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Islamic Finance Workshop Understanding Islamic Securitization, Sukuk
Structures and Documentation, Restructuring of Sukuk and Post Default Scenario
Islamic Finance Workshop Islamic Finance Workshop
Programme Overview Islamic Finance represents a way of conducting financial transactions that comply with Sharia (Islamic law). This industry is one of the fastest growing segments within the financial services industry, attracting considerable interest and participation from governments and major financial institutions from both within the Islamic world and beyond. Background After a temporary slowdown due to the recent economic recession, Sukuk market has again picked up momentum and is improving every passing day. Certain events during the last five years have also given birth to few new topics in the field of Sukuk, such as post-default scenario and Sukuk restructuring. In order to keep the pace at par with the changing dynamics of Sukuk market, Dar Al Sharia has joined hands with Malta Institute of Management to offer a complete and comprehensive Sukuk Workshop (the “Workshop”) for the very first time in Malta. This is an interactive Workshop which will cover both theory and practice with live examples from Sukuk issued by the Govt Related Entities (“GRE”) in certain jurisdictions, incorporating several innovative structures developed by Dar Al Sharia. For those who have little or no understanding about Islamic banking and finance, an optional one-day pre-workshop master class has also been arranged, which will explain in detail the ground rules in relation to Islamic banking and finance.
Who is this training for?
Conventional bankers who want to learn about Sukuk
Islamic Bankers and Consultants on Islamic Finance
Corporate Governance compliance officers
Lawyers involved in the documentation of Islamic financing transactions
Professionals working within the Islamic finance industry
University Students interested to work in the field of Islamic Finance
Anyone seeking a better understanding of Islamic Securitization and documentation besides the Islamic Finance world and its interactions with the Conventional Finance framework.
Workshop Aim & Methodology Workshop Aim
The aim of this workshop is to develop the essential knowledge required to understand Islamic financing and investment structures, one or more of which is used for issuing Sukuk. Understanding Islamic securitization and the underlying documentation is also explained in the course besides restructuring options for a Sukuk. Learning Outcomes At the conclusion of the workshop, participants will be able to:
Distinguish the characteristic features of Sukuk contracts and have a deep understanding of the different existing Sukuk contracts available and of the documents and drafting requirements related to these contracts.
Understand Islamic securitisation.
Understand the requirements to trade Sukuk, the risks involved and the ways to manage those risks.
Have a full understanding of the corporate governance issues concerning Sukuk.
Deal with the default of Sukuk contracts and take into consideration the pros and cons of restructuring.
Apply professional knowledge and skills to use Sukuk contracts in various financial transactions such as liquidity management, project finance and securitization.
Methodology This is a 3 days intensive and interactive workshop with presentations covering different uses of Sukuk, case studies, group discussions and latest in hybrid Sukuk structures.
Core Topics of the Workshop General overview of the instrument of Sukuk Functional comparison of Sukuk versus Conventional Bond How Islamic Securitization works Sukuk tradability, risks and risk mitigation, credit enhancement techniques Dealing with Sukuk default and the restructuring options Drafting requirements for Sukuk documentation Corporate Governance issues in Sukuk.
Who Should Attend the Workshop?
