuk of Ijarah,
services, leased assets, Murabaha, Salam, Istisna'a, Mudaraba, Musharaka,
investment agency and sharecropping, irrigation and agricultural partnerships.
This standard does not cover shares of stock companies, interest-based bonds,
certificates of funds and investment portfolios.
2. Definition of investment sukuk
Investment sukuk are certificates of equal value representing, after closing
subscription, receipt of the value of the certificates and putting it to use as
planned, common title to shares and rights in tangible assets, usufructs and
services, or equity of a given project or equity of a special investment activity.
One of the differences between these certificates and shares is that shares are
issued only by stock companies which have been granted by law an independent
juristic personality. This is not necessary in the case of investment sukuk.
Therefore, these certificates are defined in this Standard as investment sukuk to
distinguish them from shares and loan bonds.
3. Types of investment sukuk
There are several types of investment sukuk including the following:
3/1 Certificates of ownership in leased assets
These are certificates that carry equal value and are issued either by the
owner of a leased asset or an asset to be leased by promise, or by his
financial agent, the aim of which is to sell the asset and recover its value from
subscription, in which case the holders of the certificates become owners of
the assets.
3/2 Certificates of ownership of usufructs
These certificates have various types, including the following:
3/2/1 Certificates of ownership of usufructs of existing assets
These are documents of equal value that are issued either by the
owner of usufruct of an existing asset or a financial intermediary acting
on the owner’s behalf, with the aim of leasing or subleasing this asset
and receive rental from the revenue of subscription. In this case, the
holders of the certificates become owners of the usufruct of the asset.
3/2/2 Certificates of ownership of usufructs to be made available in
the future as per description
These are documents of equal value issued for the sake of leasing
assets that the lessor is liable to provide in the future whereby the rental
is recovered from the subscription income, in which case the holders of
the certificates become owners of the usufruct of these future assets.
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3/2/3 Certificates of ownership of services of a specified supplier
These are documents of equal value issued for the sake of providing or
selling services through a specified supplier (such as educational
programmes in a nominated university) and obtaining the value in the
form of subscription income, in which case the holders of the
certificates become owners of the services.
3/2/4 Certificates of ownership of services to be made available in the
future as per description
These are documents of equal value issued for the sake of providing or
selling services through non-existing supplier with the description of the
subject matter (such as educational programmes of a specific quality,
schedule, duration, etc. without mentioning the educational institution)
and obtaining the value in the form of subscription income, in which
case the holders of the certificates become owners of the services.
3/3 Salam certificates
These are documents of equal value issued for the sake of mobilising Salam
capital and the items to be delivered on Salam basis are owned by the
certificate holders.
3/4 Istisna’a certificates
These are documents that carry equal value and are issued with the aim of
mobilising the funds required for producing a certain item and the items to
be produced on Istisna’a basis are owned by the certificate holders.
3/5 Murabaha certificates
These are documents of equal value issued for the purpose of financing the
Murabaha commodity and the certificate holders become the owners of the
Murabaha commodity.
3/6 Participation certificates
These are documents of equal value issued with the aim of using the
mobilised funds for establishing a new project or developing an existing one
or financing a business activity on the basis of one of partnership contracts.
The certificate holders become the owners of the project or the assets of the
activity as per their respective shares. The participation certificates may be
managed on the basis of Musharaka or Mudaraba or through an investment
agent.
3/6/1 Participation certificates managed on the basis of Musharaka
contract
These are documents representing projects or activities that are
managed on the basis of Musharaka by appointing either one of the
parties or any other party to manage the operation.
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3/6/2 Participation certificates managed on the basis of Mudaraba
contract
These are documents that represent projects or activities that are
managed on the basis of Mudaraba by appointing mudarib for
management.
3/6/3 Participation certificates managed on the basis of investment
agency
These are documents that represent projects or activities that are
managed on the basis of investment agency by appointing an agent
to manage the operation on behalf of the certificate holders.
3/7 Muzara’a (sharecropping) certificates
These are documents of equal value issued for the sake of using the
mobilised funds in financing a Muzara’a contract. The certificate holders
become entitled to a share in the crop as per agreement.
3/8 Musaqa (irrigation) certificates
These are documents of equal value issued on the basis of a Musaqa
contract for the sake of using the mobilised funds for irrigating trees that
produce fruits and meeting other expenses relating to maintenance of the
trees. The certificate holders become entitled to a share in the crop as per
agreement.
