Malaysia's Value Proposition - Sukuk

Malaysia's in-depth experience and solid fundamentals in Islamic finance developed over 30 years, coupled with its strength in the domestic sukuk market, offers strong exciting value propositions to government agencies, multinational corporations and multilateral development banks/ financial institutions across the world to originate sukuk out of Malaysia. 

Facilitative Environment 

Malaysia provides a facilitative framework for sukuk issuance; both for local and international issuers. In addition to issuing ringgit sukuk, the current issuance framework allows for issuers to issue a non-ringgit sukuk in Malaysia:

• Facilitative approval process for issuance of Ringgit-denominated sukuk:
  • Deemed approval granted to sovereigns, quasi-sovereigns, Multilateral Development Banks (MDBs) and Multilateral Financial Institutions (MFIs) rated "AAA".
  • 14 working days to foreign Multi-National Corporations (MNCs) and foreign corporations.

• Facilitative approval process for issuance of non-ringgit denominated sukuk:
  • Deemed approval granted to sovereigns, quasi-sovereigns, MDBs and MFIs rated "BBB" on foreign rating scale.
  • Governing laws of Malaysia, England or United States may be used for bond documentation.

• For both ringgit and non-ringgit denominated sukuk:
  • Both resident and non-resident issuers are free to utilise proceeds from the issuance onshore and offshore.
  • The issuers are also free to hedge to the full amount of the underlying commitment.

Malaysia's facilitative environment encompasses a sound infrastructure platform, consisting of the Electronic Trading Platform (ETP) and the Real-time Electronic Transfer of Funds and Securities (RENTAS) system. These systems allow for an efficient platform for the trading of bonds, with a high level of post-trade transparency and market liquidity. For global investments, flexibility is also accorded for foreign investors to leverage on international clearing and settlement systems.

Malaysia has an active secondary market, which gives investors the option to either hold sukuk investments until maturity or to take profit. The secondary market enables greater trading activity and attracts more investors including foreign-owned corporations, who are continuously tapping the market for funding. 

This eventually augments the depth and liquidity of the sukuk market. Investors will benefit from the wide array and increasing size of sukuk transactions as they look towards diversifying their asset portfolios. 

In this aspect, Malaysia offers well-developed value propositions, which enables a dynamic scenario that benefits both issuers and investors. 

Strategic Location 

Malaysia, with its strategic location serves as a link between the East and West. The country is well-positioned to facilitate cross flow of funds and greater economic linkages between South East Asia and the Middle East. Foreign players who wish to seize the opportunity of these largely untapped and fast growing markets will find Malaysia an excellent gateway for this purpose. 

As the economies of these regions continue expanding, Malaysia is expected to play a pivotal role as a regional financial hub and gateway, particularly for transnational investments and the sourcing of funds. 

Through its various global economic inter linkages, Malaysia provides financial institutions with access to the financial pipelines of the region to tap surplus funds and the wealth of high net worth investors. 

Liberal Foreign Exchange Administration (FEA) Rules 

Malaysia's liberalised foreign exchange administration rules enhance Malaysia's competitiveness and business efficiency, while promoting financial and economic stability.

The relaxation in rulings was made in tandem with the readiness of the Malaysian economy to support the country's growth and competitiveness, whilst creating a conducive business environment for international financial institutions.

Apart from enhancing Malaysia's competitiveness and business efficiency, the liberal FEA rules enables greater trade in foreign currencies. With regards to sukuk issuances, the relaxed FEA rules enable foreign entities to raise ringgit and foreign currency-denominated funds from Malaysia. The international issuers can issue multi-currency sukuk and have the flexibility to swap domestic currency funding into other currencies.

Tax Neutrality

Tax neutrality has been accorded to Islamic finance instruments and transactions executed to fulfill Shariah requirements. There is no additional stamp duty and tax payment incurred in the usage of Islamic products. 

