BIL. Certainty (received fixed amount according to agreed

BIL.

DIFFERENCES

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DEBT SUKUK

EQUITY SUKUK

1.

CONCEPT / MEANING

·        
After investor (sukuk holder) pays the Purchase Price, Issuer
owes a debt to sukuk holder.
·        
Issuer do not distribute company’s profit to sukuk
holder.
·        
Sukuk holder will
receive fixed amount of money periodically (selling price instalment) from
Issuer.
·        
For debt sukuk, the holding
period depends / as stated in the contract, thus it has a specific period of
time.
 

·        
Sukuk holder made an investment in Issuer’s business thus,
gain or have control in terms of ownership of the business.
·        
Issuer needs to distribute company’s profit to sukuk
holder according to the contract signed.
·        
Issuer needs to arrange the 6 monthly profits (if any)
based on agreed Profit Sharing Ratio, thus no fixed payments guaranteed from
Issuer.
·        
Sukuk holder can holds the investment as long as the
company still exist (business ongoing).
 

2.

CERTAINTY OF RETURNS

Predictable /
Certainty (received fixed amount according to agreed schedule of payment)
 

Unpredictable / No
certainty (No ceiling as well as no floor to amount of profits).

3.

CERTAINTY OF CAPITAL

Predictable (100%
will received back the capital)
 

Unpredictable (might
lose the investment)

4.

TYPES  OF CONTRACTS / STRUCTURES

a. Sale-based (Murabahah, Bai Bithaman
Ajil (BBA), Salam and Istisna’)
b. Lease-based
(Ijarah, Ijarah Muntahiyah Bittamlik
and Ijarah Mawsufah fi Dhimmah)

a. Partnership-based
(Musharakah and Mudharabah)
b. Agency-based
(Wakalah Bi Istithmar)
 

5.

EXISTENCE OF UNDERLYING ASSETS

Required
(sukuk holder have to buy
assets from the obligor).

Not
required (sukuk holder only
provide monetary capital).

6.

COST OF FINANCING (FROM ISSUER PERSPECTIVE)

Lower
than equity sukuk.

Higher
than debt sukuk.

7.

DEBT EQUITY RATIOS (FROM ISSUER PERSPECTIVE)

The
Issuer need to comply with the ratios.

The
Issuer do not need to comply as it is not a debt instrument.

8.

SECONDARY TRADING

Fits easily with Trading System
& Regulations, thus easy to price in Secondary Trading.
 

Harder to sell in secondary
market as compared to debt sukuk due to its value.

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