How to issue an Islamic investment portfolio from Turkey

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How to issue an Islamic investment portfolio from Turkey
Sharia regulations

The following conditions (minimum) must be observed in the prospectus:
That the formula in which the share was issued on the basis of the portfolio fulfills its pillars and conditions, and does not include conditions inconsistent with its requirements or contradicts its provisions, including:
1- To provide in the prospectus a commitment to the provisions and principles of Islamic Sharia, and the presence of a Sharia supervisory body that approves the issuance mechanism and monitors its implementation all the time.
2 – The bulletin includes specifying the scope of investment and specifying the form of Islamic financing on the basis of which it is issued, such as speculation, participation, murabaha, peace, leasing, or others.

3- It is not permissible by law for the prospectus to include a text by guaranteeing the partner’s share in the capital, or a lump sum profit guarantee, or that is attributable to the capital, so if this stipulates explicitly or implicitly, the guarantee clause ().
4- The prospectus issued on the basis of it may not include a text that obligates one of the partners to sell his share, even if it is suspended or added to the future. Rather, it may include a promise to sell his stake in the portfolio to another investor. In this case, the sale is only made with a contract, and at the value the experts are willing to accept, and with the consent of both parties.
5- The prospectus issued on the basis thereof may not include a text that leads to the possibility of the company cutting the profit; If it occurs, the condition is void, the contract is valid, and the profits are distributed according to the capital, if the distribution ratios have not been agreed upon.
It follows that:
• It is not permissible to require a specific amount for the share of the investment portfolio or the owner of the project in the prospectus issued accordingly.
• The place of division is profit in its legal sense, and it is in excess of capital, not revenue or yield. The amount of profit is defined by either cashing or evaluating the project with cash, and what exceeds the capital when it is debited or evaluating is the profit, which is distributed among the shareholders. According to the terms of the contract.
• The project must have a profit and loss account, and it must be made public and at the disposal of the underwriting holders with the shares of the portfolio.

6- Profit is due by appearance, and is owned by debut or evaluation, and is only required by division. For a project that generates revenue or yield; It is permissible to distribute its yields, and what is distributed to both parties to the contract before the termination (liquidation) are amounts paid under the account.
7- There is nothing prohibited by Islamic law from stipulating in the prospectus that a certain percentage should be deducted at the end of each session, either from their portfolio shares in profits in the case of a periodic breakdown, or from their share in the revenue or yield distributed under the account, and placing them in a special reserve to face risks Capital loss.
8- It is not permissible by Islamic law to stipulate in the prospectus a promise from the owner of the project or from a separate third party in his character, and his financial liability for the two parties to the contract to donate in exchange for an amount allocated for the reparation of the loss in a specific project, and that it be a separate commitment from the contract; In the sense that his fulfillment of his obligation is not a condition for the enforcement of the contract and its provisions are arranged between him, so the holders of portfolio share certificates are not entitled to invalidate the contract, or to refrain from fulfilling their obligations due to the failure of the donor to fulfill what he donated; On the pretext that this commitment was a consideration in the contract.

How to issue the investment portfolio:

It is proposed that an investment portfolio be issued for specific projects
Whereas, the investment is an expression of the common percentage of a particular company from which the portfolio is derived, as a matter of the King’s company, as follows:

  1. The projects for which a portfolio is created and their value are determined according to feasibility studies

  2. Establishing a company to manage, establish and finance those projects through managing that portfolio

  3. Opening separate accounts for the portfolio in the banks for this purpose

  4. Establish an investment portfolio to finance these projects with the license, title and appointment of the manager

  5. Make a prospectus

  6. Opening for subscription through depositing the amounts in the accounts directly from the investors

  7. Complete the collection of funds in the bank’s accounts and announce the closing of the subscription

  8. Divide what all the money represents into project shares

  9. Every investor who subscribes to a share in the portfolio will be a joint partner with his other partners in owning the project at a common rate according to an underwriting certificate.

  10. Start using the money for what it was issued for

The required steps and stages:
The process of establishing the investment portfolio is done according to its quality through the following steps:

  1. The first step: The entity wishing to establish the investment portfolio creates an agreement with an Islamic finance consultant to guide it on financing and its proposed methods.

  2. The second step: the consultant undertakes to address the concerned authority (an Islamic bank), a government agency, and a specialized company to arrange for licensing and to receive the initial approval for direct financing through the relevant portfolio.

  3. The third step: the consultant, in agreement with the authority, establishes a company for the central management of the investment portfolio and its financial assets, and identifies an entity (a company with a special purpose) to issue the appropriate portfolio and announce it.

  4. Fourth Step: After requesting the company, the portfolio requesting agency reviews the central bank and the stock market in the country in which it will be issued, such as Turkey, to obtain the issuance certificate for the portfolio.

  5. Fifth step: The source, with the assistance of the consultant, appoints the opening of accounts to deposit the value of each share in the account designated with a bank to collect the amounts of the portfolio

In the subscription prospectus of the portfolio, it will be related to a specific project for the purpose of financing it, or otherwise, with the importance of having a body, whether a financial or financing institution, in addition to the importance of finding the second market for portfolio trading to allow the opportunity to exit when any of the owners of the portfolio wants to do so before the end of the share period
The portfolio provides companies with advantages, the most important of which is attracting a larger segment of investors, whether seeking Shariah-compliant products or investors seeking yield, regardless of Sharia compliance.

The issuance process requires the presence of a body or committee for fatwa and slavery

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