ISLAMIC INVESTMENT SUKUK (SUKOOK)

Sukuk: The meaning The word ‘sukuk’ is the plural for ‘ Sakk’ – literally means ‘ written document’. Some experts; the word ‘cheque’ owes its origins to ‘ Sakk’ In Islamic Finance: the concept of securitisation is in consonance with “taskeek’- which means the process of dividing ownership of tangible assets, usufruct or both

Sukuk: The Meaning 2 In short: Sukuk are basically certificates evidencing the Sukuk holders’ ownership in one or a number of assets.

Sukuk, Shares and Bonds Shares: issued only by stock companies which by law, have been granted an independent juristic personality. Bonds: lender-debtor relationship between the investor and the issuer. Sukuk: does not represent indebtedness and that can represent different factors depending on the types of securitization and the shariah principles adopted.

Salient Features of Sukuk Asset-backed, stable income, tradeable, shariah compliant trust certificates. Not simply a claim to cash flow but an ownership claim. Return derives from the yield generated by the client’s lease of the asset.

Salient Features- Cont The legitimacy of sukuk structures in Shariah lies in the fact that they do not take advantage of interest rate movements. Investing in sukuk involve the funding of trade or production of tangible assets. Sukuk are directly linked to real sector activities. Hence these will not create short term speculative movement of funds and potential financial crises.

Types of Sukuk Ijarah Sukuk Mudharabah and Musharaka Sukuk