Malaysia's tax neutrality framework is to promote level playing field between conventional and Islamic financial products. Tax neutrality reduces the cost of doing business in Islamic finance, thereby contributing to the overall competitiveness and spurs the development of Islamic finance.

Diversity of International and Local Financial Institutions

Malaysia's diversity of market intermediaries consists of investment banks, local and foreign Islamic banks, brokers and fund managers who engage in a number of activities ranging from underwriting complex financial transactions to advising on sophisticated transaction structures.

Most of these intermediaries have participated in Malaysia's many notable sukuk issuances. As such, they possess a proven track record and in-depth experience. Capitalising on the inherent strengths of Malaysia's intermediaries enables issuers to benefit from a smoother issuance process while reducing costs. The reputation of these intermediaries adds further credibility to the issuance.

Malaysia's market intermediaries are also internationally recognised for their innovative capability in structuring sukuk. This is attributed to their expert use of various Islamic principles or a combination of principles to produce truly customised sukuk offerings.

Adopt Global Legal and Regulatory Best Practices

Malaysia's legal framework caters for Islamic finance matters. There is a dedicated judge at the High Court level for Islamic finance matters. The Kuala Lumpur Regional Centre for Arbitration has specific capabilities to deal with Islamic contract matters. This legal framework enables the enforceability of Shariah-based contracts for Islamic finance while providing governance and legal redress for Islamic financial institutions. It also provides for strong investor protection.

In particular, the Capital Market Services Act 2007 (CMSA) defines the parameters for permitted capital market activities in Malaysia, while reinforcing the protection framework and promoting international best practices among financial institutions. These and other such regulatory guidelines have been instrumental in providing industry consistency and clarity for the Islamic Capital Market (ICM) in Malaysia. In addition, Malaysia's regulatory guidelines have also set benchmarks for other countries in developing their own Islamic Capital Markets (ICM). 

The legal and regulatory framework is constantly reviewed taking into consideration latest market, products and Shariah issues to ensure continuous development in the ICM.

Well-Developed Shariah Governance Framework

The Securities Commission Malaysia (SC) has established a Shariah Advisory Council (SAC) to advise the SC on issues related to the Islamic Capital Market (ICM) to ensure consistency with Islamic principles. The approach was taken, by recognising the importance of Shariah compliance in the Islamic financial system, which possesses distinctive characteristics when compared to the conventional system.

The SAC is also responsible for analysing specific issues related to the operations of ICM to provide guidance and advise to investors, the government and industry. (MIFC)

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Sukuk Using Al-Istisna’ Structure

Sukuk Using Al-Istisna’ Structure

     1. SPV issues Sukuk certificates to raise funds for the project.

    2. Sukuk issue proceeds are used to pay the contractor/builder under the istisna’ contract to build and deliver the  future project.

    3. Title to assets is transferred to the SPV

       4a & b. Completed property/project is leased or sold to the end buyer. The end buyer pays monthly installments to the SPV.

     5. The returns are distributed among the Sukuk holders.

Exchangeable Sukuk Structure

Exchangeable Sukuk Structure

   1. Obligor (Company A) sells Shares (i.e. transfer of beneficial ownership) to ABC Ltd. (a special purpose company)  that in turn, sells the beneficial ownership of Shares to XYZ Ltd. (a special purpose company) (Issuer).

   2. The Issuer, issues the Exchangeable Trust Certificates (the “Sukuk”) which evidence the beneficial ownership  interests of Sukuk Holders in the Shares.

   3. Company A enters into a Purchase Undertaking Deed with the Issuer, for the benefit of the Sukuk Holders, whereby Company A undertakes to purchase the Shares from the Issuer, upon occurrence of certain events at an agreed price.

   4. Expected fixed Periodic Payments will be provided to Sukuk Holders in cash out of the Dividends paid out by the Shares. Periodic payment is scheduled to be paid semi-annually to the Sukuk Holders. The Periodic Payments,  which are NOT guaranteed by Company A, will be payable in arrears, subject to sufficient funds being available from the dividend generated by the underlying pool of shares.

