Certificates of equal value (sukuk) that are issued for the purpose of using the funds mobilized from subscribers in growing crops on the basis of muzara’ah contract (aqd al-muzaraah). The sukuk holders become entitled to respective shares in the crop as per the terms of the contract. These sukuk are issued by the land owner or the owner of its usufruct. The subscribers are the cultivators who undertake growing crops and all related tasks. The funds realized through subscription are used to cover cultivation costs.
Those sukuk may also be issued by the cultivator and subscribed by the land owner(s). The sukuk holders become entitled to respective shares in the land produce in accordance with the agreement terms.
It is permissible by shari’ah to trade in these sukuk, in the case where sukuk holders own the land, provided that subscription is closed, sukuk are allotted, and activity is commenced. If the sukuk holders are the party in charge of work, trading in these sukuk is impermissible before the results of work have materialized, i.e., the plants have grown up and matured.
Sukuk al muzara’ah are also called muzara’ah sukuk.
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