The document provides guidance on structuring financing proposals to attract Islamic financing. It discusses reframing conventional loan schemes as Sharia-compliant partnership or business deals. Various Islamic finance structures are presented, including diminishing musharakah, ijarah, mudarabah, and sukuk. The key lessons are that Islamic financiers do not provide pure interest-based loans and the deal must be structured as a real business partnership or contract.
Basic Concepts Applicable to All Borrowers & Lenders (Series: Business Borrow...Financial Poise
A business borrows when it purchases goods or services on credit. And a small business may only “borrow” money in this fashion. At the other extreme is a large business with multiple lending facilities, with multiple lenders. Regardless, and regardless of the type of loan (i.e. cash flow, asset-based, etc.), many of the concepts are the same. This webinar arms the attendee with the basic vocabulary necessary to negotiate any type of loan.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/basic-concepts-applicable-to-all-borrowers-lenders-2020/
Sukuk are financial certificates that are structured to comply with Islamic law and its prohibition on interest. They represent ownership in an underlying asset or business venture that is shared between the investor and issuer. While sukuk aim to avoid interest, some scholars argue that present sukuk structures effectively offer fixed, interest-like returns that are guaranteed regardless of the performance of the underlying asset. There is ongoing debate around whether sukuk truly avoid interest or effectively evade Islamic lending limits.
Crowdfinance -101 (Series: Crypto, Crowdfunding & Other Crazy Concepts)Financial Poise
What is the “crowd” in Crowdfinance? What does the crowd thus buy and by what means and modes? And why should the crowd do this rather than put its money to work otherwise? What are the old (and continuing) modes for marketing and selling private securities? What is it like to purchase private securities from on-line portals? How are risks of fraud and mistake allocated there? Do on-line portals help get the rest of us in on unicorns in utero? How are equity securities purchased by the crowd turned into money? Is there a secondary market for private securities? Should ICOs be understood as crowdfinance by other means?
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/crowdfinance-101-2021/
The document discusses key aspects of company directorship under the Indian Companies Act 2013, including:
1. Directors are appointed by the company's articles, shareholders, existing directors or third parties to manage the company's affairs.
2. Directors must obtain a Director Identification Number (DIN) and can be removed by shareholders, the central government or courts.
3. The document outlines the duties and liabilities of directors, such as ensuring compliance with the company's objectives and applicable laws.
This document provides an overview of fund-based financial services. It discusses six main types of fund-based services: 1) leasing, 2) hire purchase, 3) consumer credit, 4) factoring, 5) venture capital financing, and 6) housing finance. For each type, it provides definitions, key features, and advantages. The overall purpose is to classify and explain different methods of providing structured financing that is secured or supported by company assets.
Special Purpose Vehicals Securitizationfinancedude
Special Purpose Entities (SPEs) are legal entities created for specific purposes in structuring securitization transactions. SPEs are critical components of the $5.2 trillion U.S. securitization market, which provides liquidity to financial institutions and consumers through products like mortgages and credit cards. SPEs hold pools of financial assets, issue securities to investors, and protect investors from bankruptcy risk of the financial institution that established the SPE. Accounting standards require disclosure of risks and obligations associated with SPE transactions, even if the SPE is not consolidated on the financial institution's balance sheet.
The important functions of a financial manager include:
1. Providing capital for business operations through programs and maintaining relationships with investors.
2. Managing short-term financing from banks and collections from customers.
3. Planning and controlling business operations through reporting and evaluating performance.
Debentures are debt instruments issued by companies as evidence of debt. Common types include secured/unsecured, convertible/non-convertible, and redeemable/perpetual debentures. Preference shares are hybrid instruments with characteristics of both debt and equity.
The balance sheet shows a company's assets, liabilities, and shareholders' equity on a particular date. Ratio analysis evaluates the financial health and performance of
This document provides an overview of Sukuk, which are Islamic investment certificates that represent ownership in an underlying asset. Sukuk offer risk diversification for investors and are asset-backed, tradable, and Sharia-compliant. The document discusses various Sharia contracts that can underlie Sukuk structures, including Murabahah, Ijarah, Mudarabah, and Musharakah. It also compares key differences between Sukuk and conventional bonds, such as Sukuk representing ownership in an asset while bonds represent debt. The document outlines reasons for issuing Sukuk, including raising funds for projects in a Sharia-compliant way and tapping both Islamic and conventional investor bases.
Basic Concepts Applicable to All Borrowers & Lenders (Series: Business Borrow...Financial Poise
A business borrows when it purchases goods or services on credit. And a small business may only “borrow” money in this fashion. At the other extreme is a large business with multiple lending facilities, with multiple lenders. Regardless, and regardless of the type of loan (i.e. cash flow, asset-based, etc.), many of the concepts are the same. This webinar arms the attendee with the basic vocabulary necessary to negotiate any type of loan.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/basic-concepts-applicable-to-all-borrowers-lenders-2020/
Sukuk are financial certificates that are structured to comply with Islamic law and its prohibition on interest. They represent ownership in an underlying asset or business venture that is shared between the investor and issuer. While sukuk aim to avoid interest, some scholars argue that present sukuk structures effectively offer fixed, interest-like returns that are guaranteed regardless of the performance of the underlying asset. There is ongoing debate around whether sukuk truly avoid interest or effectively evade Islamic lending limits.
Crowdfinance -101 (Series: Crypto, Crowdfunding & Other Crazy Concepts)Financial Poise
What is the “crowd” in Crowdfinance? What does the crowd thus buy and by what means and modes? And why should the crowd do this rather than put its money to work otherwise? What are the old (and continuing) modes for marketing and selling private securities? What is it like to purchase private securities from on-line portals? How are risks of fraud and mistake allocated there? Do on-line portals help get the rest of us in on unicorns in utero? How are equity securities purchased by the crowd turned into money? Is there a secondary market for private securities? Should ICOs be understood as crowdfinance by other means?
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/crowdfinance-101-2021/
The document discusses key aspects of company directorship under the Indian Companies Act 2013, including:
1. Directors are appointed by the company's articles, shareholders, existing directors or third parties to manage the company's affairs.
2. Directors must obtain a Director Identification Number (DIN) and can be removed by shareholders, the central government or courts.
3. The document outlines the duties and liabilities of directors, such as ensuring compliance with the company's objectives and applicable laws.
This document provides an overview of fund-based financial services. It discusses six main types of fund-based services: 1) leasing, 2) hire purchase, 3) consumer credit, 4) factoring, 5) venture capital financing, and 6) housing finance. For each type, it provides definitions, key features, and advantages. The overall purpose is to classify and explain different methods of providing structured financing that is secured or supported by company assets.
Special Purpose Vehicals Securitizationfinancedude
Special Purpose Entities (SPEs) are legal entities created for specific purposes in structuring securitization transactions. SPEs are critical components of the $5.2 trillion U.S. securitization market, which provides liquidity to financial institutions and consumers through products like mortgages and credit cards. SPEs hold pools of financial assets, issue securities to investors, and protect investors from bankruptcy risk of the financial institution that established the SPE. Accounting standards require disclosure of risks and obligations associated with SPE transactions, even if the SPE is not consolidated on the financial institution's balance sheet.