Lawyers involved in the documentation of Sukuk transactions Senior officials from rating agencies Fund managers investing in Sukuk Islamic bankers/practitioners Corporate governance compliance officers Professionals working in any segment of Islamic banking and finance industry University students interested to work in the field of Islamic finance Anyone seeking a better understanding of Sukuk and the Islamic Finance world in
comparison with conventional borrowing framework. Core Topics of the Master Class
Introduction to the Principles of Islamic Finance Investment based structures and products Sale based structures and products Hybrid structures and products
Who should attend the Master Class
Participants of the Workshop who have little or no understanding of Islamic banking and finance
Individuals other than the Participants of the Workshop interested in basic understanding of Islamic banking and finance and would like to understand different structures and products used in Islamic banking and finance
Workshop and Master Class dates Master Class 24th June Workshop 25-27th June Timing of the Workshop and Master Class 09.00 to 17.00 hours Registration Fee 3 Day Workshop including the One Day Master class 1400 EUR per delegate 1200 EUR on early bird registration up to end of May for MIM members 1300 EUR on early bird registration up to end of May Optional One-Day Master Class 550 EUR per delegate 450 EUR members of MIM early bird registration up to end of May 500 EUR non member early bird registrations up to end of May Location MFSA, Mriehel
Pre-Workshop Master Class
24 June 2013
09.00 – 10.45 Session A: Principles of Islamic Finance Islamic Sharia and sources of Islamic Fiqh (brief introduction) Prohibition of Riba and other elements Prohibition of other elements Relationship between ‘Risk’ and ‘Return’
10.45 – 11.00 Coffee/Tea and Networking Break 11.00 – 12.30 Session B: Currencies and Difference between Islamic and Conventional Banks Currency – concept and implications Differences between Islamic bank and Conventional bank
12.30 – 14.00 Lunch and Networking Break 14.00 – 14.45 Session C: Introduction to Islamic Contracts and their application in Islamic Finance Concept of Contract in Sharia Basic ingredients of a Contract Conditions of a Contract Valid, Void and Voidable Contracts in Sharia
14.45 – 15.30 Session D: Sale Based Structures Sale based contracts and their uses in Islamic finance
15.30 – 15.45 Coffee/Tea and Networking Break 15.45 – 17.00 Session E: Investment Based and Hybrid Structures Investment based contracts and their uses in Islamic finance Hybrid structures and their uses in Islamic Finance
17.30 – 17.15 Session E: Concluding Session Concluding remarks Course evaluation Award of Certificates
End of Pre-Workshop Master Class
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Sukuk Workshop
25 – 27 June 2013
Day 1 (25 June 2013) 09.00 – 09.30 Opening Addresses Formal Opening of the Workshop Opening Address by Rueben Buttigieg Overview of the Workshop
09.30 – 10.45 Session 1: Sukuk vs conventional bonds/ securitization and money markets
instruments Introduction to Sukuk and their Sharia basis Main differences between Sukuk and equity, bonds, securitization (conventional),
covered bonds Characteristics and documentation of Islamic capital markets instruments (sukuk
and securitization) 10.45 – 11.00 Coffee/Tea and Networking Break 11.00 – 12.45 Session 2: Fundamental Sharia requirements for the issuance of Sukuk Sukuk transaction’s structure, roles of parties involved and corporate structure
requirements What assets are required? A distinction between asset based and asset backed
Sukuk Islamic securitization vs. Sukuk – differences and similarities Brief discussion about the available and most common structures Innovation, factors driving innovation and documentation requirements
12.45 – 13.45 Lunch and Networking Break
13.45 – 14.30 Session 3: Interactive Group Discussion on the topic – Common Myths about Sukuk 14.30 – 16.00 Session 4: Sukuk structuring and documentation: A step by step guide Sukuk structures based on sale contracts such as Murabaha, Istisna, Salam,
Musawamah and Ijara Sukuk structures based on investment contracts such as Musharaka, Mudaraba,
Wakala Structuring workable Sukuk transactions: structure, drafting and documentation
issues – Practical guide Drafting recommendations (one size fits all approach) Issue of conformity of Sukuk documents to relevant jurisdiction’s laws regardless
