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.‎

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 Document: Prospectus/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

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

Valuation:  Current 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

• 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

• 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 Frequency:  Sukuk 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

Murabaha: Under 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

Finance:  Facility 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

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

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

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