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Sharia Board to Issue Equity-based Ijarah Sukuk based on “Dominant Principles”

The Sharia Board of the Securities and Exchange Organization (SEO) has confirmed issuing equity-based Ijarah Sukuk based on “dominant principles”.

The Sharia Board of the Securities and Exchange Organization (SEO) has confirmed issuing equity-based Ijarah Sukuk based on “dominant principles”.

In Ijarah Sukuk, the interest of the bondholders is based on the rent they receive at certain times and the rental rate must be fixed in accordance with the Sharia law. Therefore, Ijarah Sukuk is a good instrument for risk-averse investors. Additionally, firms may use this kind of Sukuk as a resource containing cost-financing rate.

In the latest meeting, the SEO Sharia Board reviewed three petrochemical companies and stated that the majority of these companies' assets are rentable assets. Therefore, the lease of shares of these companies is approved based on the “dominant principle” since it is totally Shariah-compliant.

Ijarah Sukuk has been issued in the Iranian capital market since 2010; along with other Islamic financial instruments, considered one of the financing methods for companies. Furthermore, Iran’s capital market is regarded as a pioneer and leading market in Ijarah Sukuk and has witnessed great developments and progress in this instrument since its first inception.