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UAE:
The Dubai Financial Market (DFM) yesterday issued a reformed set of
‘Standards for Issuing, Acquiring and Trading Sukuk’ as part of its
effort to further enhance the regulatory environment of Islamic finance
and capital markets. According to a statement by DFM, the total value of
Sukuk listed on Dubai capital markets increased 103% to AED68.6 billion
(US$18.6 billion) by the end of the first quarter 2014 compared to
AED33.8 billion (US$9.2 billion) at the beginning of the 2013.
Seeking to address the ambiguities faced in listing and trading of Sukuk,
the new amendments outlines the listing procedures, rules for trading and
redemption as well as issuance guidelines and information required in a
Sukuk prospectus. It emphasizes the independence of an SPV as a legal
entity and its financial liability, from those of the Sukuk originator.
The new rules also increase the allowable percentage of cash and debt
from 70% to 90% of the total underlying Sukuk assets.
In terms of management and distribution, the new standards clarify the
nature of Sukuk investments in relation to Sukukholders’ entitlement to
gains (ghonm) and liability for losses (ghorm). They further reaffirm the
permissibility of reward distributions to Sukukholders as a donation from
the Sukuk manager; as well as the periodical calculation and payment of
the incentive to the Sukuk manager during the financial year.
The new regulations also afford lawful means of protection for
Sukukholders; as well as the identification of a Sukuk Shariah Committee
and the possible utilization of DFM’s Fatwa and Shariah Board as a
replacement in an event where the committee is unavailable.
Commenting on the improved regulations, Essa Abdulfattah Kazim, the
chairman of DFM and secretary-general of Dubai Islamic Economy
Development Center, said: “We deeply believe that this standard will
noticeably play a crucial role and further enhance Dubai’s position among
global Sukuk centers and put the emirate at the top as the centre for
issuing, acquiring, and trading Sukuk. This all-inclusive standard will
be the focal reference for Islamic finance institutions as well as Sukuk
issuers and investors globally, and encourage the issuance of Sukuk
instead of conventional bonds and the introduction of new Shariah
compliant financial products.”
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