   5. Any excess Dividends paid from the Shares, above the Periodic Payments, will be accumulated in a Sinking Fund, up to an agreed amount. Once requisite funds have been accumulated in the Sinking Funds, any excess Dividends  up to a certain limit, will be paid to Company A as fees, for services rendered

   6. Upon maturity, the Issuer will exercise its option to sell the Exchange Property (beneficial ownership) to Company A at the Scheduled Dissolution Amount, pursuant to the Purchase Undertaking Deed issued by Company A Scheduled Dissolution Amount to be defined as (Purchase price + agreed return to maturity) agreed upfront between the Issuer and Company A at initiation stage.


Exchangeable Sukuk Structure - Exchangeable Mechanism

   7. Sukuk Holders have an “Exchange Right” i.e. right to take “possession” of the Shares during an agreed period (the  “Exchange Period”) before maturity of the Sukuk, and cancel the Sukuk Certificate

   8. Sukuk Holders issue unilateral irrevocable mandatory undertaking (the “Cash Settlement Purchase Right Deed”)  that gives Company A right of first refusal to purchase the Exchange Property and make cash payment for the Exchange Property upon exercise of the Exchange Right

   9. Issuer appoints Exchange Agent. Upon request from Sukuk Holders during Exchange Period, Exchange Agent will exercise Sukuk Holders’ Exchange Rights

 10. Exchange Agent will:
         −  Carve out Shares corresponding to the Certificates (Sukuk)
         −  Cancel the Certificates and its corresponding rights
         −  Offer the Shares to Company A (for exercise of its Purchase Right)
         −  If Company A exercises the Purchase Right, Exchange Agent receives Cash Settlement Purchase Price from Company A and forwards Cash Settlement Purchase Price to Sukuk Holders, effectively allowing cash settlement by Company A
         −  If Company A does not exercise the right, Exchange Agent forwards the Shares to Sukuk Holders

Structure of Sukuk Musyarakah -2

Sukuk Musyarakah programme shall be established to facilitate the issuance of the Sukuk Musyarakah from time to time.

   1. The Musyarakah Venture (partnership arrangement) shall be entered into between the Investors (Musyarakah Partners) to finance the Musyarakah venture or construction of the project whereby all Musyarakah Partners shall  contribute capital contribution for such purpose and any profits from the Musyarakah venture shall be distributed among the Musyarakah Partners based on the profit sharing ratio as pre-agreed amongst them. Any losses will be apportioned based on the capital contributed.

   2. The Musyarakah Venture shall be carried out through the Issuer in its capacity as an agent to construct and/or oversee the overall development project and to receive the capital contribution in the Musyarakah Venture.

   3. In return for the Musyarakah Partners’ capital contribution under the Musyarakah Venture, the Issuer shall issue the Sukuk Musyarakah to the Musyarakah Partners.

   4. The Trustee shall declare a trust over the Trust Asset and all rights under the Musyarakah Venture for the benefits of the Musyarakah Partners.

Sukuk Using Musyarakah Structure - 1

Corporate and the Special Purpose Vehicle (SPV) enter into a Musharakah Arrangement for a fixed period and agreed profit sharing ratio and the appointment of the Corporate as an agent to develop the land. Any losses will be apportioned based on the capital contributed. The corporate undertakes to buy Musharakah shares of the SPV on a periodic basis.

   1. Corporate (as Musharik A) contributes land or other physical assets to the Musharakah

   2  a & b. SPV (as Musharik B) contributes cash i.e. the issue Proceeds received from the investors to the 
       Musharakah

   3. The Corporate as an agent of the Musyarakah to develop the land (or other physical assets) with the cash injected  
       into the Musharakah and sell/lease the developed assets on behalf of the Musharik B.

