Four Ways Conventional and Islamic Commercial Banks Differ
Ten Reasons the West Should Pay Attention to Islamic Finance
Islamic Finance For Dummies Cheat Sheet

Types of Sukuk in Islamic Finance

Sukuk al musharaka (joint venture sukuk)

The musharaka contract supports a joint venture business activity in which all partners contribute capital, labor, and expertise. The profit and losses are shared among all parties based on agreed-upon ratios.

With musharaka sukuk, the sukuk holders (investors) are the owners of the joint venture, asset, or business activity and therefore have the right to share its profits. In a musharaka sukuk, unlike sukuk based on mudaraba, a committee of investor representatives participates in the decision-making process. Musharaka sukuk can be traded in the secondary market.

The musharaka sukuk process begins when an obligator signs a musharaka contract with the SPV that specifies a profit-sharing ratio and indicates that the obligator will transfer assets (such as cash and property) to the joint venture.

  • Add a Comment
  • Print
  • Share

Recommends

Promoted Stories From Around The Web

blog comments powered by Disqus
What Is Retakaful (Reinsurance) in Islamic Finance?
The Musharaka Contract in Islamic Finance
How to Benchmark the Performance of Islamic Funds: Islamic Indexes
The Islamic Principles behind Takaful
Financial Market Trading and Islamic Finance