Sharia compliance Sharia position on form and substance
16.00 – 16.15 Coffee/Tea and Networking Break 16.15 – 17.00 Session 5: Legal and regulatory issues concerning issuance of Sukuk and securitization What aspects need to be taken into account in relation to Sukuk and securitization? Sharia, legal and regulatory requirements in documentation and effects of non-
compliance
End of day 1 ***********
Day 2 (26 June 2013) 09.00 – 09.30 Review of Day 1 and Q&A 09.30 – 10.45 Session 6: Collaterals in Sukuk transactions Requirement for collaterals and risks covered: Sukuk vs conventional bonds – Case
studies on collaterals Position of AAOIFI on collaterals under investment based (Wakala, Mudaraba,
Musharaka), sale based (Murabaha, Istisna, Salam) and leasing based (Ijara) Sukuk structures
Documentation and drafting requirements 10.45 – 11.00 Coffee/Tea and Networking Break 11.00 – 11.45 Session 7: Monitoring the Sukuk transactions for Sharia compliance Guidelines of Accounting and Auditing Organization for Islamic Financial Institutions
(AAOIFI) Guidelines of Islamic Financial Services Board (IFSB) Guidelines of Islamic Fiqh Academy of Organization of Islamic Countries Guidelines of International Islamic Fiqh Academy
11.45 – 12.45 Session 8: Risks affecting investment Sukuk and securitization and allocation or mitigation of risk Identifying the risks inherent in Sukuk transactions and various Sharia techniques
for risk management Case studies of Sharia techniques, documentation and drafting requirements 12.45 – 13.45 Lunch and Networking Break
13.45 – 14.30 Session 9: Interactive Group Structuring Session using Sale Based Structures
14.30 – 15.15 Session 10: Various applications of Sukuk Project finance, Securitization, Sovereign funding, Restructuring of financial
obligations, Liquidity management, Refinancing, Other commercial applications 15:15 – 16.00 Session 11: Tradability of Sukuk What is a tradable Sukuk? Sharia requirements and AAOIFI clarifications for
tradable Sukuk Is there any distinction between documentation of tradable and non-tradable
Sukuk? Application of conventional listing rules and regulations to Islamic capital markets
instruments
16.00 -16.15 Coffee/Tea and Networking Break 16:15 – 17.30 Session 12: Redemption or winding up of Sukuk Instruments Mechanism for Redemption (liquidation under investment based structures or
exercise of option under the unilateral undertakings), documentation and drafting requirements
Events of Redemption and Sharia guidelines for Redemption: o Procuring undertakings from Mudarib, Wakil or managing partner o Procuring undertakings from lessee o Procuring undertakings from unrelated third parties
End of day 2 ***********
Day 3 (27 June 2013)
09.00 – 09.30 Review of Day 2 and Q&A 9.30 - 10.15 Session 13: Convertibility of Sukuk Types of convertible Sukuk, techniques for convertibility, and Sharia mechanism of
convertibility Documentation and drafting requirements
10.15 – 11.15 Session 14: Examining return or pricing in Sukuk and securitization transactions Distinction between various Sukuk contracts Sharia requirements in relation to return/pricing and payment under Sukuk
transactions Discussion on AAOIFI resolutions How to the reflect Sharia compliance in the documents? Sharia position on shortfall
11.15 – 11.30 Coffee/Tea and Networking Break 11.30 – 12.30 Session 15: Post default scenarios Sukukholders’ rights and remedies under Sharia (special focus on the event of
default) Obligations and liabilities of the trustee, agent and transaction administrators
under Sharia What will happen to Sukuk assets? Documentation and drafting requirements
12.30 – 13.30 Lunch and Networking Break
13.30 – 14.30 Session 16: Interactive Group Structuring Session using Investment and Hybrid
Structures 14.30 – 15.30 Session 17: Sukuk Restructuring Restructuring scenarios Mechanism of restructuring Documentation and drafting requirements of restructuring Case Studies
15.30 – 15.45 Coffee/Tea and Networking Break 15.45 – 16.30 Session 18: Corporate Governance Issues in Sukuk (IFSB) Operational requirements Recognition of risk transference Treatment for regulatory capital purposes and capital requirements for IIFS as
originators Treatment of liquidity facilities, credit risk mitigation, credit enhancement
16.30 – 16.45 Evaluation of the Course 16.45 – 17.00 Concluding Remarks and Distribution of Certificates
End of day 3 ***********
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