   4. In return, the agent (i.e. the Corporate) will get a fixed agency fee plus a variable incentive fee payable.

   5. The profits are distributed to the Sukuk holders.

   6. The Corporate irrevocably undertakes to buy at a pre-agreed price the Musharakah shares of the SPV on say  
       semi-annual basis and at the end of the fixed period the SPV would no longer have any shares in the Musharakah.


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Sukuk Using Al-Ijarah Structure

Stage 1: Contract of Cash Sale (Bay’ Mutlakah)
    − SPV purchases property (e.g. hospitals) from obligator (government) (1)
    − The assets purchased by the SPV is funded by the issuance of sukuk (trust certificates) which represents beneficial
       ownership in the assets and the lease (3)
    − Government received cash proceeds (7)

Stage 2: Contract of Leasing (Ijarah)
    − SPV rents property to the government for specified period (2)
    − SPV collects rentals (6)

Stage 3: During the tenure
    − SPV passed the rentals to investors (9) – periodic distribution/coupon

Stage 4: At maturity
    − SPV sells the property to the government at an agreed price
    − Government pays cash to SPV
    − SPV simultaneously pay investors cash for sukuk redemption




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Overview on Sukuk

Sukuk (plural of sakk) or Islamic bonds is the most popular component in Islamic Finance among Muslim and non-Muslim consumers alike. 

Sukuk refers to trust certificates or participation securities that grant investors a share of the asset including the cash flow and risks that commensurate from such ownership. Similar to financial bonds in the conventional financial industry, sukuk are proof of ownership title and are utilised by financial institutions to raise cash. 

Both conventional bonds and sukuk are structured in tandem with physical assets that generate revenue. However, unlike a bond, sukuk can be designed from innovative applications of Islamic financial contracts. 

Leveraging on various Islamic principles, sukuk can be structured in several ways to offer the issuing entity greater financial flexibility and options to meet its funding requirements. Sukuk can be structured on any or a combination of 2 or more of these Islamic contracts:

• Contracts of participation ('uqud ishtirak) such as musharakah and mudharabah; and
• Contracts of exchanges ('uqud mu'awadhat) such as bai' bithaman ajil (BBA), murabahah, istisna' and ijarah

Globally, the sukuk market has experienced tremendous growth, averaging an annual growth of 40%. The sukuk market issuances declined in 2008 as a result of global market turmoil; however the long-term prospects for the sukuk market remain strong. Sukuk issued globally in 2008 amounted to USD14.9 billion.¹ Malaysia leads the global sukuk market, represented by 61% of total global sukuk outstanding as at end 2008.²

The development of the sukuk market in Malaysia is supported by a comprehensive infrastructure including the reporting, trading and settlement system which has resulted in an active primary sukuk market with an average growth of 20% from 2002-2008.³

Without a doubt, Malaysia offers one of the most viable options for participation in this fast growing asset class. Coupled with Malaysia's more than 30 years of experience in Islamic finance and its overall comprehensive domestic sector, Malaysia offers several attractive value propositions for local and foreign sukuk issuers and investors.

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¹_{Source: Standard & Poor's Ratings Direct, January 14, 2009}
²_{Source: Financial Stability and Payment System Report 2008, Bank Negara Malaysia}
³<sub>Source: Bank Negara Malaysia, Fully Automated System for Tendering/Issuance (FAST)


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Faraid law - Muslim estate distribution

Note: To use this table, the reader should first ascertain whether the deceased left a wife or husband, and if she or he survived, should look under the appropriate heading. Only in default of either should search be made under “sons and daughters”, “father and mother” and the rest, and then in the order given in the first margin. In each instance it is supposed that there are no nearer relations than those named.

