Issue
The issue in deliberation was on whether a third party, sister company and associate company of the sukuk issuer may guarantee profit and impose ujrah on such guarantee in sukuk based on `uqud ishtirak and `aqd wakalah bi al-istithmar.
Resolution
The SAC had, at its 219th meeting held on 25 April 2019, resolved that it is permissible for a third party, sister company and associate company of the sukuk issuer:
(i) to provide guarantee on profit; and
(ii) to impose ujrah on such guarantee,
in sukuk based on`uqud ishtirak and ` aqd wakalah bi al-istithmar.(i) A physical asset that is used to carry out activities which are Shariah compliant and/or Shariah non-compliant.
(2) In the case where Shariah non-compliant financial asset is used as collateral, the SAC resolved as follows:(ii) A financial asset that is Shariah compliant and/or Shariah non-compliant.
(i) Ordinary Shares and Preference Shares
(a) Shariah non-compliant ordinary shares and preference shares of companies listed on Bursa Malaysia; and
(b) Shariah non-compliant ordinary shares and preference shares of unlisted companies,
may be accepted as collateral provided that the core business of the companies is Shariah compliant based on the confirmation by the Shariah advisers registered with the Securities Commission Malaysia. The total value of the Shariah non-compliant ordinary shares and preference shares may be accepted as the collateral value.
(ii) Shariah Non-Compliant Financial Asset other than Ordinary Shares and Preference Shares
Shariah non-compliant financial asset other than the ordinary shares and preference shares as stated in item (2)(i)(a) and (b) above may be accepted as collateral provided that the value of the collateral is limited to the Shariah compliant portion only. In this regard:
(a) The collateral value of the Shariah non-compliant financial asset which is based on interest such as conventional fixed deposit certificate and conventional bond is limited to the principal amount of such instruments; and
(b) The collateral value of the Shariah non-compliant unit trust fund is limited to the initial investment and any additional investment by the investors.
In determining the Shariah status of the SEHC that involved in Activities Beyond Control and Activities Within Control, what is the most appropriate Shariah screening methodology to be applied.
Resolution
The SAC had resolved that due to the nature of the SEHC as a national exchange that undertakes Activities Beyond Control and Activities Within Control, a specific two-tier business activities benchmark would be applicable in determining its Shariah status as follows:
The financial ratio benchmark will continue to be applicable to the SEHC.
(1) Determination of the Currency Exchange Rate on the Debt Payment Date
(2) Determination of the Currency Exchange Rate at a Pre-Agreed Exchange Rate in the Wa`d Arrangement
Issue
The issue in discussion was whether the utilization of sukuk proceeds raised from any issuance of sukuk based on various Shariah principles for various specified purposes is considered as Shariah-compliant
Resolution
The SAC has resolved that as a general ruling, the proceeds raised from any issuance of sukuk must be utilised for Shariah compliant purposes only. The SAC has further resolved that utilisation of the sukuk proceeds for the following purposes are Shariah compliant:
1) Refinancing of Conventional Borrowings
4) Refurbishment, Expansion, Repair and/or Maintenance of the Building with Mixed Activities
The sukuk proceeds may be utilised for refurbishment, expansion, repair and/or maintenance of the Building with Mixed Activities subject to the following conditions:
If the revenue received from the Shariah non-compliant activities in the Building with Mixed Activities could be determined, the said revenue computed against the total revenue from the Building with Mixed Activities must be less than the following Benchmarks:
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Resolution
Resolution
After due deliberation, the SAC has resolved that the implementation of the New Bai` `Inah Ruling is as follows:
Permissibility of Wa`d Mulzim
Wa`d mulzim is permissible based on the view of fuqaha’ that wa`d which is attached to conditions is binding. The types of conditions include a particular action, date/time and situation.
This ruling may clarify the types and categories of conditions attached to wa`d that lead to the binding effect of wa`d, especially in the financial instruments that involve promise to enter into contract that is attached to a particular date/time in the future.
Implication of breach of Wa`d
The promisor who breaches his wa`d is liable to pay ta`widh (compensation) based on actual loss suffered (if any) by the aggrieved promisee due to the breach of the wa`d.
2. Resolutions on Muwa`adah
Definition of Muwa`adah
Muwa`adah is a bilateral promise between two persons or two parties to enter into a contract in the future.
Binding Effect of Muwa`adah
Muwa`adah is mulzimah (bilaterally binding) on the promisors if the muwa`adah is attached to any of the following: