Clarification needed on whether the guidelines accommodate both “with recourse” and “without recourse” Sukuk structures.
Analysis of ambiguities in the legal ownership, credit rating, transfer mechanisms, and recourse disclosures in Sections 12–14.
Discussion on whether Asset-Backed Sukuk falls under the Securitization Act of 2004 and recommended regulatory options.
Concerns on the rigid 7-day remediation period for non-payment and the recommendation for flexible, transaction-based cure periods.
Understand the Key Legal Issues in the SEC’s Sukuk Guidelines
Learn how the draft Sukuk guidelines affect issuers, investors, and Islamic finance structures. Download the full policy note or connect with our legal team for further guidance.
This section addresses common concerns raised by businesses, legal teams, and finance professionals looking for clarity on complex issues. If you’re seeking practical answers or a better understanding of key concepts, you’ll find helpful insights here.
What is the main concern regarding recourse in the draft Sukuk guidelines?
The guidelines do not clearly state whether Sukuk may be structured on a “with recourse” or “without recourse” basis. Ambiguities in Sections 12–14 imply inconsistent expectations across Asset-Based and Asset-Backed Sukuk, requiring explicit definitions.
Does Asset-Backed Sukuk fall under the Securitization Act of 2004?
Asset-Backed Sukuk structurally mirrors securitization, relying on a “true sale” and legal asset isolation. The guidelines are unclear on whether R.A. 9267 applies, prompting Geronimo Law to propose two regulatory options for clarity.
Why should the 7-day remediation period be revised?
A rigid seven-day cure period is impractical for complex corporate financing. Flexibility is needed to reflect transaction realities, operational delays, and negotiated terms in the Trust Deed without compromising investor protection.
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