"Sukuk" is an Arabic term which simply means "certificates". Its origin can be traced to the classical Islamic period during which papers representing financial obligations from trade and other commercial activities were issued.
According to the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI); sukuk refers to "certificates" of equal value representing common shares in ownership of tangible assets, usufruct, and services or (in the ownership of) the assets of a particular project or a specific investment activity.
|✓ Represent ownership interest in assets.
|✓ Bonds represent a pure debt obligation from the issuer.
|✓ The funds raised from Sukuk issuance must be used only for ethical purposes
|✓ Bonds can be issued to finance any legal purpose
|✓ The sale of Sukuk represents the sale of the holder’s interest in an asset
|✓ The sale of a Bond is the sale of a debt.