Sukuk that represent tangible assets (also, usufructs and services) or proportionate ownership of a venture or investment portfolio. Generally, sukuk are asset-backed, stable income, tradable and shari’a-compliant trust certificates. For issuance of sukuk, shari’a stipulates the existence of assets on the balance sheet of the entity which wants to mobilize the financial resources. Furthermore, shari’a dictates that the pool of assets should not solely contain debts from Islamic financial contracts (e.g. murabaha, istisna’a).
Examples of tradable sukuk include ijara sukuk (both fixed rate and floating rate), musharaka sukuk, and mudaraba sukuk. Shari’a permits trading in mudaraba, musharaka, and investment wakala certificates after subscription is closed, allotment of the certificates is made and activity with respect to the assets and usufructs (manafe’e) is commenced.
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