Beneficial ownership in sukuk ijarah: a shari’ah appraisal

Purpose The purpose of this paper is to critically study the application of beneficial ownership in sukuk ijarah by analysing the fiqh interpretation on the concept of beneficial ownership. Design/methodology/approach This is a theoretical paper using content analysis approach that delves into the works of Islamic scholars on the concept of ownership and evaluates the concept of beneficial ownership in sukuk ijarah from the Islamic perspective. Findings The paper concludes that the beneficial ownership should be considered as true ownership because Shari’ah has allowed the transfer of ownership by a sole basis of contract (offer and acceptance). Although the sukuk holders are not registered as the legal owners in the Land Office, the documentations and agreements have clearly specified the owners and their liabilities. Research limitations/implications Empirical investigations into how sukuk holders are responsible for the underlying assets in sukuk ijarah. Practical implications It is therefore important to develop parameters for beneficial ownership to govern the use of the concept in Islamic finance. Originality/value The paper shows the fiqh interpretation on the beneficial ownership in sukuk ijarah while considering all the constraints and challenges in the implementation of sukuk.