89. Sukuk

(1) Rights under a Sukuk, to the extent that they do not fall within paragraph 88 or 90.
(2) For the purposes of this paragraph, arrangements constitute a Sukuk if —
(a) the arrangements provide for a person (the "Sukuk-holder") to pay a sum of money (the "capital") to another (the "Sukuk-issuer");
(b) the arrangements identify assets, or a class of assets, which the Sukuk-issuer will acquire for the purpose of generating income or gains directly or indirectly (the "Sukuk assets");
(c) the arrangements provide that the Sukuk represent an undivided beneficial ownership in the Sukuk assets;
(d) the arrangements specify a period at the end of which they cease to have effect (the "Sukuk term");
(e) the Sukuk-issuer undertakes under the arrangements —
(i) to make a repayment in respect of the capital (the "redemption payment") to the Sukuk-holder during or at the end of the Sukuk term (whether or not in instalments); and
(ii) to pay to the Sukuk-holder other payments on one or more occasions during or at the end of the Sukuk term (the "profit payments");
(f) the amount of the profit payments does not exceed an amount which would, at the time at which the Sukuk is issued, be a reasonable commercial return on a loan of the capital;
(g) the arrangements are a Financial Instrument admitted to trading on a Recognised Investment Exchange; and
(h) the Sukuk has received a fatwa as to compliance with Shari'a from an appropriately qualified Shari'a Supervisory Board.
(3) For the purposes of sub-paragraph (2) —
(a) the Sukuk-Issuer may acquire the Sukuk assets before or after the arrangements take effect;
(b) the Sukuk assets may be property of any kind, including rights in relation to property owned by someone other than the Sukuk-issuer;
(c) the identification of the Sukuk assets mentioned in sub-paragraph (2)(b) and the undertakings mentioned in sub-paragraph (2)(e) may (but need not) be described as, or accompanied by a document described as, a declaration of trust;
(d) the reference to a period in sub-paragraph (2)(d) includes any period specified to end upon the redemption of the Sukuk by the Sukuk-issuer;
(e) the Sukuk-holder may (but need not) be entitled under the arrangements to terminate them, or participate in terminating them, before the end of the Sukuk term;
(f) the amount of the profit payments may be —
(i) fixed at the beginning of the Sukuk term;
(ii) determined wholly or partly by reference to the value of or income generated by the Sukuk assets; or
(iii) determined in some other way;
(g) if the amount of the profit payments is not fixed at the beginning of the Sukuk term, the reference in sub-paragraph (2)(f) to the amount of the profit payments is a reference to the maximum amount of the profit payments;
(h) the amount of the redemption payment may (but need not) be subject to reduction in the event of a fall in the value of the bond assets or in the rate of income generated by them; and
(i) entitlement to the redemption payment may (but need not) be capable of being satisfied (whether or not at the option of the Sukuk-issuer or the Sukuk-holder) by the issue or transfer of Shares or other Financial Instruments.
(4) An instrument excluded from sub-paragraph (1) of paragraph 90 by sub-paragraph (2) of that paragraph is not thereby taken to fall within sub-paragraph (1) of this paragraph.