The important functions of a financial manager include:
1. Providing capital for business operations through programs and maintaining relationships with investors.
2. Managing short-term financing from banks and collections from customers.
3. Planning and controlling business operations through reporting and evaluating performance.
Debentures are debt instruments issued by companies as evidence of debt. Common types include secured/unsecured, convertible/non-convertible, and redeemable/perpetual debentures. Preference shares are hybrid instruments with characteristics of both debt and equity.
The balance sheet shows a company's assets, liabilities, and shareholders' equity on a particular date. Ratio analysis evaluates the financial health and performance of
This document provides an overview of Sukuk, which are Islamic investment certificates that represent ownership in an underlying asset. Sukuk offer risk diversification for investors and are asset-backed, tradable, and Sharia-compliant. The document discusses various Sharia contracts that can underlie Sukuk structures, including Murabahah, Ijarah, Mudarabah, and Musharakah. It also compares key differences between Sukuk and conventional bonds, such as Sukuk representing ownership in an asset while bonds represent debt. The document outlines reasons for issuing Sukuk, including raising funds for projects in a Sharia-compliant way and tapping both Islamic and conventional investor bases.
Sukuk can be issued through various securitization structures. Securitization involves pooling assets and repackaging them into marketable securities known as sukuk. A special purpose vehicle (SPV) is typically used to hold the assets and issue the sukuk. The sukuk represent undivided ownership interests in the underlying assets, with profits distributed from the assets' revenue. Common asset-based sukuk include those backed by murabahah contracts, ijarah contracts through asset sale-leaseback, and receivables. The SPV provides bankruptcy protection for investors if the originator entity encounters financial problems.
Investment banks act as underwriters or agents for corporations and municipalities issuing securities. They maintain markets for previously issued securities and offer advisory services to investors. Unlike traditional banks, investment banks do not accept deposits or provide loans. Investment banking facilitates mergers and acquisitions, private equity placements, and corporate restructuring.
Bankruptcy Claims Trading (Series: Bankruptcy Transactions: Advice for the Ad...Financial Poise
Claims Trading in bankruptcy cases has advanced and grown in sophistication swiftly in recent history. Companies and their advisors should be prepared before wading into these waters. How will a claim be treated once transferred? What steps should a company acquiring a claim take to ensure the claim is paid? How should a claim be valued? What kind of documentation will be needed to properly transfer the claim? If a dispute arises regarding the claim, how should the acquiring company defend itself? This webinar focuses on understanding these issues and addressing best practices for advanced reorganization practitioners and advisors working on the cutting edge of bankruptcy transactions.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/bankruptcy-claims-trading-2020/
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/bankruptcy-claims-trading-2020/
This document discusses various types of financial services including leasing, hire purchase, and venture capital. It provides details on:
- The process of leasing, including the steps and types (finance lease, operating lease, sale and leaseback).
- How hire purchase works, including terms, process, and features.
- The meaning of venture capital, how it provides funding to startups and small businesses, and characteristics like long time horizon and equity participation.
- The development of venture capital in India, including the first VCFs established and rules/regulations from SEBI and the Indian Venture Capital and Private Equity Association.
This document discusses the nature and scope of financial services. It begins by defining financial services and intermediation. It then describes the traditional and modern activities of financial services, including fund-based activities like underwriting and non-fund based activities like advisory services. Modern activities include project advisory, M&A assistance, and risk management services. Revenue sources include fund-based income from interest and investments, and fee-based income from services. Financial innovation was necessitated by factors like low profitability, competition, economic liberalization, and improved customer expectations.
Financial assets are non-physical claims or rights to cash flows or other assets that are represented by a paper or electronic certificate. Unlike tangible real assets like land or equipment, financial assets derive their value from contractual agreements rather than physical attributes. Common types of financial assets include stocks, bonds, bank balances, and investments that can be readily converted into cash. Marketable securities refer to liquid financial assets that are easily traded on organized markets and can be quickly converted to cash at a reasonable price, such as commercial paper, money market instruments, and certain stocks and bonds.
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
The document is a report on financial services that discusses securitization. It contains:
1) An introduction to securitization, the process of pooling and selling existing assets to a Special Purpose Vehicle which then issues asset-backed securities.
2) Details on the entities involved in securitization - originator, special purpose vehicle, obligor, servicer, trustee, rating agency, and structurer.
3) The regulatory framework and history of securitization deals in India, including some of the largest deals.
The document discusses financial services. Financial services refer to services provided by the finance industry, which encompasses organizations that deal with money management like banks, credit card companies, insurance companies, brokerages, and investment funds. Financial services involve at least two parties, the service provider and user. They are intangible and require innovation. Financial services can be broadly classified into traditional and modern activities. Traditional activities include fund-based activities like lending and non-fund based activities. Modern services include mergers and acquisitions advising, capital restructuring guidance, and acting as trustees. Financial services are also classified as fund-based, involving acquiring assets/funds for customers, or fee-based, where institutions earn income through fees. Financial
Crowdfunding from the Start-Up's Perspective (Series: Crowdfunding)Financial Poise
How can businesses use the tools created by the JOBS Act to access capital? This webinar compares raising money online to traditional methods of capital raising. It also compares each of the different titles available under the JOBS Act. Finally, we discuss and compare the differences between security based crowdfunding and rewards based crowdfunding, exploring those instances where such a method would make sense.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/crowdfunding-from-the-start-ups-perspective-2021/
The document discusses securitization, which involves converting illiquid loans and receivables into marketable securities. Securitization originated in Denmark by selling bonds backed by equal amounts of loans. It later evolved in the US through innovations like slicing loan portfolios into tradable securities. A key part of securitization is the use of a special purpose vehicle (SPV) that purchases the loans, issues securities to investors, and uses the loan payments to repay investors. This separates the loans from the originator, protecting investors. Securitization provides originators with liquidity and long-term funding while transferring risk off their balance sheets.
The document provides an overview of recent developments in pensions investment law and practice. It discusses legal issues trustees should consider when making investments, including ensuring proper investment advice and delegating decisions appropriately. It also summarizes new European regulations on securities financing transactions that will require reporting, record-keeping and risk warnings. Finally, it provides updates on the longevity market and an upcoming seminar hosted by Linklaters on pensions investment issues.
This document provides an overview of financial services in India. It discusses the concept and scope of financial services, including both traditional and modern activities. Traditional activities include fund-based activities like underwriting shares and non-fund based activities like merchant banking. Modern activities include services like project advisory, M&A advisory, and risk hedging. The regulatory framework for financial services in India involves the RBI and SEBI. One type of modern financial service discussed in detail is leasing, including the concept, process, types (financial, operating, leverage, sale and lease back), advantages, and history of leasing in India.
The document discusses the roles and responsibilities of merchant bankers in India according to SEBI regulations. Key points:
- Merchant bankers are regulated by SEBI and involved in public issues, rights issues, open offers, and buybacks.
- They must meet requirements for capital, staffing, experience, and qualifications.
