Sukuk is a share in an asset, not a debt
A sukuk holder receives part of the income from the asset and bears part of its risk. As soon as an issue guarantees repayment of par regardless of what happens to the asset, it is economically a bond.
Purchase undertaking
An undertaking by the issuer to buy the certificates back at par at the end of the term is the most common structure that costs an issue its compliance. A buy-back at market or fair value as at the redemption date is permissible.
An identifiable asset
The issue must be backed by a specific asset or pool of assets that can be described and valued. Abstract "financing of the issuer's activities" will not do.
What to check in the prospectus
- the structure (ijara, mudaraba, musharaka, wakala, istisna) and its fit with the asset;
- the order in which profit and loss are allocated;
- the terms of early redemption;
- the Shariah board's opinion and its scope.