The emergence of the Islamic capital market in 2002 with the inaugural sukuk issued by the Malaysian Governement spearheaded the capital markets exponentially as it became the blue print to an increasing variety of instruments which can be used to create an efficient Islamic portfolio in line with portfolio theory and financial planning.
Increasingly, many companies have begun to tap into the sukuk market to take advantage of the increased liquidity in the Islamic world.
This article seeks to give a basic understanding of the sukuk market and to understand what are the various common types of sukuk so that accountants can tapped into this market for their financing needs.
What is sukuk?

• Frequently referred to as an Islamic bond but more accurately translated it is an Islamic investment certificate.
• Unlike a bond where the issuer is contractually obliged to pay to the bondholders on certain specified dates, interest and principal, under a sukuk structure, holders of the sukuk each hold an beneficial ownership in the underlying assets. Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as been entitled to share in the proceeds of the realization of the sukuk assets.
• Is a form of assets-backed securities
• It requires an underlying tangible assets transaction either in an outright sale and purchase transaction or in a master lease transaction
• The primary condition for the issuance of sukuk is the existence of assets on the balance sheet of the issuing entity that wants to mobilize its financial resources.
• However, the assets need to be Shariah compliant. Hence, the identification of a suitable asset is a critical step in the process of issuing sukuk certificates.

If you noticed, it is very important that sukuk assets need to be Shariah compliant.
So what is Shariah compliant?
Shariah-compliant investment is “ethical” investment organized in compliance with Islamic law.
To comply with Shariah Law, investment must not involve ‘riba’, a kind of usury practised during pre-Islamic times among the Arabs, which involves delaying the payment of debt in return for an increase in its amount – in other words, interest.
For example, Shariah property investment funds must not rent properties to organizations involved in alcohol, armaments, cinema, conventional financial services, tobacco, pornography, pork or gambling
The common types of sukuk are as follows:

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