3/9 Mugarasa (agricultural) certificates
These are documents of equal value issued on the basis of a Mugarasa
contract for the sake of using the mobilised funds for planting trees and
meeting expenses of the work. The certificate holders become entitled to a
share in the land and the plantation.
3/10 Concession certificates
These are documents of equal value that are issued for the sake of using
the mobilised funds to finance execution of a concession offer in which case
the certificate holders become entitled to rights associated with the
concession.
4.
Characteristics of investment sukuk
4/1 Investment sukuk are documents issued, in equal value, either in the
name of the owner or of the bearer to establish the right of the certificate
owner or rights and obligations such certificate is representing.
4/2 Investment sukuk represent a common share of ownership of assets
available for investments, whether they are non-monetary assets,
usufructs, a mixture of tangible assets and usufructs and monetary assets,
such as receivables and cash. These sukuk do not represent a debt owed
to the issuer by the certificate holder.
4/3 Investment sukuk are issued on the basis of a Shari’a-compliant contract
in which case the issue of trading of these sukuk are governed by the rules
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of respective contract.
4/4 The trading of investment sukuk is subject to the terms that govern trading
of the rights they represent.
4/5 The owners of these certificates share the return as stated in the
subscription prospectus and bear the losses, each according to his
respective share of ownership.
5.
Shari’a rulings and requirements
5/1 Issuance of investment sukuk
5/1/1 It is permissible to issue investment certificates, on the basis of any
of Shari’a-compliant investment contracts, whereby the subscription
funds will be used for investment purpose.
5/1/2 It is permissible to issue securities for trading in tangible assets and
usufructs. This could be accomplished by partitioning the assets or
usufructs into units of equal value and issue securities that
represent the value of the assets. It is not permissible to issue
securities for receivables.
5/1/3 The contract of issue must be governed, after closing date and
allocation of the certificates, by all effects of the contract for which
the issue is concluded.
5/1/4 The two parties of the contract of issue are the issuer and the
subscribers.
5/1/5 The relationship between the two parties of the issue contract may
be ascertained as per the contract that form basis of the issue and
its Shari’a characteristics. The explanation for this is as follows:
5/1/5/1 Certificates of ownership of leased assets
The issuer of these certificates is selling a leased asset or
an asset be leased on promise. The subscribers are buyers
of the asset. The mobilised funds from subscription are the
purchase price of the asset, and the certificate holders
become the owners of the assets jointly with its benefits
and risks.
5/1/5/2 Certificates of ownership of usufructs
Exposure Draft Investment Sukuk
(a)
Certificates of ownership of usufructs of existing
assets The issuer of these certificates is selling
usufruct of an existing asset. The subscribers are
buyers of the usufructs. The mobilised funds from
subscription are the purchase price of the usufructs,
and the certificate holders become the owners of the
usufructs jointly with its benefits and risks.
(b)
Certificates of ownership of usufructs to be made
available in the future
The issuer of these certificates is selling usufruct of an
asset to be made available in the future as per
specification. The subscribers are buyers of the
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usufructs. The mobilised funds from subscription are
the purchase price of the usufructs, and the certificate
holders become the owners of the usufructs jointly
with its benefits and risks.
(c)
Certificates of ownership of services
The issuer of these certificates is selling services. The
subscribers are buyers of the services. The mobilised
funds from subscription are the purchase price of the
services.
The certificate holders are entitled to sell all types of
usufructs in addition to the funds of reselling such
usufructs.
5/1/5/3 Salam certificates
The issuer of the certificates is a seller of Salam
commodity. The subscribers are the buyers of that
commodity. The funds realised from subscription are the
purchase price of the commodity, which the Salam capital.
The holders of Salam certificates are entitled to the Salam
commodity, the selling price or the price of selling the on
parallel Salam basis, if any.
5/1/5/4 Istisna’a certificates
The issuer of the certificates is the manufacturer (supplier).
The subscribers are the buyers of the item to be produced,
and the funds realised from subscription are the cost of the
item. The certificate holders are entitled to the item or the
selling price of the manufactured item.