If a person dies leaving Division of Real and Personal Property WIFE: Wife and no relations ¼ to wife, ¾ to the Bait-ul-mal(1) Wife and son (sons) 1/8 to wife, rest to son (sons equally) Wife, son and daughter 1/8 to wife, 7/12 to son, 7/24 to daughter (2) Wife, two sons and two daughters 1/8 to wife, 7/24 to each son and 7/48 to each daughter. (2) Wife and one daughter 1/8 to wife, ½ to daughter and 3/8 to Bait-ul-mal. Wife and daughters 1/8 to wife, 2/3 to daughters and 5/24 to Bait-ul mal Wife, daughter and one son’s son (h.l.s.) 1/8 to wife, ½ to daughter, rest to son’s son Wife, daughters and one son’s son (h.l.s.) 1/8 to wife, 2/3 to daughters equally, rest to son’s son Wife, daughter, one son’s son and one son’s daughter 1/8 to wife, 1/3 to daughter, ¼ to son’s son and 1/8 to son’s daughter. (3) Wife, daughter and son’s daughters 1/8 to wife, ½ to daughter, 1/6 to son’s daughters equally and rest to the Bait-ul-mal. Wife, daughters and one son’s daughter 1/8 to wife, 2/3 to daughters equally and rest to Bait-ul-mal Wife, daughter and three full brothers 1/8 to wife, ½ to daughters, 1/8 to each brother. Wife, daughters and two paternal uncles 1/8 to wife, 2/3 to daughters equally and 5/48 to each uncle. Wife, daughters and four true grandmothers 1/8 to wife, 2/3 to daughters equally and 1/6 to the grandmothers equally and the rest to the Bait-ul-mal. Wife, son and father (h.h.s.) 1/8 to wife, ¼ to father, rest to son. Wife, daughter and mother 1/8 to wife, 1/6 to mother and ½ to daughter. Rest to Bait-ul-mal. Wife, daughters, father and mother 3/27 to wife, 4/27 each to father and mother, 16/27 to daughters (4) Wife, father and mother ¼ to wife, ½ to father and ¼ to mother (5) Wife, four full brothers and two full sisters ¼ to wife, 6/40 to each brother and 3/40 to each sister. (6) Wife, four true grandmothers and two paternal uncles ¼ to wife, 1/24 to each grandmother and 7/24 to each uncle. Wife, mother and true grandmother ¼ to wife, 1/3 to mother and the residue 5/12 to true grandmother. Wife, mother, full sister, uterine brother and sister, consanguine brother and consanguine sister 3/15 to wife, 2/15 to mother, 6/15 to full sister and 4/15 equally between the uterine brother and uterine sister. The consanguine brother and consanguine sister get no shares. (7) Wife, mother, two sons 1/8 to wife, 1/6 to mother and residue 34/48 equally to sons Wife, daughter, two paternal uncles 1/8 to wife, ½ to daughter and the residue 6/16 to the uncles equally. Wife, uterine sister, four sons of brother, son of uncle 1/8 to wife, 1/6 to uterine sister and the residue 28/48 to the sons of brother equally. Son of uncle gets nothing. Wife, mother, sister 3/13 to wife, 4/13 to mother and 6/13 to sister. (7) Wife, mother, 2 sisters 3/13 share to wife, 2/13 share to mother and 8/13 shares to sisters equally. (7) Wife, two daughters, fathers mother 1/8 to wife, 2/3 equally to daughters, 1/6 to mother and the residue 1/24 to Bait-ul mal.

(1) Re Mutchilim [1960] M.L.J. 25.
(2) The daughters in such case being residuaries with the son.
(3) The son’s daughters being residuary with the son’s son.
(4) An example of the doctrine of aul or increase.
(5) The mother gets 1/3 of ¾ (that is after deducting the wife’s share). This follows a decision of the Caliph Umar.
(6) The brothers and the sisters are residuaries.
(7) An example of aul.

