The legal and beneficial ownership conundrum in sovereign sukuk structuring

The past decade has witnessed the dynamics of ṣukūk structuring amidst legal complexities in cases involving enforcement of the rights of investors or ṣukūk holders in the event of default. This paper examines the legal and beneficial ownership in a typical sovereign ṣukūk structure and the specific...

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Main Author:	Oseni, Umar Aimhanosi
Format:	Article
Language:	English English
Published:	IIUM 2015
Subjects:	HJ8003 Public credit. Debts. Loans. Claims KBP1 Islamic law.Shariah.Fiqh
Online Access:	http://irep.iium.edu.my/47139/ http://irep.iium.edu.my/47139/ http://irep.iium.edu.my/47139/1/Legal_and_Beneficial_Ownership_in_Sovereign_Sukuk_-_Al-Shajarah.pdf http://irep.iium.edu.my/47139/4/47139_the_legal_and_beneficial_WOS.pdf

id	iium-47139
recordtype	eprints
spelling	iium-471392018-06-12T03:25:28Z http://irep.iium.edu.my/47139/ The legal and beneficial ownership conundrum in sovereign sukuk structuring Oseni, Umar Aimhanosi HJ8003 Public credit. Debts. Loans. Claims KBP1 Islamic law.Shariah.Fiqh The past decade has witnessed the dynamics of ṣukūk structuring amidst legal complexities in cases involving enforcement of the rights of investors or ṣukūk holders in the event of default. This paper examines the legal and beneficial ownership in a typical sovereign ṣukūk structure and the specific rights of the parties under the existing practice and the classical Islamic legal framework. Specifically, the issue of public property often used in sovereign ṣukūk as the underlying asset of the transaction leaves much to be desired. Through a systematic content analysis, this study uses the qualitative legal research method to analyse a number of sovereign ṣukūk structures gathered from available ṣukūk prospectuses. The study finds that the nature of legal and beneficial ownership in ṣukūk transplanted from the conventional bonds structuring is different from the type of ownership envisaged in Islamic commercial law. It is found that the modern structure of ṣukūk products only allows for beneficial ownership to be conferred on the ṣukūk holders, and this does not contradict any principle of Islamic law when one considers the true nature of beneficial ownership under the common law. Though it literally falls short of a true sale in Islamic law in the event of default, a closer look of the legal structure reveals the true nature of beneficial ownership. The mere fact that the ṣukūk holders can have recourse against the underlying asset justifies the conferment of true ownership. Nevertheless, the stakeholders may still need to consider the use of a public property as the underlying asset of a sovereign ṣukūk. With the increasing interest of emerging economies in ṣukūk to meet their long-term financing needs, this study is expected to guide the global Islamic finance industry on Sharī‘ah and legal issues relating to sovereign ṣukūk. IIUM 2015-12 Article PeerReviewed application/pdf en http://irep.iium.edu.my/47139/1/Legal_and_Beneficial_Ownership_in_Sovereign_Sukuk_-_Al-Shajarah.pdf application/pdf en http://irep.iium.edu.my/47139/4/47139_the_legal_and_beneficial_WOS.pdf Oseni, Umar Aimhanosi (2015) The legal and beneficial ownership conundrum in sovereign sukuk structuring. Al-Shajarah , 20 (S). pp. 111-148. ISSN 1394-6870 http://journals.iium.edu.my/shajarah/index.php/shaj
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HJ8003 Public credit. Debts. Loans. Claims KBP1 Islamic law.Shariah.Fiqh
spellingShingle	HJ8003 Public credit. Debts. Loans. Claims KBP1 Islamic law.Shariah.Fiqh Oseni, Umar Aimhanosi The legal and beneficial ownership conundrum in sovereign sukuk structuring
description	The past decade has witnessed the dynamics of ṣukūk structuring amidst legal complexities in cases involving enforcement of the rights of investors or ṣukūk holders in the event of default. This paper examines the legal and beneficial ownership in a typical sovereign ṣukūk structure and the specific rights of the parties under the existing practice and the classical Islamic legal framework. Specifically, the issue of public property often used in sovereign ṣukūk as the underlying asset of the transaction leaves much to be desired. Through a systematic content analysis, this study uses the qualitative legal research method to analyse a number of sovereign ṣukūk structures gathered from available ṣukūk prospectuses. The study finds that the nature of legal and beneficial ownership in ṣukūk transplanted from the conventional bonds structuring is different from the type of ownership envisaged in Islamic commercial law. It is found that the modern structure of ṣukūk products only allows for beneficial ownership to be conferred on the ṣukūk holders, and this does not contradict any principle of Islamic law when one considers the true nature of beneficial ownership under the common law. Though it literally falls short of a true sale in Islamic law in the event of default, a closer look of the legal structure reveals the true nature of beneficial ownership. The mere fact that the ṣukūk holders can have recourse against the underlying asset justifies the conferment of true ownership. Nevertheless, the stakeholders may still need to consider the use of a public property as the underlying asset of a sovereign ṣukūk. With the increasing interest of emerging economies in ṣukūk to meet their long-term financing needs, this study is expected to guide the global Islamic finance industry on Sharī‘ah and legal issues relating to sovereign ṣukūk.
format	Article
author	Oseni, Umar Aimhanosi
author_facet	Oseni, Umar Aimhanosi
author_sort	Oseni, Umar Aimhanosi
title	The legal and beneficial ownership conundrum in sovereign sukuk structuring
title_short	The legal and beneficial ownership conundrum in sovereign sukuk structuring
title_full	The legal and beneficial ownership conundrum in sovereign sukuk structuring
title_fullStr	The legal and beneficial ownership conundrum in sovereign sukuk structuring
title_full_unstemmed	The legal and beneficial ownership conundrum in sovereign sukuk structuring
title_sort	legal and beneficial ownership conundrum in sovereign sukuk structuring
publisher	IIUM
publishDate	2015
url	http://irep.iium.edu.my/47139/ http://irep.iium.edu.my/47139/ http://irep.iium.edu.my/47139/1/Legal_and_Beneficial_Ownership_in_Sovereign_Sukuk_-_Al-Shajarah.pdf http://irep.iium.edu.my/47139/4/47139_the_legal_and_beneficial_WOS.pdf
first_indexed	2023-09-18T21:07:06Z
last_indexed	2023-09-18T21:07:06Z
_version_	1777411006472912896

The legal and beneficial ownership conundrum in sovereign sukuk structuring

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