Sukuk Guidelines revised by Malaysian Securities Commission

26 July, 2011: The Securities Commission Malaysia has issued revised Islamic Securities Guidelines (Sukuk guidelines), on 12^th July, 2011 which will replace the Guidelines on the Offering of Islamic Securities issued on 26 July 2004, in an effort to enhance the efficiency and competitiveness of the Malaysian sukuk market.

The revised guidelines facilitate transparency in issuances and enable issuance and documentation standards that would be comparable by international standards and practices. Some of the highlights of the revised guidelines include the following:

• Greater clarity in complying with Shariah rulings, principles and concepts  
• Expediting approval time for issuance of sukuk
• Greater disclosure of relevant information
• Issuance and documentation standards to be comparable with international best practices

• Enhancing the effective role and responsibilities of key transaction parties, namely principal adviser, advisers, credit rating agencies and sukuk trustees for the benefit of sukuk holders.

The guidelines set out the relevant Shariah rulings and principles to be complied with by all issuances of ringgit-denominated sukuk and provide clarity on the naming of sukuk issuance. The name of the sukuk should not be misleading and should be named according to the underlying Shariah contract. In case the sukuk is based on multiple Shariah principles then sukuk shall be named according to the obligor or issuer.   

Malaysia is currently the largest sukuk market in the world and accounts for 65% of the global issuances and the only country in the world to have issued 3 international sovereign sukuk and the revised guidelines are with the intent to attract local and international issuers. The text of the revised guidelines is available here.

[Reported by: Nidhi Bothra]

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