03 June 2022 - Events
The Securities and Commodities Authority of the UAE (the “SCA”), which regulates Sukuk offerings in the UAE and by UAE companies in non-UAE jurisdictions, passed a resolution requiring issuers of Sukuks (Sha'aria compliant bonds) to enhance disclosures in issuances, including providing a mechanism to resolve revenue allocation disputes in the event a Sukuk no longer complies with Islamic Law. A Sukuk is a bond that generates returns without violating the Islamic Law prohibition on receiving or paying interest. The resolution was issued after a UAE company, Dana Gas, stopped payments on its Sukuks due to a Fatwa (decree) that altered the interpretation of Islamic finance rules, rendering its Sukuks unlawful. Under the new disclosure requirements, issuers of SCA Sukuk offerings will explain the differences between UAE law and the law of the country where an offering occurs as well as any deviations from the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Fatwas that suggest deviations from AAOIFI standards must now also cite past cases on AAOIFI violations for evidentiary support in their legal reasoning. For more information see: http://www.mifc.com/index.php?ch=ch_contents_capital_markets&pg=pg_cm_global&ac=26427
This article was written with contributions from Nabeela Latif.