Manama, Kingdom of Bahrain - The International Islamic Financial Market (IIFM) announced the publication of its Sukuk Al Ijarah Standard Documentation Templates. The suite of standardized documentation consists of Template Prospectus, Sale and Purchase Agreement, Ijarah Agreement, Service Agency Agreement, Purchase Undertaking, Sale and Substitution Undertaking and Declaration of Trust.
The purpose of the Sukuk standard documentation templates is to provide the industry with a standardized set of documents addressing clauses that are challenged and are repetitive during the drafting of the Sukuk prospectus and related issuance documentation, while also standardizing definitions and updating Shari’ah requirements.
The Sukuk issuers, lead arrangers, legal advisors and other related parties will greatly benefit from this suite of standard documents as it will lead to efficiency and cost reduction in drafting of voluminous Sukuk documentation for issuers and offer greater transparency and comfort to investors.
“This IIFM Sukuk Al Ijarah Standards for Asset-Based Sukuk are a culmination of extensive industry assessment, market consultation, working group deliberation and Shari’ah guidance. Going forward IIFM also plans to work with the industry on standardizing Asset-Backed Sukuk documentation as well as other Sukuk structures such as Sukuk Al Mudarabah (Tier 1 and Senior Unsecured) and hybrid Sukuk,” said Khalid Hamad Al-Hamad, Chairman of IIFM.
“Standardization of Sukuk documentation is a complex exercise considering that not all the clauses and information can be put in a standardized form. Hence, the aim of these document templates is to achieve maximum standardization level which will help in the robust development of the Sukuk market,” said Ijlal Ahmed Alvi, Chief Executive of IIFM.
The Standards were launched at a special webinar event organized by IIFM where an international panel of experts representing IIFM, Bank ABC Islamic, Credit Agricole CIB, Standard Chartered Bank, Clifford Chance LLP and DDCAP Limited spoke on the legal, operational, market and Shari’ah aspects of the documentation and their benefit to users as well as the positive impact of the standards in development of the market. The market share and potential of Ijarah Sukuk as well as other fast emerging hybrid structures were also discussed at the event. The panelists view Ijarah as the king of Sukuk, with market needs and innovation, the use of Ijarah structure is now embedded across many Sukuk. In the context of Sukuk and other Islamic financial instruments, the speakers also touched on the impact of regulatory driven Interbank Offered Rate (IBOR) transition to Risk Free Rates and IIFM efforts in organizing an industry level consultation process which will help Islamic standard-setting organizations in particular IIFM, AAOIFI and IFSB to provide guidance and benchmark protocols for the Islamic finance industry.
More than 150 participants from around 115 institutions based in 30 countries attended the webinar launch event. The participants were representatives from financial institutions, multilateral institutions, regulatory bodies, stock exchanges, law firms, accounting & business advisory firms and educational institutions.
Mr. Alvi thanked the IIFM Shari’ah Board for their invaluable guidance, Clifford Chance LLP for providing exceptional external legal counsel services, working group member institutions for their active involvement in the drafting and feedback exercise. He also acknowledged the financial grants received from The Waqf Fund (Bahrain) and the National Bank of Kuwait (Bahrain) to enable the completion of this project.
The IIFM Sukuk Al Ijarah Standard documentation templates are available for free and can be downloaded from www.iifm.net
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About International Islamic Financial Market (IIFM)
IIFM is a standard-setting body focusing on standardization of Shari’ah-compliant financial contracts and product templates relating to the Islamic Financial Services Industry (IFSI).
IIFM which is based in Bahrain and hosted by the Central Bank of Bahrain (CBB), was established in 2002 under the Royal Decree No (23) Year 2002 of the Kingdom of Bahrain as a neutral and non-profit infrastructure development institution, by the collective efforts of the CBB (formerly Bahrain Monetary Agency), Islamic Development Bank, Autoriti Monetari Brunei Darussalam (formerly Ministry of Finance Brunei Darussalam), Bank Indonesia, Bank Negara Malaysia (delegated to Labuan Financial Services Authority) and the Central Bank of Sudan.
Besides the founding members, IIFM is also supported by certain regulatory and government bodies such as Dubai International Financial Centre Authority, State Bank of Pakistan, The National Bank of Kazakhstan and by a number of international and regional financial institutions active in Islamic finance as well as other market players.
Information on IIFM and its activities is available on www.iifm.net
Media Contact:
Mr. Usman M. Naseer, Senior Officer, Business Development, IIFM
e-mail: usman.naseer@iifm.net
© Press Release 2020
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