News Category: Public
Register Date: Feb 17 2019
Publish Date: Feb 17 2019

Equity Based Ijarah Sukuk in Iran Capital Market

Iran capital market is planning for development of Shariah compliant financial instruments

Shariah board of Securities and Exchange Organization(SEO) has released a resolution that permits some types of stocks to be leased for issuing ijarah sukuk. More clearly, the shariah scholars have persisted that all types of shariah compliat equities may not be leased and specific criteria should be passed.
The board resolution emphasizes that “Shariah confirmation for stock leasing shall be issued upon present situation of the company and its last audited financial statements; so the company which has applied for issuing of stock-based ijarah sukuk shall take the required steps during a less than 6 months period after applying for issuance.” Moreover, shariah scholars have warned that “value of requested ijarah sukuk should not exceed the amount of leasable physical assets of the company. Additionally, a particular mechanism must be adopted to prevent the company from selling the leasable assets without sukuk holders’ permission.”
After the resolution was released, Iran Securities and Exchange Organization(SEO) started implementation of the board's resolution and subsequently Equity based Ijarah Sukuk was officially lanuched in the market. Each type of equity requires the board's approvals and till now more than 5 equity based ijarah sukuk have been issued in Iran.

KeyWords: Shariah compliant financial instrument, Sukuk, Ijarah, Equity


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