5/1/5/5 Murabaha certificates
The issuer of the certificates is the seller of the Murabaha
commodity. The subscribers are the buyers of that
commodity, and the realised funds are the purchasing cost
of the commodity. The certificate holders own the
Murabaha commodity or the price of selling it.
5/1/5/6 Musharaka certificates
The issuer of the certificates is the inviter to a partnership
in a specific project or activity. The subscribers are the
partners in the Musharaka contract. The realised funds are
the share contribution of the subscribers in the Musharaka
capital. The certificate holders own the assets of
partnership and are entitled to profit, if any.
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5/1/5/7 Mudaraba certificates
The issuer of the certificates is the Mudarib, the
subscribers are the capital owners, and the realised funds
are the Mudaraba capital. The certificate holders own the
assets of Mudaraba operation and profit share as per
agreement. The certificate holders, being the capital
providers, bear the loss, if any.
5/1/5/8 Certificates for acting as investment agent
The issuer of the certificates is an investment agent. The
subscribers are the principals and the realised funds are
the subject matter of investment. The certificate holders
own the assets represented by the certificates with its
benefits and risks.
5/1/5/9 Muzara’a certificates
The issuer of the certificates is the landlord. The
subscribers are farmers who invest on the basis of
Muzara’a contract. The realised funds are the cultivation
cost. The certificate holders are entitled to a share of the
produce of the land as per agreement.
5/1/5/10 Musaqa certificates
The issuer of certificates is the owner of the land that
consist of trees. The subscribers are those who assume
the irrigation process on the basis of Musaqah contract.
The realised funds stand as the maintaining cost of the
trees. The certificate holders are entitled to a share in the
produce of the trees as per agreement.
5/1/5/11 Mugarasa certificates
The issuer of the certificates is the owner of land that is
suitable for planting trees. The subscribers are those who
assume the agricultural or horticultural process on the
basis of Mugarasa contract. The realised funds stand as
cost of maintaining the plantation. The certificates holders
are entitled to a share in both the land and trees as per
agreement.
5/1/6 The relationships between the parties, namely the issuer and the
subscriber shall be governed by applicable contracts for issuing
sukuk. In this case, once such contracts are concluded, their
effects, with regard to rights and obligations of the parties, shall be
observed.
5/1/7 The issuance of prospectus represents the issuer’s invitation to
subscription in which case the act of subscription represents an offer
and the acceptance is the issuer’s approval of the subscription. The
prospectus represents an offer only when it includes a provision
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showing that it is an offer. In this case, the prospectus will be
considered as an offer and the subscription becomes an acceptance.
5/1/8 The following shall be observed in the prospectus of issue:
5/1/8/1 The prospectus must clearly encompass all contractual
conditions, adequate information on the participants in the
process of issue, such as agents, managers, originators,
investment trustee, the party undertaking cover of loss,
payment agent etc.), including their legal characteristics,
rights and duties and the conditions of appointing and
dismissing them.
5/1/8/2 The prospectus of investment sukuk must specify the type of
the contract according to which the certificates are to be
issued, such as sale of a leased asset, Ijarah, Murabaha,
Istisna’a, Salam, Mudaraba, Musharaka, Wakala, Muzara’a,
Mugarasa and Musaqa.
5/1/8/3 The contract that form basis for the issue must fulfil all its
requirements and conditions and that the contract must not
include a condition that conflicts with its nature and rules.
5/1/8/4 The prospectus must explicitly indicate the operations
would comply with Shari’a rules and principles and that
there is a Shari’a board to approve procedures of the
issues and monitor their execution until maturity.
5/1/8/5 It must be clearly stated in the prospectus that the realised
funds and the assets they generated when put into use
would be invested through a Shari’a-compliant investment
instruments.
5/1/8/6 It must be clearly stated in the prospectus that each
certificate holder is entitled to a share in the investment
returns as per subscription and would bear losses
according to percentage of ownership represented by the
certificate.
5/1/8/7 The prospectus should include any provision that makes
the issuer to guarantee payment of the nominal value of the
certificates or certain percentage of profit to the certificate
holder, except in the case of misconduct or negligence.
However, the guarantee may be provided free of charge by
an independent third party. It is also permissible that the
issuer provides collaterals or personal guarantee as
security for cases of misconduct or negligence. This rule
must be read together with item 3/1/4/3 of the Shari’a
standard no. (12) in respect to Sharika (Musharaka) and
Modern Corporations and the contracts stated in that
standard.
