preview

The Difference between Sukuk and Shares

Satisfactory Essays
Open Document

Sukuk
Sukuk which is a plural of “sak” or “sanadat”, which means certificate of investment. Aaoifi, an islamic body for accounting, auditing and financial regulation define sukuk as:
“certificate of equal value representing undivided shares in the ownership of tangible assets, usufruct and services or (in the ownership of) the asset of a particular projects or special investment activity”.
One can easily differentiate between sukuk and shares. As shares represent a general ownership for an unlimited period of time while sukuk represent ownership in specific asset or project of a company for a limited period of time. Sukuk can be issued on any asset or for the project, so the return on the sukuk will be determined by the cash flow originating from that asset or project which is not prefixed as in the case of bonds. So for this reason unlike bonds sukuk are permissible in islam and shariah complaint.
Sukuk can be divided in to different types on the basis of either their return is going to be variable or fixed (quasi fixed).
The rate of return in case of participatory mode will be variable like:
• Musharakah based sukuk
• Mudarabah based sukuk
The rate of return in case of non-participatory mode will be fixed or quasi fixed:
• Ijarah sukuk
• Istisna sukuk
• Salam sukuk
Some other types of sukuk are:
• Muzara’ah sukuk
• Musaqah sukuk
• Mugharasah sukuk
Types of sukuk:
Mudarabah sukuk:
These certificates represent project/activities managed on the principle of mudarabah by

Get Access
Related
Get Access