Sukuk and capital markets

Sukuk al-salam

Certificates that raise salam capital so the goods to be delivered belong to the holders; AAOIFI does not permit trading them.

Sukuk al-salam are certificates of equal value issued to mobilise salam capital, so that the goods to be delivered under the salam come to be owned by the certificate holders. AAOIFI's investment sukuk standard does not permit trading in salam certificates, because before delivery they represent a claim to goods owed rather than an asset in hand. They therefore suit holders who expect to keep the certificates to maturity, and the offering documents and investor disclosures should say so plainly.

Sources

AAOIFI Shari'ah Standards, English edition (full text, PDF): Shari'ah Standard No. 17, Investment Sukuk, items 3/3 and 5/2/14

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

Related terms

SalamA forward sale: the full price is paid at signing for precisely specified goods to be delivered later.SukukCertificates of equal value representing undivided shares in the ownership of assets, usufruct, services or a project.Tradability of sukukWhether sukuk may be sold on, which depends on what they represent: assets and usufruct, or debts and cash.Parallel salamA separate, independent salam with a third party that lets a party to a first salam offset its position in the same goods.