- As lead managers, they perform key functions like pricing issues, marketing, and preparing offer documents.
- Post-issue, they monitor allotments and refunds, file reports, and ensure investor grievances are addressed.
Securitization is the process of converting future cash flows from assets into marketable securities that can be sold to investors. An originator transfers a pool of financial assets like loans or receivables to a special purpose vehicle (SPV). The SPV issues securities called pass-through certificates or pay-through certificates to investors to fund the purchase. Investors receive periodic payments from the cash flows generated by the underlying assets. This allows the originator to raise funds and transfer assets off its balance sheet.
This document provides an overview of merchant banking services. It defines merchant banking and traces its origins in London financing foreign trade. Merchant banking services include project counseling, loan syndication, issue management, underwriting public issues, portfolio management, advising on NRI investment, mergers and acquisitions, and offshore finance. They help raise funds for projects, market corporate securities to the public, insure companies issuing public stock, manage investor portfolios, and facilitate foreign investment.
The document discusses various Shari'ah issues related to different types of sukuk structures. It summarizes the key rulings of the 2008 AAOIFI Resolution on sukuk, which stated that sukuk must represent tangible assets and not debts. It also prohibited unconditional purchase undertakings at nominal value for equity-based sukuk, though some alternatives were permitted. The document then examines issues in primary and secondary markets for sale-based sukuk, as well as concerns around ensuring return and capital certainty in equity-based sukuk structures. Throughout, it analyzes how different rulings and approaches have impacted the global sukuk market.
TROs and Preliminary Injunctions (Series: Newbie Litigator School 101 - Part 1)Financial Poise
Sometimes—often at the beginning of a case—you need the court to take immediate action to protect your client’s interests or to maintain the status quo while the litigation progresses. This webinar discusses procedures and strategies for obtaining temporary restraining orders and preliminary injunctions. The topics discussed include the procedural and substantive requirements for obtaining TROs and preliminary injunctions, some best practices for how to succeed on motions seeking TROs and preliminary injunctions, and how to challenge and defeat those motions.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/tros-and-preliminary-injunctions-2021/
The document discusses financial services and activities. It defines financial services as mobilizing and allocating savings, and notes they are customer-oriented, intangible, require simultaneous performance by suppliers and consumers, and are people-intensive. Traditional financial activities include fund-based activities like underwriting and dealing in markets, as well as non-fund based fee-based services like managing capital issues, project advisory, and mergers/acquisitions guidance. Financial engineering involves designing innovative financial instruments and solutions.
Basic Concepts Applicable to All Borrowers & LendersFinancial Poise
A business borrows when it purchases goods or services on credit. And a small business may only “borrow” money in this fashion. At the other extreme is a large business with multiple lending facilities, with multiple lenders. Regardless, and regardless of the type of loan (i.e. cash flow, asset-based, etc.), many of the concepts are the same. This webinar arms the attendee with the basic vocabulary necessary to negotiate any type of loan.
Part of the webinar series: Business Borrowing Basics 2021
See more at https://www.financialpoise.com/webinars/
Animé par Kader Merbouh, Directeur de l'Executive Master Finance Islamique, Université Paris Dauphine, Casablanca & Kedge, Arnaud RAYNOUARD, Professeur de Droit, Université de Paris Dauphine et Nadia MOLINIER, Directeur Juridique & Présidente, Ethink Finance Elite
Sukuk can be issued through various securitization structures. Securitization involves pooling assets and repackaging them into marketable securities known as sukuk. A special purpose vehicle (SPV) is typically used to hold the assets and issue the sukuk. The sukuk represent undivided ownership interests in the underlying assets, with profits distributed from the assets' revenue. Common asset-based sukuk include those backed by murabahah contracts, ijarah contracts through asset sale-leaseback, and receivables. The SPV provides bankruptcy protection for investors if the originator entity encounters financial problems.
Investment banks act as underwriters or agents for corporations and municipalities issuing securities. They maintain markets for previously issued securities and offer advisory services to investors. Unlike traditional banks, investment banks do not accept deposits or provide loans. Investment banking facilitates mergers and acquisitions, private equity placements, and corporate restructuring.
Bankruptcy Claims Trading (Series: Bankruptcy Transactions: Advice for the Ad...Financial Poise
Claims Trading in bankruptcy cases has advanced and grown in sophistication swiftly in recent history. Companies and their advisors should be prepared before wading into these waters. How will a claim be treated once transferred? What steps should a company acquiring a claim take to ensure the claim is paid? How should a claim be valued? What kind of documentation will be needed to properly transfer the claim? If a dispute arises regarding the claim, how should the acquiring company defend itself? This webinar focuses on understanding these issues and addressing best practices for advanced reorganization practitioners and advisors working on the cutting edge of bankruptcy transactions.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/bankruptcy-claims-trading-2020/
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/bankruptcy-claims-trading-2020/
This document discusses various types of financial services including leasing, hire purchase, and venture capital. It provides details on:
- The process of leasing, including the steps and types (finance lease, operating lease, sale and leaseback).
- How hire purchase works, including terms, process, and features.
- The meaning of venture capital, how it provides funding to startups and small businesses, and characteristics like long time horizon and equity participation.
- The development of venture capital in India, including the first VCFs established and rules/regulations from SEBI and the Indian Venture Capital and Private Equity Association.
This document discusses the nature and scope of financial services. It begins by defining financial services and intermediation. It then describes the traditional and modern activities of financial services, including fund-based activities like underwriting and non-fund based activities like advisory services. Modern activities include project advisory, M&A assistance, and risk management services. Revenue sources include fund-based income from interest and investments, and fee-based income from services. Financial innovation was necessitated by factors like low profitability, competition, economic liberalization, and improved customer expectations.
Financial assets are non-physical claims or rights to cash flows or other assets that are represented by a paper or electronic certificate. Unlike tangible real assets like land or equipment, financial assets derive their value from contractual agreements rather than physical attributes. Common types of financial assets include stocks, bonds, bank balances, and investments that can be readily converted into cash. Marketable securities refer to liquid financial assets that are easily traded on organized markets and can be quickly converted to cash at a reasonable price, such as commercial paper, money market instruments, and certain stocks and bonds.
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
The document is a report on financial services that discusses securitization. It contains:
1) An introduction to securitization, the process of pooling and selling existing assets to a Special Purpose Vehicle which then issues asset-backed securities.
2) Details on the entities involved in securitization - originator, special purpose vehicle, obligor, servicer, trustee, rating agency, and structurer.
3) The regulatory framework and history of securitization deals in India, including some of the largest deals.
