In order to develop the sukuk (Islamic bond) market on a stronger footing, the Securities and Exchange Commission of Pakistan (SECP) has drafted the Issuance of Sukuk Regulations, 2012, to elicit public comments. The public can submit their comments by October 15. The regulations are aimed at facilitating the issuers and to provide comfort to the sukuk investors. The regulations broadly cover (i) eligibility and conditions for issuance of sukuk, (ii) disclosure and reporting requirements, and (iii) appointment of trustee and Sharia advisor. Under the regulations, any company or corporate body can issue sukuk. However, such company or corporate body shall have no over-due loan, the issuer’s as well as the instrument rating shall not be lower than triple B minus (BBB-), it has appointed a trustee through a trust deed to safeguard the interests of the sukuk holders, it has arranged appropriate security, where required, in the form acceptable to the trustee, it has obtained consent of a depository company to declare the sukuk as an eligible security for the purposes of depository system. Every company or corporate body shall before the issuance of sukuk, appoint a Shariah advisor who shall ascertain and shall give a fatwa that the concept on the basis of which the sukuk is structured and the business in which proceeds of the sukuk issue are to be utilized are not against the principles of Shariah. Where the sukuk are issued to the general public, the issuer shall prepare a prospectus containing all the information and disclosures as required under the ordinance. However, where the sukuk are issued through private placement, the issuer shall prepare an information memorandum and disclose therein all the material information including those as mentioned in the sukuk regulations. The issue of sukuk along with its salient features shall be reported by the issuer to the SECP within 10 days of the close of the issue.