5/1/9 It is permissible for institution to undertake that it will purchase the
non-subscribed issues, in which case the obligation of the
underwriter is based on a binding promise. The underwriter should
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not receive any consideration for the undertaking per se, taking into
account item 4/1/2/4 of Shari’a standard no. (12) in respect to
Sharika (Musharaka) and Modern Corporations.
5/1/10 Depending on the nature of the contract of the issue, the certificates
may be issued on short, long or medium terms basis. It could also
be issued without specification of period of maturity.
5/1/11 It is permissible for the issuer or the certificate holders to adopt
permissible methods of managing risks, such as establishing an
Islamic insurance fund with contributions of certificate holders, or
buying insurance policies from Islamic Insurance (Takaful)
companies through payment of the premiums from the income
shares or tabru’u donation of the certificate holders.
5/1/12 It is permissible to set aside certain percentage of the profit in order
to mitigate fluctuation of distributable profit (profit equalisation
reserve) on the condition that this should not be used in the case of
losses.
5/2 Trading in investment certificates
5/2/1
After closing subscription, identification of the certificate holders
and commencement of investment activity, it is permissible, in
principle, to trade in and redeem investment sukuk that represent
common ownership of tangible assets and usufructs. It must be
noted that the Shari’a requirements of exchange contract must be
observed when investment activities are yet to commence. Again,
rules of receivables must be observed if all the assets are, on the
date of liquidation, receivables or the assets represented by the
certificates were sold on a deferred payment basis.
5/2/2
In the case of negotiable investment certificates, it is permissible
for the issuer to include in prospectus of issue a provision stating
that the issuer will purchase, at market value, any certificate that
may be offered to him after completion of the process of issue. It
is not permissible for the issuer to undertake to purchase the
certificates at a nominal value.
5/2/3
The certificates may be traded through any acceptable means that
do not violate Shari’a rules and principles. The trading may take
place, for example, through registration, electronic means or actual
delivery by the bearer to the purchaser.
5/2/4
It is permissible, right after the time of issue up to the date of
maturity, to trade in issues that represent ownership of existing
leased assets or assets to be leased on promise.
5/2/5
It is permissible to redeem, before maturity, certificates of
ownership of leased assets from the issuer according to the price
agreed upon between the certificate holder and the issuer.
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5/2/6
It is permissible to trade in securities of ownership of usufructs of
tangible assets prior to a contract of sub-leasing the assets. When
the assets are sub-leased, the certificate is then representing rent
receivables, which makes it a debt certificate. Therefore, the
certificate is subject to rules and requirements of disposal of
debts.
5/2/7
It is permissible for the issuer to redeem, either at a market price
or as agreed upon at the time of purchase, the issues of
ownership of usufruct of tangible assets from certificate holder
after allocation of sukuk and payment of subscription amounts.
The permissibility of the redemption is circumscribed with a
condition that the amount of subscription or of redemption is not
deferred, see item 3/ 4 of the Shari’a Standard in respect to Ijarah
and Ijarah Muntahia Bittamleek.
5/2/8
It is permissible to trade in certificates of ownership of usufructs of
an asset to be made available after the asset is identified. It is not
valid to sublease or trade in usufructs of an asset to be made
available prior to identification of the asset, in which case trading
must be carried out in line with the requirements of currency
exchange.
5/29
It is permissible to trade in securities of ownership of usufructs to
be provided by a specified source prior to sub-leasing such
usufructs. When the usufructs are sub-leased, the certificate is
representing rent receivables to be collected from the second
lessee. In this case, the certificate is representing a debt and,
therefore, is subject to rules and requirements of disposal of
debts.
5/2/10 It is permissible to trade in securities of ownership of usufructs to
be provided by a specified source after the source of usufructs is
identified. It is not valid to sublease or trade in usufructs to be
provided by a specified source prior to identification of the source,
in which case trading must be carried out in line with the
requirements of disposal of debts.
5/2/11 It is permissible to arrange a parallel ijarah on services or tangible
assets which usufruct lines with specification of the usufructs
owned by the certificate holders as in items 5/2/8 and 5/2/10
provided the two lease contracts remain independent.
5/2/12 It is permissible for the second buyer of usufructs of existing
assets to resell them. The buyer is also entitled to issue
certificates in this respect.