The document discusses financial services. Financial services refer to services provided by the finance industry, which encompasses organizations that deal with money management like banks, credit card companies, insurance companies, brokerages, and investment funds. Financial services involve at least two parties, the service provider and user. They are intangible and require innovation. Financial services can be broadly classified into traditional and modern activities. Traditional activities include fund-based activities like lending and non-fund based activities. Modern services include mergers and acquisitions advising, capital restructuring guidance, and acting as trustees. Financial services are also classified as fund-based, involving acquiring assets/funds for customers, or fee-based, where institutions earn income through fees. Financial
Crowdfunding from the Start-Up's Perspective (Series: Crowdfunding)Financial Poise
How can businesses use the tools created by the JOBS Act to access capital? This webinar compares raising money online to traditional methods of capital raising. It also compares each of the different titles available under the JOBS Act. Finally, we discuss and compare the differences between security based crowdfunding and rewards based crowdfunding, exploring those instances where such a method would make sense.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/crowdfunding-from-the-start-ups-perspective-2021/
The document discusses securitization, which involves converting illiquid loans and receivables into marketable securities. Securitization originated in Denmark by selling bonds backed by equal amounts of loans. It later evolved in the US through innovations like slicing loan portfolios into tradable securities. A key part of securitization is the use of a special purpose vehicle (SPV) that purchases the loans, issues securities to investors, and uses the loan payments to repay investors. This separates the loans from the originator, protecting investors. Securitization provides originators with liquidity and long-term funding while transferring risk off their balance sheets.
The document provides an overview of recent developments in pensions investment law and practice. It discusses legal issues trustees should consider when making investments, including ensuring proper investment advice and delegating decisions appropriately. It also summarizes new European regulations on securities financing transactions that will require reporting, record-keeping and risk warnings. Finally, it provides updates on the longevity market and an upcoming seminar hosted by Linklaters on pensions investment issues.
This document provides an overview of financial services in India. It discusses the concept and scope of financial services, including both traditional and modern activities. Traditional activities include fund-based activities like underwriting shares and non-fund based activities like merchant banking. Modern activities include services like project advisory, M&A advisory, and risk hedging. The regulatory framework for financial services in India involves the RBI and SEBI. One type of modern financial service discussed in detail is leasing, including the concept, process, types (financial, operating, leverage, sale and lease back), advantages, and history of leasing in India.
The document discusses the roles and responsibilities of merchant bankers in India according to SEBI regulations. Key points:
- Merchant bankers are regulated by SEBI and involved in public issues, rights issues, open offers, and buybacks.
- They must meet requirements for capital, staffing, experience, and qualifications.
- As lead managers, they perform key functions like pricing issues, marketing, and preparing offer documents.
- Post-issue, they monitor allotments and refunds, file reports, and ensure investor grievances are addressed.
Securitization is the process of converting future cash flows from assets into marketable securities that can be sold to investors. An originator transfers a pool of financial assets like loans or receivables to a special purpose vehicle (SPV). The SPV issues securities called pass-through certificates or pay-through certificates to investors to fund the purchase. Investors receive periodic payments from the cash flows generated by the underlying assets. This allows the originator to raise funds and transfer assets off its balance sheet.
This document provides an overview of merchant banking services. It defines merchant banking and traces its origins in London financing foreign trade. Merchant banking services include project counseling, loan syndication, issue management, underwriting public issues, portfolio management, advising on NRI investment, mergers and acquisitions, and offshore finance. They help raise funds for projects, market corporate securities to the public, insure companies issuing public stock, manage investor portfolios, and facilitate foreign investment.
The document discusses various Shari'ah issues related to different types of sukuk structures. It summarizes the key rulings of the 2008 AAOIFI Resolution on sukuk, which stated that sukuk must represent tangible assets and not debts. It also prohibited unconditional purchase undertakings at nominal value for equity-based sukuk, though some alternatives were permitted. The document then examines issues in primary and secondary markets for sale-based sukuk, as well as concerns around ensuring return and capital certainty in equity-based sukuk structures. Throughout, it analyzes how different rulings and approaches have impacted the global sukuk market.
TROs and Preliminary Injunctions (Series: Newbie Litigator School 101 - Part 1)Financial Poise
Sometimes—often at the beginning of a case—you need the court to take immediate action to protect your client’s interests or to maintain the status quo while the litigation progresses. This webinar discusses procedures and strategies for obtaining temporary restraining orders and preliminary injunctions. The topics discussed include the procedural and substantive requirements for obtaining TROs and preliminary injunctions, some best practices for how to succeed on motions seeking TROs and preliminary injunctions, and how to challenge and defeat those motions.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/tros-and-preliminary-injunctions-2021/
The document discusses financial services and activities. It defines financial services as mobilizing and allocating savings, and notes they are customer-oriented, intangible, require simultaneous performance by suppliers and consumers, and are people-intensive. Traditional financial activities include fund-based activities like underwriting and dealing in markets, as well as non-fund based fee-based services like managing capital issues, project advisory, and mergers/acquisitions guidance. Financial engineering involves designing innovative financial instruments and solutions.
Basic Concepts Applicable to All Borrowers & LendersFinancial Poise
A business borrows when it purchases goods or services on credit. And a small business may only “borrow” money in this fashion. At the other extreme is a large business with multiple lending facilities, with multiple lenders. Regardless, and regardless of the type of loan (i.e. cash flow, asset-based, etc.), many of the concepts are the same. This webinar arms the attendee with the basic vocabulary necessary to negotiate any type of loan.
Part of the webinar series: Business Borrowing Basics 2021
See more at https://www.financialpoise.com/webinars/
Animé par Kader Merbouh, Directeur de l'Executive Master Finance Islamique, Université Paris Dauphine, Casablanca & Kedge, Arnaud RAYNOUARD, Professeur de Droit, Université de Paris Dauphine et Nadia MOLINIER, Directeur Juridique & Présidente, Ethink Finance Elite
This document provides an introduction to the philosophy and features of Islamic finance. It discusses how Islamic banking avoids interest and gambling and aims to achieve ethical practices and economic goals aligned with Islamic principles. It outlines some key features of various Islamic financing tools like debt-creating modes, semi-debt modes, and sharing modes. It also discusses principles like valid gains on investment being allowed if associated with real assets exposed to business risk, and how certain fixed returns are permissible if the transaction meets other Islamic requirements.
Islamic finance has its origins in medieval trade practices but began growing exponentially in the late 20th century. It is based on Sharia (Islamic law) which prohibits interest and gambling. Common Islamic financial products include partnership contracts like Mudaraba and Musharaka that are based on profit/loss sharing, cost plus financing like Murabaha, leasing contracts like Ijara, and investment certificates or bonds like Sukuk which represent partial ownership in an underlying asset. While still smaller than conventional banks, the Islamic finance industry has been growing 10-15% annually and includes both niche Islamic banks and conventional banks offering Islamic financial services.
Commercial banks accept deposits and provide loans and financial services, earning a profit from interest paid on loans. Islamic banks adhere to Islamic principles prohibiting interest, using alternative structures like profit-sharing and leasing. A central bank regulates the entire banking system, controlling money supply and acting as a bank for the government, while commercial and Islamic banks deal directly with the public, following central bank guidelines.
What Kind of Loan? (Series: Business Borrowing Basics)Financial Poise
In a broad sense, most loans can be divided into two basic types: an asset-based loan (ABL) and a cash flow loan.
