Resolutions of the Securities Commission Shariah Advisory Council

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Capital Market Issues According to Islamic Jurisprudence SPV that the property which is being hibah will be returned after it has been used by the SPV in issuing Islamic bonds. ARGUMENTS THAT SUPPORT THE PERMISSIBILITY OF CONDITIONAL HIBAH To include conditions in any contract is a muamalat issue called nazariyyah muqtadhaàqd (theory of contract objective). The Hanbali Mazhab is considered the most open minded with regard to this issue whereby they permit additional conditions in the contract in order to safeguard the interests of those who are bound by the contract as long as the conditions do not contradict the Shariah principles. 314 For example, it is permissible for a seller to put a condition on a buyer to forbid him from selling the merchandise to another person other than the original seller. 315 The majority of the Islamic jurists collectively allow hibah bi syart ìwadh. However, they have differences in opinions in deciding on the type of contract. The Hanafi Mazhab is of the opinion that this contract is classified as hibah at the beginning of the contract that is before qabdh, and will end with bai` when ìwadh occurs. Whereas, the Maliki Mazhab is of the view that this contract is similar to bai`. The Syafiì and Hambali Mazhab are of the opinion that this contract is a bai` contract and should meet the sales and purchase conditions. 316 314 Al-Zarqa’, Al-Madkhal al-fiqhi, vol. 1, pp. 482–491. Al-Buhuti, Kasysyaf al-Qina`, vol. 3, pp. 188–192. 315 Al-Zarqa’, Al-Madkha al-Fiqhi, vol. 1, p. 491. 316 Al-Zuhaili, Al-Fiqh al-Islami, vol. 5, pp. 29–30. 135
Resolutions of the Securities Commission Shariah Advisory Council RESOLUTION 136 WHEN ISSUE PROCESS The SAC, at its 38th meeting on 2 April 2002, agreed that the process of when issue (securities futures trading) in the Islamic bond market is in line with the Shariah requirement. It is a process that has been practised in conformity with the “al-wa`d“ principle that is the use of a promise. This activity is permissible because it has been ascertained to be free of riba or gharar elements. INTRODUCTION The process of securities futures trading was created with the objective of obtaining a suitable bid price by a principle dealer when making a buying offer before the issuance of the bond. At the same time the principle dealer will be able to identify the demand level of a particular bond which is to be launched. By identifying the demand level of the bond, the principle dealer will be able to estimate the risk control which has to be taken during the purchase of the bond. The process of securities futures trading between the investor and the principle dealer does not involve any contract but it is a promise to buy and sell. All promises to buy and sell are recorded in the system and the parties involved are responsible to fulfil their promises. If the party that promises to sell fails in the bid, then the said party will buy from the market in order to deliver to the party that has been given the promise. The possibility of a party reneging on his promise in this process is very unlikely because the party that made the promise will endeavour to fulfil the promise
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Resolutions of the Securities Commission Shariah Advisory Council

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