The Egyptian Financial Supervisory Authority (EFSA) has finalised a draft law to regulate Shari'a compliant debt tools (sukuk); the proposed law includes 30 articles setting a legal framework for the issuance and transaction of sukuk. The law aims to expand the scope of activities that sukuk can finance and allow the issuance of business sukuk, whose holder agrees to contribute to the capital of the partnership in equal or varying amounts to establish a new project or share in an existing one, the holder is then considered as partner, not creditor. An Islamic supervision committee will be entitled to identify the types of sukuk that may be released provided that they are compliant with Shari'a. The committee should be independent from EFSA and the issuing party; it will consist of three experts familiar with the Islamic “Jurisprudence of Transactions” chosen by the issuing entity from a list of registered experts prepared by Dar Al-Iftaa. Guided by the experiences of other countries in the field of issuing Shari'a compliant bonds, the supervisory committee will have the authority to express its opinion on the issued bonds, which will be binding. The committee's report will be made public to the traders; it will also set the necessary regulations for the issuing and subscribing procedures, in order to protect the holders and to achieve market stability. The draft law regulates only sukuk issued by companies and legal persons and does not concern sovereign bonds issued by the government or legal public bonds. EFSA says that sukuk bonds are an important instrument used by governments, companies and other legal persons to finance different activities and projects, or to expand them. Ahmed El-Najjar, member of the economic committee at the Freedom and Justice Party (FJP), said they collaborated with the finance ministry to put forward a vision on the sovereign sukuk, and later they agreed to expand the scope, adding private sector sukuk to be under the same law; Al-Nour Party was also involved in the negotiations. The financial supervisory authority had a different vision, “they suggested to make amendments to the existing law, instead of issuing a separate law, but we think that amendments are not enough to create an adequate legal framework for sukuk”, stated El-Najjar, “we welcome the participation of EFSA, but they shouldn't impose their vision,” he added. The FJP official insisted that there should be a unified law that regulates all kinds of sukuk whether governmental, private or joint; he expressed his optimism about the current situation saying that if the draft constitution passes, the issue will be referred to the Shura Council, which will hold the legislative power.
