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Structure of NASDAQ Dubai Sukuk

NASDAQ Dubai is the Middle East's international financial exchange. It enables companies to benefit from a unique investor pool that combines regional and international wealth, making it a globally unique platform for companies to raise capital and investors to find exciting investment opportunities. Dubai connects the east and west and excels in areas such as trade, transportation, tourism, real estate, and financial services. NASDAQ Dubai combines the best of international standards with regional knowledge and understanding, assisting listed companies in the region and beyond in their growth.

The exchange's large investor base distinguishes it from others. Investors in the UAE and the region, as well as those in the United States, Europe, Asia, and elsewhere, can easily trade its securities. This provides its listed companies with instant global recognition and visibility, backed up by the international NASDAQ brand name. Company owners are free to raise capital in whatever way they see fit. They can set the price at which shares are sold in an IPO and retain control of the company afterward. The exchange is supported by a world-class regulatory framework, giving issuers and investors alike confidence that their interests are being protected.

NASDAQ Dubai, as a market leader in innovation, provides a diverse product offering.

Companies can raise capital through the issuance of shares, Sukuk, and bonds. Exchange-traded funds, derivatives, exchange-traded commodities, and Real Estate Investment Trusts (REITs) are all eligible to be listed and traded. NASDAQ Dubai is ideal for a wide range of businesses, from family businesses to conglomerates, government entities, and high-growth enterprises.

Structure of the NASDAQ Dubai Sukuk al Ijarah

Sukuk al ijarah, Sukuk al Musharakah, and Sukuk Mudarabah are the most common Sukuk issuances in the UAE that have an impact on the economy. The lease or lease back agreement should be executed separately from the initial asset purchase agreement, and the two should be conditioned one upon the other, according to Shariah. According to the hadith of the prophet, "the prophet peace be upon him prohibited sale and (overriding) condition." Any such conditionality of entering into the purchase of the assets in order to lease them back to the seller is not acceptable to the majority of Islamic jurists. This amounted to two contracts in one.

Sukuk al Ijarah is classified as a purchase agreement, a lease agreement, a service agreement, and a purchase undertaking. This Sukuk is based on a property right to some other benefit at the agreed-upon price. Sukuk al Ijarah is typically issued on the basis of a real estate sale and leaseback arrangement. This type of Sukuk is a common structure among sovereign issuers. The proceeds of the Sukuk are typically used by the issuer to purchase real estate from the originator and then lease it back to the originator. The Originator agrees to repurchase the property at the original purchase price upon maturity or early settlement. Shariahlaw requires the issuer to perform the majority of the asset's maintenance.

Structure of the NASDAQ Dubai Sukuk Mudarabah

This sukuk is divided into two parts: the Mudarabah agreement and the purchase undertaking. This is a collaboration agreement between two parties: investors and capital managers. This is an investment sukuk that denotes common ownership of equally valued units in the Mudarabah equity. The holders of the Sukuk al Mudarabah are the capital suppliers. They would own shares in Mudarabah equity and receive returns based on their ownership percentage (NASDAC Dubai 2011). Sukuk Mudarabah holders have the right to transfer ownership by selling the deeds in the securities market.

Structure of NASDAQ Dubai Sukuk Musharakah

Musharakah agreement, management agreement, and purchase undertaking are the three types of Sukuk. This usually entails two parties working together to install a capital for motivation. Sukuk al-Musharakah is one of the most popular structures among corporate issuers. This lasted until the Accounting and Auditing Organization for Islamic Financial Institutions issued a ruling on Sukuk in early 2008. (NASDAC Dubai 2011). These rulings have made the use of nominal value Purchase undertakings in such Sukuk prohibited. The subscription proceeds from Sukuk al-Musharakah are contributed by the issuer to enter into a joint venture with the Originator, who contributes either, his own capital/asset or makes a contribution of some kind.

Profits are split between the Issuer and the Originator according to an agreement. Shariah, on the other hand, requires that any losses be shared among them in proportion to the amount of capital contributed (NASDAC Dubai 2011). More information can be found in the figure below. 

Profits are split between the Issuer and the Originator according to an agreement. Shariah, on the other hand, requires that any losses be shared among them in proportion to the amount of capital contributed (NASDAC Dubai 2011).   

Conclusion

The Sukuk market is maturing, and there is increasing momentum as a result of interest from issuers and investors. Sukuk have proven their viability as a means of mobilizing medium to long-term investments from a large investor base. Different Sukuk structures have emerged over the years, but the majority of Sukuk issuance to date has been Sukuk al-Ijarah, which are freely tradable at par, premium, or discount because they are based on the undivided pro-rata ownership of the underlying leased asset. The secondary market tradability of Sukuk makes them more appealing. Although less common than Sukuk al-Ijarah, other types of Sukuk are also playing an important role in emerging markets, assisting issuers and investors alike in participating in major projects such as airports, bridges, and power plants.  For more information regarding the Sukuk and bonds contact to Dhanguard we will gladly assist you in every aspect. 

Frequently Asked Questions

Sukuk is basically an Islamic version of Conventional Bonds.

Sukuk signify a form of equity as they symbolize certificates discussing ownership to holders of an asset or pool of assets or entitlement to its cash flows. 

Yield is a numerical figure that shows the return that you get on a bond. The simplest form of yield is calculated by this formula: Yield = Coupon Amount/Price.

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