The Critical Shariah Issues of Sukuk

Purpose: The aim of the paper is to review some of the important Shariah issues of sukuk, especially in light of the controversies harbouring some of them. The paper treats the three most critical Shariah issues of sukuk, which govern the legitimacy of sukuk from issuance to redemption. They relate basically to guaranteeing the capital invested and the return to the sukuk holders, the sukuk being real representative of ownership of the underlying assets and the tradability of the sukuk.

Methodology: The paper employs a qualitative research methodology that adopts a textual and Fiqh comparative analysis approach. The methodology also incorporates a macro perspective for treating the subject by analyzing the overall picture of sukuk in their current status.

Findings: The study primarily finds that certain controversies harbour the current standard structures of sukuk, which necessitates a revisit to sukuk engineering as it may have unnecessarily challenged the potential of sukuk on one hand and may have challenged some of the Shariah principles on the other.

Limitations: The study does not cover the accounting assets of Sukuk nor does it cover their financial aspects.

Practical Implications: The study should help reconsider how sukuk should be structured to meet Shariah requirements.

Originality: Although the paper addresses some of the issues that have been addressed before, it acquires its significance and value from setting the basis for what constitutes Shariah compliant sukuk as an Islamic capital market instruments and showing the areas that need reform and reconsiderations