An ABL is made by a lender who underwrites the loan primarily by valuing the company’s assets, such as accounts receivable (A/R) and inventory. An ABL lender underwrites a loan based on the ability to liquidate its collateral should it need to. A “cash flow” lender, in contrast, while also secured against the borrower’s assets, underwrites the loan primarily based on the cash flow and general credit-worthiness of the borrower.
The distinction between these types of loans is only the beginning of understanding the many types of loans available to a business, because within each of the two types there are many subtypes.
This webinar takes the audience through a guided tour of the various borrowing options available to businesses, from both a business and legal perspective, to paint the overall landscape of the different types of lenders that exist and to provide a framework for understanding what type of lender and loan may make sense for any particular borrower.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/what-kind-of-loan-2021/
The document provides an overview of Islamic finance and banking principles. It summarizes that Islamic banking prohibits interest and gambling, and requires profit and risk sharing between parties based on underlying business transactions or assets. It describes common Islamic finance concepts like mudarabah, musharakah, murabaha, and ijara that are used to structure financing. The document also answers frequently asked questions about Islamic deposit accounts, fees, and whether Islamic banking is only for Muslims.
The document discusses Islamic banking principles and provides details about various Islamic banking facilities and terms. It lists four group members and defines Islamic banking as banking consistent with Islamic law and prohibiting interest. It then explains various Islamic banking contract types like Murabaha, Musharaka, and Sukuk.
This document provides an overview of Islamic finance, including its key principles and common products and services. The main points are:
1) Islamic finance is a financial system that complies with Sharia (Islamic law), prohibiting interest and speculative transactions.
2) Its principles include profit/loss sharing, prohibiting riba (interest) and gharar (uncertainty), and requiring transactions to be halal (permissible) and fair.
3) Common Islamic finance products/services include murabaha (cost-plus financing), ijara (leasing), mudaraba (profit-sharing), musharaka (partnership), and sukuk (Islamic bonds).
The Islamic finance is based on the different rules under the Sharia Law , absolutely everyone has good knowledge related to the Islamic finance .
the question is , what is the benefits can be achieve under the Islamic finance ?
its very important point , to understand what is the real different between the Islamic finance and conventional finance ( interest rate ) .
lets agree about the first gold of this two kinds of finance its make profit or return , buts lets focus who is the beneficiary at this situation under the conversational finance ?
( depositors receive the interest rate from the bank , and then a bank receive the interest rate when provides loans to individuals , firm , organisation , institution) .
so we talk about the private utility .
but when we talk about the Islamic finance is achieve the public benefits , when the amount financing expending in the real sector or production sector , and this would lead to improve the business cycle and economic growth .
Commercial banks accept deposits and provide loans and financial services, earning interest. Islamic banks operate based on Islamic principles, avoiding interest and engaging in profit-sharing partnerships instead. Both commercial and Islamic banks accept deposits and provide loans as primary functions, but Islamic banks use contracts like mudharabah (profit-sharing) and murabahah (cost-plus sale) that comply with Sharia law's prohibition on interest. A central bank regulates the entire banking system, acts as a bank for the government, and controls the money supply, while other banks serve customers and operate under the central bank's oversight.
This document discusses hard money loans, which are loans provided by private investors for real estate projects that do not qualify for traditional bank financing. It provides details on who hard money lenders are, what types of properties and borrowers they typically fund, and their application and underwriting process. Hard money lenders have more flexible standards than banks and make funding decisions based more on the borrower's experience and ability to sell the property for a profit within a few months than on credit scores. They typically require 50-65% loan-to-value and fund residential and commercial investment properties.
The document provides an overview of finance, including its origins and definitions. Finance is defined as the management of money and other assets/resources. It discusses how finance is essential for economic activities and business operations by providing necessary funds. The document then covers key aspects of finance like investment opportunities, profitable opportunities, optimal fund mix, internal controls, and future decision making. It concludes that finance is concerned with managing various sources of funds and allows companies to receive money needed to pay operating expenses.
Islamic banking operates according to Shariah principles and uses different financial instruments than conventional banking. An Islamic bank acts as an intermediary between surplus and deficit financial units by channeling funds using equity-based and debt-based instruments. As an efficient intermediary, an Islamic bank offers competitive money and capital markets, reduces information and transaction costs, and protects customers from risks through a stable payment system and risk management products. The balance sheet of an Islamic bank includes various financing instruments like trade, home, and auto financing as assets, and investment accounts and capital as liabilities.
The document discusses asset valuation and corporate social responsibility (CSR) from an Islamic perspective.
It outlines key principles for asset valuation in Islam based on the Quran and Hadith, including that assets are only valuable if they provide benefits to society. CSR in Islam is guided by principles of obedience to God, public interest, and environmental protection.
The document contrasts the Western view of CSR as aligned with materialism versus the Islamic view, which takes a holistic approach based on spiritual teachings of the Quran and Hadith. CSR from an Islamic perspective focuses on human dignity, free will, equality and rights as derived from divine revelations.
An Intro to the Financial Services IndustryEric Tachibana
The Financial Service Industry is one of the most attractive industries to target if you are a consultant. However, when selling into, or delivering for, Financial Services Institutions (FSIs), it is useful to have some understanding of how FSI business models work, and the unique requirements that drive their IT strategies.This deck is a living document that hopes to act as a primer for consultants who need to support FSI clients, but who may not have prior experience in the sector.
This document provides an overview of derivatives and their evolution in both conventional and Islamic finance. It discusses some key points:
- Derivatives allow parties to manage risks like price fluctuations by creating claims based on underlying assets. Common forms include forwards, futures, options, and swaps.
- Islamic finance prohibits forms of derivatives that involve gambling (maysir), uncertainty (gharar), or usury (riba). Instruments must be based on real assets and trades.
- Some contracts used in Islamic finance to facilitate deferred sales resembling derivatives include salam (prepayment for future delivery), istisna (contracting future manufacturing), and parallel salam contracts.
- Newer hybrid contracts like
This document provides an overview of derivatives in Islamic finance. It discusses what derivatives are, how they have evolved over time, and the rationale for using them for risk management purposes. It then examines some key requirements for Islamic financial instruments, including being free of riba (usury), gharar (uncertainty), and maysir (gambling). Several contracts that could serve as the basis for Islamic derivatives are described, including salam (deferred delivery sale), istisna (manufacturing contract), and parallel salam contracts. Options in Islamic finance are also discussed through an examination of the istijrar contract, which incorporates options elements. The document concludes by reviewing viewpoints of different fuqaha (Islamic jurists
This document provides an overview of a seminar comparing Islamic and conventional banking. It discusses the governing principles of Islamic banking based on Shariah laws, including the absence of interest (riba'), avoidance of speculation (gharar) and oppression (zulm). Key differences between Islamic and conventional banks are that Islamic banks promote risk-sharing, aim to maximize profit within Shariah restrictions, and deal with zakat, while conventional banks guarantee predetermined interest rates and prioritize profit maximization. Challenges for Islamic banks include balancing Shariah interpretation with commercial viability and operating within various legal systems.
