Sukuk Classification: Similarities and Differences
Similarities and Differences Between Certain Types of Sukuk
| Sukuk Type | Musharakah Sukuk | Mudarabah Sukuk | Murabahah Sukuk | Ijarah Sukuk | Salam Sukuk |
|---|---|---|---|---|---|
| Nature | Partnership in management and net profit | Partnership in net profit only | Deferred receivables (debt) | Deferred receivables (debt) | Deferred receivables (debt) |
| Participation in management | Yes | No | No | No | No |
| Return | Share of net profit | Share of net profit | Difference between total periodic payments and nominal value of the sukuk underlying asset | Periodic lease payment | Difference between product price and nominal value |
| Return known in advance | Not known | Not known | Known | Known | Not known (market price of the product obtained through Salam cannot be predetermined) |
| Payment | Periodic | Periodic | Periodic | Periodic | One-time |
| Redemption term | Within agreement period | Within agreement period | Within final payment | Within agreement period | From proceeds of product sale |
| Redemption price | Market value of the project | Market value of the project | No separate redemption payment | Market value of the asset | Market value of the product |
| Underlying asset | Project assets | Project assets | Sale transaction assets | Leased assets | Future production |
| Trading on secondary market | Permissible | Permissible | Not permissible | Permissible | Not permissible |
Similarities can be observed among different types of sukuk. The differences become clearly evident in their operational mechanisms. A comparative analysis of each type provides a clearer understanding of the distinctions between these uniquely structured certificates (Table 1). Notable differences from conventional securities include the absence of a separate redemption price in Murabahah sukuk, the lack of periodic payments in Salam sukuk (concluding with a single redemption), and the prohibition of trading these two types on the secondary market.
We have attempted to present some information about sukuk. We hope that through this series of articles, our readers have developed a basic understanding of sukuk. To further enrich this understanding, we present the following table, which illustrates the similarities and differences between sukuk, ordinary shares, and bonds.
Similarities and Differences Between Sukuk, Ordinary Shares, and Bonds
| Security Type | Ordinary Share | Sukuk | Bond |
|---|---|---|---|
| Issuance form | Equity security | Equity security | Debt security |
| Participation in corporate governance | Participates in management and income | Depends on type: full participation, profit sharing, debt obligation | Creates only a debt obligation |
| Maturity | None (perpetual) | Fixed maturity | Fixed maturity |
| Investor return | Dividend | Share of net profit or deferred markup | Guaranteed interest rate |
| Return of nominal value | Not guaranteed | Not guaranteed | Guaranteed |
| Potential difference between nominal and redemption value | Possible | Possible | Not possible |
| Asset-backed | Backed | Backed | Depends on type |
| Conceptual basis | Human intellect | Shariah | Human intellect |
| Regulation | Regulatory legal acts | Shariah & regulatory legal acts | Regulatory legal acts |
| Financing scope | Discretionary | Shariah-compliant | Discretionary |
| Trading on secondary market | Permissible | Permissible (depending on type) / Not permissible | Permissible |
Author: Sirojiddin Abrorov
Tashkent State University of Economics
Associate Professor, Department of Finance
Doctor of Philosophy (PhD) in Economics
Source: islommoliyasi.uz