5/2/13 It is permissible to trade in or redeem Istisna’a certificates if the
funds have been converted through business or trade into assets
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owned by certificate holders during the operation of Istisna’a. If
the realised funds are immediately paid as a price in a parallel
Istisna’a contract or the manufactured item is submitted to the
ultimate purchaser, then trading in Istisna’a certificates is subject
to rules of disposing debts.
5/2/14 It is not permissible to trade in Salam certificates.
5/2/15 It is not permissible to trade in Murabaha certificates after delivery
of the Murabaha commodity to the buyer. However, trading of
Murabaha certificates is permissible after purchasing the
Murabaha commodity and before selling it to the buyer.
5/2/16 It is permissible to trade in Mudaraba certificates after closing of
subscription, allocation of certificates and commencement of
investment operation in respect to the Mudaraba assets and
usufructs.
5/2//17 It is permissible to trade in Musharaka certificates after closing of
subscription, allocation of certificates and commencement of
investment operation in respect to Musharaka assets and
usufructs.
5/2/18 It is permissible to trade in sukuk of investment agents after
closing of subscription, allocation of sukuk and commencement of
investment operation in respect to the assets and usufructs.
5/2/19 It is permissible to trade in Muzara’a, Musaqa and Mugarasa
certificates after closing of subscription, allocation of certificates
and commencement of investment operation in respect to the
assets and usufructs. This rule applies when the certificate
holders are own the land. Thus, trading in these certificates is not
allowed where the certificate holders act as workers, i.e.
undertake to provide agricultural, irrigation or planting works. This
is the case unless the certificate holders have contributed, in
addition to labour, some equipment and plant seeds.
6.
Effective date
This Standard shall be effective beginning 1 Muharram 1425H or 1 January
2004.
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Adoption of the exposure draft
The exposure on Shari’a Standard of Investment Sukuk was adopted by Shari’a Board
in its meting No. (9) held on 11 – 16 Ramadan 1423 H, corresponding to 16-21
November 2002.
Shari’a Board
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Shaikh Muhammad Taqi Usmani
Shaikh Abdulla Bin Sulaiman Al Manea
Shaikh Al Siddiq Mohamed Al Darir
Shaikh Wahba Mustafa Al-Zuhaili
Shaikh Ajeel Jassim Al-Nashmi
Shaikh Abdul Rahman Bin Saleh El-Atram
Shaikh Dato’ Ghazali Bin Abdul Rahman
Shaikh Al Ayashi Al Saddiq Faddad
Shaikh Abdul Sattar Abu-Ghuddah
Shaikh Ahmed Ali Abdalla
Shaikh Nazih Kamal Hammad
Shaikh Hussain Hamid Hassan
Shaikh Nizam Muhammad Salih Yaquby
Shaikh Mohamad Daud Bakar
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Chairman
Deputy Chairman
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member
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Appendix A: Brief history of the preparation of the exposure draft
In its meeting No. (7) held in Makkah al-Mukarramah on 9-13 Ramadan 1422H
corresponding to 24-28 November, 2002 the Sharia Board decided to give priority to
the preparation of the Shari’a standard for commercial papers.
On Saturday 14 Shawwal 1422H corresponding to 29 December, a Shari’a
consultant was commissioned to prepare a juristic study and an exposure draft on
the Shari’a standards for commercial papers.
In its meeting held in the Kingdom of Bahrain on 4 & 5 Safar 1423H corresponding to
17 – 18 April, 2002, the Shari’a Standard Committee discussed the exposure draft of
the Shari’a standard on commercial papers and asked the consultant to make
additional amendments to reflect the comments made by the members of the
committee.
In its meeting No. (4) held 16 and 17 Rabi’ul Awwal 1423 H corresponding to 28 and
27 June 2002, the committee discussed the exposure draft and made necessary
amendments as per the comments and observations of the members and in the light
of the recommendations of AAOIFI’s first fiqh forum in respect to requirements of
trading in Investment portfolios held in Amman (The Hashimate Kingdom of Jordan)
16 on Rabi’ul Awwal 1423H corresponding to 27 June 2002.