This seminar discusses the broad distinctions between Islamic and conventional banking. Islamic banking adheres to Shariah (Islamic law) which prohibits interest and interest-based transactions, requires risk-sharing between investors and entrepreneurs, and aims for socially equitable and ethical economic practices. Conventional banking focuses on maximizing profits and uses interest as the price of credit. The seminar outlines the different governing principles, functions, and challenges between the two banking systems.
Similar to reframing conventional debt to Islamic finance (20)
The document summarizes a plenary session from the World Conference of Accountants 2010 held in Kuala Lumpur, Malaysia from November 8-10, 2010. It attended by 6,000 people from 135 countries with 7 simultaneous translation languages. The plenary session on the second day included a presentation by Paul Wouters from the Netherlands on "Islamic Finance: Basics for the Accountant". The presentation was well received, with several attendees from different countries providing positive feedback on finding the speech informative and useful in understanding Islamic finance.
Shariah and conventional law of contracts : friendly neighbors ?P. Wouters
1) The document discusses differences and similarities between Islamic (Shariah) law of contracts and conventional law of contracts. It argues that exclusion of Shariah in conventional contracts shows a lack of understanding of Islamic law.
2) Litigation under Shariah aims for consensus and agreement between parties, while conventional litigation focuses more on individual rights and gains. Excluding Shariah courts and law undermines the validity of Islamic principles in finance.
3) Better understanding is needed between the two legal frameworks to develop Islamic finance properly without distorting its foundations.
The Special Finance Houses (SFH) were introduced in Turkey in 1983 in response to the 1982 financial crisis and as part of financial reforms pushed by the IMF. The SFHs were created to mobilize funds outside the conventional banking system and attract Gulf investment. This positioned Turkey as a pioneer in Islamic banking decades before it became widespread. Today, Turkey's four participation banks manage around $17 billion in assets across West Africa, Southeast Asia, Europe and the GCC.
Islamic private equity funds (IPEFs) provide a way for investors to pool their money and invest in private companies according to Islamic principles. An IPEF is structured as follows:
1) A Shariah adviser or board sets the Shariah compliance policies.
2) Investors provide capital to the fund.
3) A management team identifies target companies to invest in on behalf of the IPEF.
4) Profits and losses from exits are distributed back to investors, spreading risk across multiple investments.
IPEFs allow smaller investors access to private equity deals while diversifying risk. They must structure partnerships and investments in accordance with Islamic laws against interest and speculation.
This document discusses Islamic private equity opportunities in the Middle East region. It provides statistics on the geographical distribution of Shariah-compliant assets globally and within the region. The top countries for Shariah assets are Iran, Saudi Arabia, and Malaysia. Real estate and private equity are attractive sectors for Islamic investments. The document outlines tips for private equity market entry in the Gulf Cooperation Council countries, including developing corporate governance standards and providing value-added services. Fundraising by Middle Eastern private equity funds reached a record $6.4 billion in 2008, driven by large fund sizes. Popular investment sectors include transport, healthcare, oil and gas, and construction.
This document provides an overview of the EU Directive on Financial Collateral from 2002 from a Turkish point of view. It discusses key definitions in the directive including financial collateral agreements and the types of financial instruments that can be used as collateral. It also summarizes measures taken in the directive such as reducing formal requirements for enforcement, allowing rapid enforcement of collateral, and recognizing title transfer arrangements. Finally, it provides examples of how the directive could improve enforcement of collateral in Turkey by allowing direct sale of financial instruments without court intervention if stipulated in the agreement.
The document discusses whether lawyers make good mediators. While lawyers are trained in dispute resolution and have experience dealing with legal issues, their training is focused on analyzing disputes through legal frameworks rather than solving problems. Mediation requires a different approach of listening to parties' perspectives, helping them find their own solutions, and making agreements to resolve rather than end disputes. With additional training focused on these mediation skills, lawyers can become excellent mediators by applying their legal knowledge and experience while learning to take a more impartial, problem-solving role.
This document summarizes the Belgian juvenile justice system and restorative justice practices. It discusses that the system focuses on youth protection rather than punishment. For children under 12, protective measures like warnings or social services involvement are used rather than penalties. For older children, restorative mediation is emphasized to resolve issues out of court before other measures like community service or placement. The goals are rehabilitation, keeping children in their homes when possible, and repairing harm done to victims.
The document summarizes the European Code of Conduct for Mediators. It outlines that the code establishes standards for mediator competence, independence, impartiality, and confidentiality. It also describes that mediators should make parties aware of the mediation process and ensure any agreements reached are done through informed consent. Adherence to the code does not override national laws governing individual professions. The presentation was given in Turkey by Paul Wouters of Bener Danışmanlık A.Ş.
Mediation In Criminal Matters [Compatibility Mode]P. Wouters
1. Belgian law allows for out of court settlements in criminal cases negotiated by prosecutors, sometimes including victims.
2. European initiatives aim to formalize mediation in criminal matters.
3. Council of Europe recommendations provide guidelines for competent mediators to balance party vulnerabilities in criminal mediation.
Mediation In Criminal Matters [Compatibility Mode]
reframing conventional debt to Islamic finance
1. A successful
“Islamic finance”-road show
- re-frame a conventional loan scheme to
an Islamic finance structure - have the cutting edge -
Paul Wouters - Lawyer
Counsel Bener Law Office – Istanbul Turkey
pwouters.law@gmail.com
Singapore Dec 2009
2. A successful "Islamic finance"-road show
Who should have a look at this presentation
At present you have a concrete project that needs financing and you
were planning to attract financiers / investors to support you with
conventional, interest based finance.
Together with your accountant or auditor, you probably drafted an
executive summary (1) with the financial data / collateral .. that your
prospected financier / investor expects to see, (2) with the projected
IRR and (3) with any further merits of the deal.
You probably are ready to start your road show or maybe even
conducting it as we speak.
Paul Wouters - Bener Law Office
3. A successful “Islamic finance”-road show
Who should have a look at this presentation (ctd)
And then someone did mention the possibility of “Islamic finance” to
you. It is a buzzword, but you have no experience yet.
You wonder : is Islamic finance something for me ?
Maybe you even plan to present your existing financial exec-sum to
some Middle East or Southeast Asia based Islamic bankers in order to
obtain “Islamic finance”.
Then this small presentation is meant for YOU.
Paul Wouters - Bener Law Office
4. A successful "Islamic finance"-road show
First orientation :
I am not a Muslim – “Islamic finance” therefore is nothing for me ?
WRONG : Islamic finance is accessible to everyone.
I am a Muslim – when I lend money from another Muslim, we are
making “Islamic finance” ?
WRONG : when a Muslim lends money from another Muslim, that
is not necessarily “Islamic finance”. In fact, any loan of money
could involve Riba. It is not the religion of the people involved
that decides if something is Islamic finance, it is the way that
money is put to work that makes finance Islamic compliant or
not.
Paul Wouters - Bener Law Office
5. A successful "Islamic finance"-road show
First orientation (ctd) :
You did hear that Islamic finance actually is the same as conventional
finance ? Islamic finance is “only hiding the interests” ?
WRONG :
YES: it is finance consisting out of a business transaction
for a profit;
BUT NO: Islamic finance is about the way money “is put to work”.
