Investment Sukuk — practice questions

Correct answer: C. Clauses 2 and 4/2: Investment Sukuk are certificates of equal value representing undivided shares in ownership of tangible assets, usufructs and services, or of the assets of particular projects or special investment activity, after receipt of the Sukuk value, closing of subscription and employment of the funds. They represent a common share in the ownership of the assets made available for investment and do not represent a debt owed to the issuer by the certificate holder. They are called ‘investment’ Sukuk to distinguish them from shares and bonds.

Correct answer: A. Clause 5/1/2: It is permissible to securitise tangible assets, usufructs and services by dividing them into equal shares and issuing certificates for their value, but it is not permissible to securitise debts owed as a liability for the purpose of trading. Trading such Sukuk would be trading in debt, which is governed by the rules on disposal of debts. Clause 5/2/15 accordingly prohibits trading Murabahah certificates after delivery of the commodity to the buyer, and Clause 2/2/7 of Shari’ah Standard No. (8) prohibits negotiable Sukuk based only on Murabahah receivables.

Correct answer: D. Clause 5/1/7: The issuance of the prospectus represents the issuer’s invitation to subscribe; the act of subscription is an offer, and acceptance is the issuer’s approval of the subscription (allotment). The exception is where the prospectus expressly states that it is an offer, in which case the prospectus is the offer and the subscription becomes the acceptance. Clause 5/1/3 adds that the issue contract acquires all the legal effects of the underlying contract after closing of subscription and allotment.