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Key Facts

Sukuk Key Facts (Download)

Under this product, the Customer appoints the Bank as its agent to sell, purchase, transfer and safe keep the Sukuk ‎‎(Securities) on its behalf for an agreed upon agency and safe custody fee. In order for customers to enter into a ‎Sukuk transaction, they need to have a sub-custody account with SIB by signing a Sukuk custody agreement. After ‎such an agreement is signed, the customers can order the Bank to “buy and correspondingly sell Sukuk” as well as ‎transfer the Sukuk (internally or externally) on their behalf. ‎

Since the Customer owns the purchased Sukuk, profit generated from the Sukuk, if any, will directly be credited to ‎the Customer’s account. Similarly, in case of any loss, the Customer shall bear the loss.‎

Key Terms and Features:

Agent:  SIB which purchases or sells Sukuk from or to both the primary and secondary markets, for its Customers for a specified fee but is not responsible for decisions pertaining to the underlying Sukuk

Issuer“Issuer” means a legal entity that develops, registers and sells securities (e.g., Sukuk) to finance its operations”

“Sukuk” or “Units of Sukuk”Includes all Sukuk traded in local and international markets that are approved by SIB Investment Team. In all cases subject to any necessary regulatory Approval/permission(s) (as applicable)

SIB:  Sharjah Islamic Bank

Internal Shari'a Control Committee: a committee appointed by Sharjah Islamic Bank, consisting of a group of scholars specialized in Islamic financial transactions, independently supervises transactions, activities and special products, and ensures their compliance with Islamic Shari'a in terms of the bank's objectives, activities, operations and rules of conduct

Customer:  Means Investor and/or SIB’s existing customer(s) who is eligible for availing this product

Offering DocumentProspectus/offering memorandum containing the detailed structure and terms and conditions of each Sukuk, published by the respective Sukuk issuers for each Sukuk issuance

Bid/Offer Price:  The prevailing sell and buy prices respectively for the concerned Sukuk, quoted in the secondary market

Bid/Offer Yield to Maturity/Call:  

• The expected rate of return for the respective investor in case a particular Sukuk runs through to its maturity or next call date

ValuationCurrent market value of the Sukuk, is the Market Bid price and/or buying rate price times the number of units held by the Investor, plus the accrued profit due which is the applicable profit rate of the Sukuk divided by 360 and multiplied by the number of days from the last coupon/profit payment made by the Issuer

Face Value:  The value of the underlying Sukuk at the price of 100/ Par

Validity:  Refers to the period that a placed Sukuk  order is valid for market execution by the Promoter/Agent

• The product will be subject to an annual Management fee of up to 0.10% (excluding VAT) of the aggregate Investment amount. This fee shall be payable without any deduction or set off and for value on the due date 

• In addition, the Agent may charge the Customer its agency fee expressed as a percentage of the transacted Investment amount, the detail of which shall be provided in the order form

Credit ratings:  Not all Sukuk have credit ratings, however for some Sukuk, the three top credit rating agencies, the S&P, Moody’s, and Fitch have credit ratings assigned for some Sukuk. Please check credit rating for the particular issue on the Order Form

Accrued Profit: 
• The Bank as an agent of the customer will credit any profit distributed by the issuer to the customer’s account

• In case of selling the Sukuk on behalf of the customer before distribution of the profit by the issuer, the accrued profit due which is the applicable profit rate of the Sukuk divided by 360 and multiplied by the number of days from the last profit payment made by the Issuer, the Customer will pay or receive the accrued profit if he is buying or selling the Sukuk respectively

Payment FrequencySukuk profit payments are paid semiannually or as describe in offering documents

Currency:  Sukuk are denominated in US dollars or UAE dirham, unless stated otherwise on the Offering Document

ISIN:  Every public Sukuk can be identified using an ISIN (International Securities Identification Number) code, which is unique to each Sukuk available in the market. Please check the ISIN on the order form for the customer  order

Minimum Investment:  Amount specified in the Offering Document of the Sukuk is subject to a minimum of USD 200,000 (or its equivalent) or such other amount as may be prescribed by the Promoter/Agent or Issuer

Issue Date:  The date at which the pricing of the concerned Sukuk issuance has taken place and is available for trading in the secondary market

Tenor/Maturity: It is the date specified by the issuer to redeem the outstanding amounts. On this date, the issuer pays the full principal plus any profit due to investors at Par value

MurabahaUnder a Murabaha contract, based on a promise obtained from the customer upfront, Bank purchases the underlying assets and subsequently sells it to the customer at a sale price, which is a combination of cost price plus profit amount calculated with reference to profit rate. The sale price is payable by the customer during the term of finance

Service Agency:  Under the service agency, Bank appoints the customer as its service agent to manage underlying assets. The Bank purchases these underlying assets. Income generated by the underlying assets to the extent of expected profit rate is paid to the bank and excess is for the customer as incentive

FinanceFacility amount provided by Sharjah Islamic Bank PJSC (the Bank) to allow the Bank's Customer(s) either to increase the magnitude of investment or to seek liquidity against existing investment for personal use. Bank use National Bonds Murabaha product to support finance against the SUKUK. Key statements are to be read in conjunction to Key statement, terms and conditions of National Bonds Murabaha product

