Rock your resolutions. Take the Dummies challenge and you could WIN $1,000! Get Started.
The Islamic Principles behind Takaful
How Is Islamic Finance Different from Conventional Finance?
The Structure of Sharia Boards for Islamic Financial Institutions

Types of Sukuk in Islamic Finance

Step 1 of 6
Previous
Next Slideshow
Next Slideshow

Sukuk al mudaraba (sukuk based on equity partnership)

In simple mudaraba contracts, investors are considered to be silent partners (rab al mal), and the party who utilizes the funds is the working partner (mudarib). The profit from the investment activity is shared between both parties based on an initial agreement.

The same type of contract applies to sukuk. In a mudaraba sukuk, the sukuk holders are the silent partners, who don’t participate in the management of the underlying asset, business, or project. The working partner is the sukuk obligator.

The sukuk obligator, as the working partner, is generally entitled to a fee and/or share of the profit, which is spelled out in the initial contract with investors.

  • Add a Comment
  • Print
  • Share
blog comments powered by Disqus
Sharia Boards and Islamic Financial Institutions
Ten Reasons the West Should Pay Attention to Islamic Finance
Compare Commodity and Equity Funds on the Islamic Market
The Islamic Unit Trust and Mutual Funds Market
Four Ways Conventional and Islamic Commercial Banks Differ
Advertisement

Inside Dummies.com