Sukuk al-mudaraba | Practical Law
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Sukuk al-mudaraba
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Sukuk al-mudaraba
Practical Law Glossary Item 3-501-0653
(Approx. 3 pages)
Glossary
Sukuk al-mudaraba
Also known as
mudaraba sukuk
. A form of
sukuk
derived from the
mudaraba
partnership structure. In a
sukuk al-mudaraba
:
The party seeking financing (
mudareb
) enters into an agreement with a special purpose vehicle (SPV) to manage certain assets owned by the SPV.
The SPV acquires the assets to be managed using the proceeds of a
sukuk
issuance.
The
mudareb
receives a fee for managing the assets but is not liable for any investment losses, which are borne solely by the SPV.
In some cases, the
mudareb
may also receive a portion of the profits.
The SPV uses the profits from the investments to make payments to the
sukuk
holders.
For more information on
sukuk al-mudaraba
, see
Islamic Finance Deal Structure: Sukuk al-mudaraba
.
For more information on Islamic finance in the US, see Practice Notes:
Islamic Finance: US Law Overview
.
Islamic Finance Structures and Products
.
For more information on Islamic finance in the UK, see Practice notes:
Islamic finance: UK law overview
.
A guide to key resources: Islamic finance
.