Proposed Model
Jualah sukuk is designed on the basis of Jualah contract. The issuer transfers these securities and raises funds to provide such services subject of these securities and present to the originator in form of a second Jualah contract as the investors’ agent. Bellow, we are to explain how Jualah sukuk could be applied to finance various tourism projects.
Shariah Board Resolution
Jualah sukuk for overhaul (repair and maintenance) operations
Iran Cultural Heritage, Handicrafts and Tourism Organization (ICHTO) needs funds to perform its own projects in the fields of repair and maintenance of hotels, guesthouses, resorts and cultural centers. Actually, there are different ways to raise funds for these projects, including issuance of Jualah sukuk which seems the best decision for this purpose. In this method, the ICHTO sets a SPV and signs a Jualah contract for these years and introduces the SPV as the agent to perform repair and maintenance operations and receive a certain amount of money as the fee during the three year period. The SPV, following all primary studies and receiving all required permits, issues Jualah sukuk and by pooling the investors’ funds enters a Jualah contract with contractor on behalf of the security holders for one year to start the overhaul operations. Then the SPV pays the specified fee to the contractor as stipulated in the contract and proportional to the progress of the project.
By finishing the operations, contractor delivers the project to the ICHTO and SPV, in compliance with the first Jualah contract, receives the fee from the ICHTO and settles the security holders’ principal and profit. In this method, the fee for the first and second contracts are so determined to provide from the difference between the two Jualah contracts the rating agencies, trustee agency and SPV’s commissions and security holders profit.
Jualah sukuk to build and transfer
This model is used to build hotels, resorts and cultural centers. Here, ICHTO sets up a SPV and signs a five year Jualah contract and introduces the SPV as the agent to perform the required operations for establishing such resorts and cultural centers. The SPV, following all primary studies and receiving all required permits issues five year Jualah sukuk and by pooling the investors’ funds enters a three year Jualah contract with contractor on behalf of the security holders and pays the fee after finishing each phase as stated in the contract. Contractor delivers the completed project to the ICHTO and ICHTO transfers the project to the private sector in form of a selling by installments contract or a hire-purchase contract and receives monthly, annual, etc. rentals. Then these installments or rentals, after deducting relevant charges are divided among security holders through an investment bank. If contract is a hire-purchase, the ICHTO, at the end of the hire period, fully transfers the ownership of the project to the private sector.

Convertible Jualah sukuk for establishment
A number of ICHTO’s projects have greater longevity and their revenues could be continued for a long time; so, principal and profit could not be returned in short time. Thus, the ICHTO issues convertible Jualah sukuk. In this method, ICHTO signs a five year Jualah contract with SPV and building operations are performed by the SPV as the ICHTO’s agent. The SPV, following all primary studies and receiving all required permits, issues convertible Jualah sukuk, then pools the investors’ funds and signs a two year Jualah contract with contractor for building hotels or other projects. The ICHTO pays a certain fee to the contractor after finishing each specific phase as stipulated in the contract. At the end of the project, contractor delivers the complete project to the ICHTO. The SPV in partnership with ICHTO assesses the whole project and change it into stocks of a public joint stock company and convert the investors’ Jualah sukuk into stocks. The stock holders’ dividend shall be paid at the end of each fiscal year.


Sharia Board’s Opinion
Conforming to sharia rules, all transactions in primary market on Jualah sukuk, besides the main Jualah contract, are accepted by majority of Islamic jurisprudents. Regarding those transactions in secondary market, except those debt sale transactions which are complied with the dominant opinion of Islamic jurisprudents and the civil code of the I.R. of Iran, other transactions are accepted by majority of Islamic jurisprudents. So, sharia board believes that designing of such securities shall not be in contrast with sharia rules.

Sessions
Session Number Session Date Description
45 Jun 23 2010

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