Shariah Issues in Ijarah Asset-Based Sukuk

INCEIF

The Global University in Islamic finance

Kuala Lumpur, Malaysia

CIFP

SH2002 Shariah issues in Islamic finance

Title

Shariah Issues in Ijarah Asset-Based Sukuk

Semester Jan 2013

Name: Hani Hazza

Matric No: 1200189

Abstract

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Allah SWT Says; [Say, "Have you seen what Allah has sent down to you of provision of which you have made [some] lawful and [some] unlawful?" Say, "Has Allah permitted you [to do so], or do you invent (things) to attribute to Allah."](YUNUS: 59).

In this study insha’allah I will try to discuss critically the legality of al-Ijarah asset-based sukuk through addressing FOUR main shariah issues related to this product. We will discuss the shariah requirements in ownership of the underlying asset used for sukuk al-Ijarah, legality of profit earned from al-Ijarah asset-based sukuk, the sukuk holder’s interest in the underlying assets and then we will come to discuss the validity of restrictions on disposal of the underlying assets of sukuk al-ijarah “asset-based sukuk”.

This analysis would be supported by Quranic verses, Hadithes and legal maxims.

Key terms of the research

1. Asset-based sukuk, 2. Asset-backed sukuk, 3. Absolute ownership (milkuttaam), 4.Asset,_5.Ijarah.

Objectives of the research:

Critical analysis of shariah issues regarding the following elements and conditions of al-ijarah asset-based sukuk contract;

* Shariah issue regarding ownership of the underlying asset of sukuk al-ijarah “asset-based”,

* Shariah issue regarding the profit earned from al-Ijarah asset-based sukuk.

* Shariah issue regarding sukuk holder’s interest in the underlying assets and;

* The issue of restrictions on disposal of the underlying assets.

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Table of content

2.0 Introduction

2.0 Definitions and forms of sukuk al-Ijarah,

3.1 Definitions of sukuk and sukuk al-Ijarah.

3.2 Al-Ijarah asset-based...