Collateral:  Sukuk, Mutual Funds (including Exchange Traded Funds – ETF), Equities or any other approved investment

Finance to Value (FTV) / Leverage: Leverage amount to the market value of Collateral against which Finance is provided. E.g. If assigned leverage is 1:1 (@ 50% FTV) for investment of AED 1 Million; the Bank will provide Finance of AED 500,000 to the Customer

Margin Call:  The FTV threshold at which Customer must make a cash payment or provide additional Collateral acceptable to the Bank, within 2 business days of the Bank’s notice of a Margin Call, of sufficient value to regularize the FTV back to the original FTV. If the Margin Call is not regularized within this time period, the Bank may immediately accelerate, where applicable, all amounts due under the Finance, and liquidate the investment

Secured Obligations:

• Investment for which Finance is availed will be held under lien until the Finance is fully settled. A Personal Guarantee of the authorized person is required in respect of Customer(s) who are corporate entities. Additional Collateral provided for Margin Call will also be held under lien
• The Bank may dispose of the Investment and/or additional Collateral in the event of failure to service Margin Call or pay Finance at maturity. Any outstanding amounts due under the Finance may be settled from any other account held by the customer at the Bank

Notice Period:  

• The Bank may amend the terms and conditions of the product documents subject to 30 days calendar days’ written notice with express consent of the Customer except for notice related to amendments by the Sukuk issuer, which have to be satisfied in terms of the specific notice
• The Bank may amend the Terms and Conditions of Investment Product Finance subject to sixty (60) calendar days’ notice except for notice related to pre-closure and Margin Calls which have to be satisfied in terms of the specific notice
• We may give notice of variations by any means available, including but not limited to email and secure e-message service and by publication on our website (www.sib.ae)

Key Risks:


• Investment Product Finance could result in partial or, in extreme cases, total loss of the customer own contribution for the investment underlying the Finance
• At maturity, the customer will have to make payment for all the customer obligations under Finance even if the performance of the investment is negative
• Failure to meet the customer payments obligations on time may negatively affect the customer credit rating, which will limit the customer ability to access financing in the future


Market Risk

• Decline in market value of investment due to systematic factors may affect performance of capital markets and lead to significant erosion of your capital

• The Customer being owner of the Sukuk will always bear the ownership risk of the Sukuk except in case of willful negligence, misrepresentation or breach of the terms and conditions of the agency agreement by the Agent


Liquidity Risk

• Delay in redeeming the investment at a  favorable price due to lack of demand resulting in loss in the value of Customer investment

Capital Risk

• Investment in Sukuk is not capital protected and the returns are not guaranteed. Customer could face partial to significant loss of invested capital

Credit Risk

• Default on the payment of obligations by the Issuers of the underlying Sukuk could reduce the value of the Sukuk

Currency Risk

• Investment in Sukuk may be affected by currency exchange rates that could reduce the value of Customer investment even though the market return is positive 

Performance Risk

• Past performance of the Sukuk is not a reliable guide to future performance

Sharia Risk

• All the Sukuk are purchased by SIB on behalf of the Customer shall be approved by the ISSC. Customer should also do its own independent assessment as to the Sharia compliance of the Sukuk

Profit Rate Risk

• Profit rate fluctuations in the financial markets will impact the value of the underlying Sukuk for better or worse

Default/Issuer Risk

• Issuers are at risk of defaulting on their financial obligations, which may also include Sukuk they have issued, and hence by buying these Sukuk, Customer is open to default risk of the Issuer of the Sukuk. Default Risk is the risk that a buyer of a Sukuk takes on, in case the Issuer will be unable of honor or meet their financial obligations towards the Investors 

• Customer must refer to the Offering Document for further details on risks pertaining to any concerned Sukuk.

Cooling Off

• The customer waives his/her Cooling-Off Option, the transaction will be processed as soon as possible, as per the Bank’s normal conduct of business


• Investments in Sukuk under this product is not a bank deposit and as such is not capital protected or capital guaranteed and may result in loss of Customer’s principal invested amount
• Sharjah Islamic Bank is merely a Promoter/Agent of the Sukuk trading/dealing on the Customer’s behalf on execution basis only and is not liable for the performance of the Sukuk or its valuation.
• Past performance of an investment is not a reliable guide to or indicator of future performance
• Customer should seek professional financial and Sharia, accounting & regulatory advice(s) prior to deciding to invest through this product and not rely on the Agent in making any investment decision on Customer’s behalf
• Customer should carefully review the Offering Documents, including the prospectus, Master Collateralized Murabaha, Transaction form and Pledge agreement , of the respective Sukuk and seek professional advice (including financial, Sharia, accounting, regulatory and legal advice) where the documents are not available in the preferred language of the Customer

Disclaimer This product has been approved by the Sharjah Islamic Bank’s Internal Sharia Supervision Committee

By signing this document, I/We acknowledge that I/We have read, understand, and agree to all of the above terms and product facts outlined which have been explained to me/us

First Applicant:Second Applicant:

Name:  ____________________________

Name: ____________________________

Account No: ________________________

Account No: _______________________

Signature: __________________________

Signature: ________________________
Date: ______________________________Date: _____________________________



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