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Sukuk 22 maulana taqi usmani strikes back bond

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Sukuk 22
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Maulana Taqi Usmani Strikes Back Bond Holders' Ownership of Enterprise Assets. The assets in the Sukuk may be shares of companies that do not confer true ownership but which merely offer Sukuk holders a right to returns. Such Sukuk are no more than the purchase of returns from shares; and this is not lawful from a Shariah perspective. Likewise, there has been a proliferation of certain Sukuk that are based on a mix of Ijarah, Istisna' and Murabahah contracts undertaken by Islamic banks or institutions such that these are packaged and sold to Sukuk holders. The inclusion of Murabahah contracts into such Sukuk, however, cannot but bring into question the issue of the sale of debt,3 even if the percentage of the Murabahah contracts may be considerably less than that of the Ijarah, Musharakah and Istisna' contracts. Sukuk 23
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Maulana Taqi Usmani Strikes Back Regular Distributions to Sukuk Holders Most of the Sukuk that have been issued are identical to conventional bonds with regard to the distribution of profits from their enterprises at fixed percentages based on interest rates (LIBOR). In order to justify this practice, the issuers include a paragraph in the contract which states that if the actual profits from the enterprise exceed the percentage based on interest rates, then that amount of excess shall be paid in its entirety to the enterprise manager (whether a Mudarib, or a partner, or an investment agent) as an incentive for the manager to manage effectively. If the actual profits are less than the prescribed percentage based on interest rates, then the manager may take it upon himself to pay out the difference (between the actual profits and the prescribed percentage) to the Sukuk holders, as an interest free loan to the Sukuk holders. Sukuk 24
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Maulana Taqi Usmani Strikes Back Regular Distributions to Sukuk Holders Then, that loan will be recovered by the lending manager either from the amounts in excess of the interest rate during subsequent periods, or from lowering the cost of repurchasing assets at the time the Sukuk are redeemed. Sukuk 25
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Maulana Taqi Usmani Strikes Back Guaranteeing the Return of Principal Virtually all of the Sukuk issued today guarantee the return of principal to the Sukuk holders at maturity, in exactly the same way as conventional bonds. This is accomplished by means of a binding promise from either the issuer or the manager to repurchase the assets represented by the Sukuk at the stated price at which these were originally purchased by the Sukuk holders at the beginning of the process, regardless of their true or market value at maturity. Sukuk 26
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AAOIFI Re-Affirms Feb 2008 First: Sukuk, to be tradable, must be owned by Sukuk holders, with all rights and obligations of ownership, in real assets, whether tangible, usufructs or services, capable of being owned and sold legally as well as in accordance with the rules of Shari'ah.
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