That is in business situations that create permissible profit and
NOT by a mere loan of cash that generates impermissible profits
(interests) or RIBA.
The Islamic finance project and its' documentation and structuring
will therefore not be centered around a loan agreement, but around a
business agreement. We will touch this aspect briefly later in the slide
show.
Paul Wouters - Bener Law Office
6. A successful "Islamic finance"-road show
Option 1 – the object is to finance 1 single project only
In a conventional environment one prepares the financial data and
looks for the necessary collateral. Then a bank or financier is visited
negotiate a loan and the terms and conditions thereof.
Depending on the creditworthiness of the debtor, the value of the
collateral and the solidity of the project one will get more / less money
in the form of a cheaper / more expensive interest-based loan .
Paul Wouters - Bener Law Office
7. A successful "Islamic finance"-road show
Lesson 1 – the Islamic Bank / Investor does not extend
pure financial loans
Basically, in Islam a financial loan is extended for charitable reasons
only (Qard Hasan) .
This does not mean however that Islamic finance is “for free”. The
same as in conventional finance, one will enter into a business
transaction that will cost money. Only this time it will be structured
in a “real economy”-deal with a more transparent and just profit
margin.
Paul Wouters - Bener Law Office
8. A successful "Islamic finance"-road show
Solution – package the finance needs in a partnership or a
business deal
If the finance needs can be translated to the acquisition or production
of assets, there could be several ways to solve your problem :
1. isolate the assets or activity into a partnership that meets Islamic
standards (Mudarabah or Musharakah are widely used) OR maybe –
if accepted - even use a Special Purpose Vehicle SPV-structure. One
puts labor (and maybe some investment) into the partnership and the
financier helps out with the rest of the needed financial means.
The way of profit sharing is agreed upon with the financier and - if so
desired - the conditions of his exit out of the project.
Paul Wouters - Bener Law Office
9. A successful "Islamic finance"-road show
Case 1– “diminishing musharakah” house financing
2
1
20 / 100
Client
House 3
Finance 1
Financier
1
80 / 100
1. Agreed upon part in capital gives pro rata in property units
2. Client pays periodic rent to occupy the units that are property
of the financier
3. Client pays periodicy a part of capital and acquires steadily all
the property of all units until full exit financier
(simplified model)
Paul Wouters - Bener Law Office
10. A successful "Islamic finance"-road show
Solution – package the finance needs in a business deal or
partnership (ctd) :
2. look for an Islamic based or at least Islamic compliant business
contract with potential finance features.
Islamic law recognizes different types of nominate contracts
(Murabahah, Ijarah, Istisna, Salam etc) that may allow the
construction or acquisition of assets or services against deferred
payment and such with various delivery conditions. This will be
subject however to specific rules and regulations that might differ
from the conventional framework that you are familiar with.
Example: your financier buys the asset cash from a producer. He
then sells it down to you with deferred payments against an agreed
upon mark up (using a Murabahah contract).
Other structures that resemble conventional construction contracts,
leasing etc are also available.
Paul Wouters - Bener Law Office
11. A successful "Islamic finance"-road show
Case 2 – “ijarah muntahia bi tamleek” or financial
leasing-type contract
2b
Financier Client
2a
1b 1a
Manufacturer
1a.Financier buys goods cash for 1000 with promise to lease from
client (client may act as agent bank to assure conformity goods)
1b.Delivery goods to financier (client may act as agent bank to assure
conformity goods)
2a.Client leases goods from financier at 1000+
2b.At lease end delivery property of the goods to the client as gift
or for consideration
(simplified model)
Paul Wouters - Bener Law Office
12. A successful "Islamic finance"-road show
It is important to know that the Islamic financier will exclude some
industries (gambling …). Or that IF he might be able to allow certain
“haram” activities (sale of alcohol …) and some exposure to
conventional interest based products, such will be in minor
proportion only and probably with time bars combined with the
“cleansing” of any non-permissible profits. Such cleansing will result
in less residual profit and will therefore diminish the appetite of your
potential Islamic financier to go ahead.
Other financial ratios and business reasons also might prevent the
financier from easy dealing with structures that are for example too
cash-liquid.
The use of conventional trust.. structures mostly is allowed, but whilst
the Islamic partnerships and nominate contracts resemble sometimes
closely the conventional ones, small differences can have big
consequences that may decide on the viability of the project.
Paul Wouters - Bener Law Office
13. A successful "Islamic finance"-road show
Option 2 – looking for stable business partner
In a conventional environment one prepares the financial data, looks
for a partner and convince him of the viability and profitability of the
enterprise.
The partner will analyze the projected return on investment, market
evolutions etc. Subsequently he will negotiate the conditions of his
entry. Conventional legal structuring is very flexible and inventive in
terms and conditions. We assume that you are familiar with those
aspects (waterfalls, convertible bonds etc).
Paul Wouters - Bener Law Office
14. A successful "Islamic finance"-road show
Lesson 2 – observe Islamic limitations
As stated above, the use of conventional trust and company structures
mostly is allowed. But even when the traditional Islamic partnerships
are set aside in favor of those, certain of their ground rules will have
to be respected. It is important that you are aware of the basic
understandings.
Some activities or industries are not suitable for Islamic investments
and residual presence of conventional interest based financing can
cause problems. Also liquidity management of the venture has to be
looked at.
As stated above, there also will be some financial ratios to be taken
into consideration, next to industry screening.
Paul Wouters - Bener Law Office
15. A successful "Islamic finance"-road show
Case 3 – “mudarabah” partnership for point-of-sales
4
2 Client /
POS- mudarib
venture 3 1
Financier
1
4
1. Financier invests capital
2. Client invests labor only and manages the venture
3. Client may receive monthly advance on profits for his labor
(refundable if no profits show at the end)
4. Profit share according to agreement – loss only for capital
financier except by serious breach management client/mudarib
(simplified model)
Paul Wouters - Bener Law Office
16. A successful "Islamic finance"-road show
Option 3 – what about the so-called SUKUK ?
The Islamic Fiqh Academy decided already more then 30 years ago
that the issuance of and trading in shares (on the stock exchange) is
permissible.
Conventional bonds however represent a pure debt obligation (IOU
from loan debt) and moreover contain the impermissible “riba”
(usually translated to “usury” or “interest”). They cannot be used in
Islamic finance.
However, debt arising from (deferred) payment liabilities stemming
from an Islamic contract can be securitized into Islamic bonds. Since
such is also a pure financial obligation (IOU from contract debt),
trading should be cash and at par value.
Paul Wouters - Bener Law Office
17. A successful "Islamic finance"-road show
Option 3 – what about so-called SUKUK ? (ctd)
Islamic finance developed another financial instrument : Sukuk.
Very summarized, Sukuk give title to a part of an underlying asset
and the income thereof: it is not a pure financial debt instrument, but
an equity-title.
That underlying asset preferably generates more or less fixed income
streams (for instance: rental income), that on their turn result in
regular pay outs to the Sukuk holders. Another similarity with
conventional bonds is that Sukuk usually have a 3 up to 10 year
maturity. These are aspects that the market of the conventional bond
holders specifically is looking for.
