The risks of the noncompliance with the principles of shariah in Sukuk

Abstract

This paper aims to study the risks of the noncompliance with the principles of shariah in the Islamic investment sukuk that are issued by the Islamic financial institutions. It addresses the conception of the risk and its types. Then the paper highlights the conception of the sukuk and their types briefly. It also investigates the risks of noncompliance with the principles of shariah that faces the sukuk specifically the sale of sukuk in the face value at the end of the period of release (amortization). The paper also addresses the conception of amortization and its legal ruling. The study adopts inductive approach and analytical approach. The research has found a number of significant findings. It was found that the risk of the noncompliance with the principles of shariah is the risks arising from the lack of commitment of the shariah terms and their conditions. In addition to this, the practical reality of sukuk in the markets differs from the conceptualization of the Islamic juristic this is because the Islamic financial institutions view the permissibility of selling sukuk in face value at the end of the period of release, while most researchers including the International Islamic Fiqh Academy believe it is not permissible. The research suggests that the sukuk must be amortized at market value to avoid violating the terms and conditions of shariah.