Legal documentation in islamic financial institutions

English The Islamic wealth management has been part and parcel of Islamic finance. TK Medium of instructions: The Conference was attended by senior representatives of Islamic financial institutions, accounting and auditing firms, legal firms, universities and higher learning institutions, and media, from across the world.

Profits and losses are shared between the investors, who also bear the risk of loss. The first example was rent on property. Securitisation Background of the trainer: In Islamic finance, the obligation to pay often arises from commerce-type transactions such as lease or sales and is usually predicated on particular Islamic contracts.

The Islamic financial institution may receive an agreed management fee. The mathematical formulas are acceptable as there are no Sharia issues with these calculations.

Surah an-Nisaa have identified the quantum each of beneficiaries their rightful portion. Speculation The Shariah does not permit speculation or gambling, or maisir. An Islamic financier is looking for a return on its capital which compares with interest that a conventional bank would expect.

Provided the Islamic facility is kept separate from the other facilities to avoid being tainted by riba, Islamic financial institutions can become involved in projects notwithstanding that interest may be paid under the conventional facilities.

Generally, Islamic finance products although not based on lending still create a payment obligation. Hoarding Trade and enterprise, which can generate real wealth for the benefit of the community as Legal documentation in islamic financial institutions whole, are encouraged between partners sharing profits and losses.

The Special Mudaraba will stipulate the conditions of the participation and describe in detail the underlying contract documents to be entered into by the Mudarib, the purpose for which the funds should be employed and the obligations of the parties involved. The IIFM workshop was appreciated by the attendees and the participants benefited from the technical information imparted by the speakers.

The issues that may arise may not just relate on the documentation alone, but also in the legal framework in which such contracts are to be enforced. The process of Ijara can be used for equipment as well as property.

And will it work. The investor is not liable for losses beyond the amount of the capital initially subscribed and the manager which need not invest its own money would not bear a share of any losses other than its own time and effort.

Hoarding money is improper; money is merely a means of exchange and should not be treated as a commodity. However, its role is different and will involve confirming whether or not an investment which has been approved for business reasons is acceptable from an Islamic perspective.

She was also invited by the Banks to conduct in-house training for the Bank Officers. The Islamic financial institution funds the manufacturer during the construction of the asset, acquires title to that asset on completion and either immediately passes title to the developer on agreed deferred payment terms or, possibly, leases the asset to the developer under an Ijara wa Iqtina.

Uncertainty The existence of uncertainty, or gharar, in a contract is also prohibited as it requires the occurrence of an event which may not occur. She is an author and now runs her own business advisory, training and legal consultancy.

We are not supposed to leave our children in proverty. The following example highlights the acceptability of quoting the profit as a percentage in an Ijara transaction: Deferred payment terms may be agreed and the arrangement may be secured.

The funds so provided will usually be those of its investors rather than the Islamic financial institution, with the Islamic financial institution acting as trustee for those investors and thereby assuming fiduciary responsibilities.

The book revolves around a critique of the current regulatory developments, which the authors feel will be ineffective in fixing the structural flaws in banking. All legal documentation in Islamic finance does provide for payment default.

The Islamic financial institution may either put up all the funds itself and undertake responsibility for investing them, or alternatively it can provide funds to the customer who then acts as Mudarib. They proceed to purchase the same home with those funds.

He went on to provide in-depth explanation on key terms of the master agreement, Islamic hedging product templates and soon to be developed Islamic Credit Support Deed.

Justice, equity, fairness and morality are values which underpin the entire Islamic way of life, of which commerce is only a part. The deposits represent on-balance sheet loans by the depositors to the Islamic financial institution that is required to maintain a liquidity ratio of per cent for such accounts.

Accordingly, many financial institutions have a religious board or a Shariah adviser to ensure compliance with the principles of Shariah and to provide an opinion, or fatwa, when required. While it may appear contrary to the Sharia, it is acceptable to describe the profit on an Islamic finance transaction as a percentage.

Typically, a special purpose company will purchase the asset in question and lease it to the ultimate purchaser under back to back arrangements and will issue Sukuk certificates under a note issuance facility entitling the holders of the Sukuk to a pro rata ownership of the asset and a right to receive a proportion of the rental payments.

Ijlal Ahmed Alvi, in his Opening Remarks highlighted on the expansion of Islamic finance and increasing sophistication in Islamic financial products and arrangements.

The Islamic financial institution and the customer provide financing for a specified project in agreed proportions. The Islamic financial institution then sells on the equipment or goods to its customer at cost plus a reasonable profit. Besides the founding members, IIFM is also supported as member by certain regulatory and government bodies such as State Bank of Pakistan, Dubai International Financial Centre, Indonesia Financial Services Authority, The National Bank of Kazakhstan, and by a number of international and regional financial institutions and other market participants.

• Advised the UK Financial Ombudsman on dealing with customer complaints relating to Islamic financial institutions and products.

• Advised AAOIFI in Bahrain on the review of its Shari’ah Title: Co-Chairman & Partner at Dome. ASIM KHAN. Asim Khan is a Chartered Accountant with more than 16 years’ experience in financial services (including conventional and Islamic financial institutions) and the oil & gas industries across the Asian sub-continent, Middle East and Europe, while working with top tier organizations such as PricewaterhouseCoopers, KPMG and Deutsche Bank.

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2-Day Workshop: Highlighting Tips and Procedures on Legal Documentation for Islamic Securities Products ” Techniques and Strategies for Comprehensive Understanding On Legal Documentation for Islamic Securities Instruments “. Payment default is contemplated by Islamic finance.

Shari'ah Non-compliance Risk Management and Legal Documentations in Islamic Finance

All legal documentation in Islamic finance does provide for payment default. Perhaps what is not contemplated is the unintended consequences of a default in relation to the shariah contract. This is an area where there is not much case law, but the. SHARIAH GOVERNANCE IN THE ISLAMIC FINANCIAL INSTITUTIONS IN MALAYSIA Zulkifli Hasan emphasize on its legal framework.

contributor in terms of growth and profit to the Islamic financial institutions in Malaysia. (b) Documentation Not only the concept of the product must be Islamic, but its documentations as well. interpretation, legal documentation, and market education are the keys to success.

The moves toward central Sharia boards and external Islamic financial institutions can use to invest in infrastructure, complementing the existing Special Purpose Company (SPC) regime.

Legal documentation in islamic financial institutions
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Legal, Documentation and Shariah Risk in Islamic Banking and Finance