One could say that Sukuk represents equity that however usually
behaves like a conventional bond (medium term maturity and fixed
income streams).
Paul Wouters - Bener Law Office
18. A successful "Islamic finance"-road show
Option 3 – what about the so-called SUKUK ? (ctd)
Some jurisdictions already have specific Sukuk-regulations in place
and others – mostly global financial centers - are planning them.
Most types of Sukuk structures are acknowledged by the different
Islamic jurisdictions. But not ALL structures will be allowed
everywhere, nor be freely tradable everywhere.
Not all Sukuk are aimed to the global market and/or are not expected
to be tradable then at face value. But for others certain structuring
might prevent international Islamic investors to participate in the
issuance or on the contrary specifically interest them.
The same would apply to conventional products that are tailored too
much towards a specific market or jurisdiction.
Paul Wouters - Bener Law Office
19. A successful "Islamic finance"-road show
Option 3 – what about the so-called SUKUK ? (ctd)
Approaching Islamic financiers to place Islamic Sukuk therefore
needs sufficient consideration.
One should comply with the local standards of the place of issuance,
but if one also want to target an international investor audience, one
might need some more consideration and eventually use different
structures or even different jurisdictions.
This entails that whilst most projects can be the subject of Sukuk
issuance, not all those Sukuk might attract investors from all over the
world. A project or the way it is structured may be suitable for
Islamic financing, but might or might not fill the (tradable) Sukuk-bill
of your targeted partners.
It is worthwhile to stress that large scale project finance, turnkey and
infrastructure projects are daily routine for regular Islamic (non-
Sukuk) finance.
Paul Wouters - Bener Law Office
20. A successful "Islamic finance"-road show
Case 4 – “mudarabah” partnership Sukuk financing
2
4
Manager /
Mudarib 5 Mudarabah 3 Compliant
Venture
Project
SPV 5
2
5 1 1
Investors
1. Investment 100 by investors in
SPV in return for Sukuk
2. Mudarabah: Cash contribution
SPV/ labor contribution manager
3. Investment 100 in project
4. Advance mudarib remuneration (refundable if ultimate loss)
5. Profit / loss (loss absorbed by SPV only up to 100)
(simplified model)
Paul Wouters - Bener Law Office
21. A successful "Islamic finance"-road show
Case 5 – “ijarah” Sukuk financing
2
6
SPV Investors
1 3 4 5 1. Originator sells asset for 100 to SPV
Originator 2. SPV issues Sukuk and receives 100
asset
from investors
3. Originator leases asset back at 100 +
4. Originator pays rent that is paid down
to investors (income stream)
5. At end of lease the asset is bought back by the originator at 100
6. Proceeds are distributed to investors
(simplified model)
Paul Wouters - Bener Law Office
22. A successful "Islamic finance"-road show
Option 4 – Investment funds
The Islamic finance universe knows Reit, Private Equity Funds, Unit
Trusts, Funds of Funds etc.
Often conventional trusts, companies … can be used, subject to not
violating the basic features of the Islamic partnerships. The financial
instruments representing parts in the funds might possibly be floated
on the stock exchange and/or might be freely tradable.
Islamic investment strategies are however imposed. Those investment
targets that violate industry screenings (haram-halal) or financial
screenings (targets that are too cash liquid or too loaded with
conventional interest debt / income) are excluded or only allowed
within certain conditions (cleansing interests or haram income or
sale). Conventional debt “leverage” is problematic.
Mostly Shari’ah Boards are appointed that will set those investment
criteria and certify ongoing compliance therewith.
Paul Wouters - Bener Law Office
23. A successful "Islamic finance"-road show
Unit holders Investments
Case 6 – Islamic REIT
Trustee 3 2
Manager
I-REIT 1
4
Shari’ah
5 Board
1. I-Reit makes investments and distributes returns to unit holders
2. Unit holders hold I-Reit units in return for capital input and receive returns
3. Manager gives management services in return for management fees
4. Trustee represents unit holders in return for trustee fees
5. Shariah Board advices Manager and I-Reit on Shariah issues
(simplified model)
Paul Wouters - Bener Law Office
24. A successful "Islamic finance"-road show
Shari'ah differences and perceived Shari'ah risk
Because of different cultural and jurisprudential interpretations. the
same “Code Napoleon”-based civil law might allow 'blue' in Spain but
prescribe 'yellow' in the Netherlands.
Such issues also exist between the various Islamic jurisdictions and
interpretations. The Shari'ah indeed knows several mazhab (schools
of thought) that geographically can be located on the global map.
Just be aware of this and relax. Do not get influenced by a
spectacular fatwa of a Shari'ah scholar representing a minority
position from a school different from the one that dominates the
jurisdiction where your deal will be executed or eventually tried in
court or later on enforced.
The basic wisdom is always the same: Respect the ground rules. Do
what you are allowed to do. Stay away from what you are not allowed to
do. And be careful and slightly conservative when you enter a gray
zone.
Paul Wouters - Bener Law Office
25. A successful "Islamic finance"-road show
Conclusion
Conventional loan documentation cannot simply the “translated” to
an Islamic finance-environment by changing dots and commas.
A first analysis will help to understand the available ways of Islamic
finance that might suit the specific finance needs.
It will give insight into the mechanisms of the specific deal and make
one understand if they are what one is looking for and whether or not
one stands a chance in obtaining a positive result.
These are the vital questions : Is the underlying project suitable for
Islamic finance ? What structure might be advisable ? And if needed:
can tradable Sukuk be issued ?
Paul Wouters - Bener Law Office
26. A successful "Islamic finance"-road show
Know that your competitors are asking the Islamic bank / investor for
“a loan” and be aware of the fact that such is exactly what he does not
want to hear.
You may talk “loans and interests” with your conventional
banker. But also your prospective Islamic partner deserves to
hear the arguments and handed the tools that he is used to
work with.
His interest or disinterest in a project depends on the way
it is presented. A good or bad first impression often
decides on success or failure.
Paul Wouters - Bener Law Office
27. A successful "Islamic finance"-road show
Do not blindly assume that a conventional executive summary
and road show will convince (or even interest) the potential
“Islamic finance” partner.
First understand the own needs within the framework of Islamic
finance. Then translate them to the language of the prospected
financier/ investor. Have the cutting edge.
From project analysis to deal closing.
Paul WOUTERS
Lawyer
Paul Wouters - Bener Law Office
28. A successful "Islamic finance"-road show
For more information:
Paul Wouters
Lawyer Antwerp (Belgium) Bar Association
Counsel Bener Law Office – Istanbul Turkey
pwouters.law@gmail.com
Bener Law Office
Yapi Kredi Plaza C Blok Kat 4
34330 Istanbul - Turkey
www.bener.av.tr
info@bener.av.tr
This document is provided for information
purposes only and contains generalizations
and simplifications for the needs of the
presentation. It is intended to highlight issues
only and no to be comprehensive.
Professional legal advice or relevant Shari’ah
opinion should be obtained before taking or
refraining from any action as a result of the
contents of this document.
.