In its meeting No. (5) held on 2 and 3 Rajab 1423 H corresponding to 9 – 10
September 2002 and decided to merge the exposure of this Standard with the
exposure draft of the Standard on Securitisation. In its meeting No. (6) held on 19
Rajab 1423 H corresponding to 26 September 2002 in the Kingdom of Bahrain, the
Committee further discussed the exposure after the merger, made some
amendments and decided to present it to the Shari’a Board.
The revised exposure draft of the Shari’a standard was presented to the Shari’a
Board in its meeting No. (9) held in Makkah al-Mukarramah on 11-16 Ramadan
1423H, corresponding to 16-21 November 2002. The Shari’a Board made further
amendments to the exposure draft of the standard and decided that it should be
distributed to specialists and interested parties in order to obtain their comments in
order to discuss them in a public hearing.
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Appendix B: Basis of the Shari’a rulings
•
The basis for the permissibility of issuing investment certificates is that such
certificates are usually issued on the basis of Shari’a-nominated contracts. Hence,
issuance of sukuk on the basis of any of these contracts becomes acceptable as
well.
•
The basis for considering the issue prospectus as an offer and the act of
subscription as an acceptance is that valid contacts take place on the basis of
anything that indicates consent without specifying a particular form of expression. It
is thus not objectionable that an offer comes from one person and acceptance from
a large number of persons.
•
The basis for the right of certificate holders to management is that they own the
property that their certificates represent, and management is part of ownership.
•
The basis for permissibility of trading in investment sukuk when such sukuk
represent shares in tangible assets or usufructs is that the trading is, in fact, on the
assets and usufructs. Since these assets may be traded so too the certificates that
represent them.
•
The basis for impermissibility of trading in Salam certificates is that the certificate
represents a share in the Salam debt in which case the certificates is subject to
rules of debt trading.
•
The basis for permissibility of trading in Istisna’a certificates after conversion of the
realised funds into assets is that such assets represent properties that can be
disposed of. The basis for the impermissibility of trading in Istisna’a certificates in
case of using the realised funds as a price in a parallel Istisna’a contract or when
the Istisna’a commodity is delivered to the ultimate purchaser is that the certificate
represent a price owed by the ultimate purchaser to manufacturer, i.e. it is a
monetary debt for which trading of the sukuk at this stage is subject to the rules of
debt trading.
•
The basis for the impermissibility of trading in Murabaha certificates after the
commodity is sold and delivered to the buyer is that the certificate represents a
monetary debt against the buyer, in which case trading is not permissible except in
accordance limitations of debt trading. However, if purchase of the commodity has
taken place and is yet to be sold, trading in these certificates is permissible because
the certificates represent assets that can be traded.
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Appendix D: Definitions
Securitisation (tawreeq)
Securitisation is known in Arabic terminology as Taskeek (issues and Tasneed
(securities). Securitisation is a process of dividing ownership of tangible assets,
usufructs or both into units of equal value and issue securities as per their value.
The Issue Contract
The Issue Contract is the contract that form basis for issuance of the investment
certificates.
The issuer of investment certificate
The issuer of investment certificate is the party who uses the realised funds in a
Shari’a compliant investment instrument. The issuer could be a firm, an individual, a
government or a financial institution. The issuer may delegate, for a consideration or
commission, the process of arranging the operation of the issue to a financial
intermediary, which may be stipulated by the issue prospectus.
The issue agent
It is an intermediary institution that manages the process of issue and performs all
procedural arrangements pertaining to the issue on behalf of the issuer against a
specific fee to be agreed upon or to be stated in the prospectus of issue. The
relationship between the issuer and the issue agent is governed agency contract
with remuneration.
The issue manager
The issue manager is the intermediary institution that acts for remuneration on
behalf of the subscribers in executing the issue contract.
The payment underwriter
The payment underwriter is the intermediary institution that undertakes to pay dues
of certificate holders after when realised.
The investment manager
The investment manager is the party appointed by the issuer or the issue manager
to perform all or part of investment operations as indicated in the issue prospectus.
The investment trustee
The investment trustee is the intermediary financial institution charged with
protecting the interests of certificate holders, supervising the performance of the
issue manager and safe custody of documents and guarantees for consideration
stipulated in the issue prospectus on the basis of agency contract
Trading of certificates
Trading of certificates refers to disposal of the ownership right contained in the
certificate through selling, pledging, gift or any other permissible means of disposal.
Exposure Draft Investment Sukuk
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