If a person dies leaving Division of Real and Personal Property HUSBAND: Husband and no relation ½ to husband and balance to Bait-ul-mal Husband and son (sons) ¼ to husband, rest to son (sons equally). Husband, son and daughter ¼ to husband, ½ to son, ¼ to daughter. Husband, two sons and two daughters ¼ to husband, ¼ to each son, 1/8 to each daughter. Husband and one daughter ¼ to husband, ½ to daughter and rest to State. Husband and daughters ¼ to husband, 2/3 to the daughters and rest to State. Husband, daughter and one son’s son (h.l.s.) ¼ to husband, ½ to daughter and rest to son’s son. Husband, daughters and one son’s son ¼ to husband, 2/3 to daughters equally, 1/12 to son’s son (h.l.s.) Husband and father ½ to husband and ½ to father. Husband, daughter, one son’s son and one son’s daughter ¼ to husband, ½ to daughter, 2/12 to son’s son and 1/12 to son’s daughter. (8) Husband, daughter and three full brothers ¼ to husband, ½ to daughter, rest to brothers equally. Husband, daughters and two paternal uncles ¼ to husband, 2/3 to daughters equally and 1/12 to uncles equally. Husband, daughter and true grandmothers ¼ to husband, ½ to daughter, 1/6 to grandmothers equally. Rest to State. Husband, son and father (h.l.s.) ¼ to husband, 1/6 to father, rest to son. Husband, daughter and father ¼ to husband, ½ to daughters, rest to father. Husband, daughters and mother 3/13 to husband, 2/13 to mother, 8/13 to daughters equally. (9) Husband, daughters, father and mother 3/15 to husband, 8/15 to daughters and 2/15 each to father and mother. (10) Husband, daughter, mother, father, son’s son and son’s daughter 6/13 to father, 3/13 to husband, 2/13 to mother and 2/13 to father. The son’s son and son’s daughter are excluded. (10) Husband, daughter and paternal uncle ¼ to husband, ½ to daughter and ¼ to paternal uncle. Husband, daughter, son’s daughter and two full sisters ¼ to husband, ½ to daughter, 1/6 to son’s daughter and 1/12 share equally to sisters. (11) Husband, daughter, son’s daughter, one full sister and one consanguine sister ¼ to husband, ½ to daughter, 1/6 to son’s daughter and 1/12 to full sister. Consanguine sister gets nothing. (11) Husband, daughter, son’s daughter, two uterine sisters ¼ to husband, ½ to daughter, 1/6 to son’s daughter. Residue to Bait-ul-mal. Husband, daughter, father, mother, son’s son and son’s daughter 3/13 to husband, 6/13 to daughter, 2/13 each to father and mother. (10) Husband, father and mother ½ to husband, 1/6 to mother, rest to father. (12) Husband, father, mother and two daughters 3/15 share to husband, 2/15 to father, 2/15 to mother and 8/15 to daughters equally. (10) Husband, mother and three full sisters ½ to husband, 1/6 to mother, 2/3 to sisters equally. Husband, mother, full sister, consanguine sister 3/8 to husband, 1/8 to mother, 3/8 to full sister, 1/8 to consanguine sister. (10) Husband, two full brothers and three full sisters ½ to husband, 2/14 to each bother and 1/14 to each sister.(13) Husband, mother, full brother and two uterine sisters ½ share to husband, 1/6 to mother and the balance of 1/3 between the two uterine sisters and the full brother. (14) Husband and daughters of two daughters ½ to husband and rest to Bait-ul-mal. Husband, mother, sister and grandfather Husband 3/9, mother 2/9 sister 4/27, father’s father 8/27. (15) Husband, mother, grandfather, one consanguine brother, one or more uterine brothers. Husband ½, mother 1/6, grandfather 1/6, consanguine brother 1/6, uterine brother excluded. (16)

(8) The son’s son and son’s daughter are residuaries.
(9) Example of aul or increase.
(10) Examples of aul or increase
(11) In these cases the daughter and son’s daughter get their Quranic shares while the sister takes as residuary.
(12) The mother gets 1/3 of ½ (that is after deducting the husband’s share).
(13) The brothers and sisters are residuaries.
(14) This is the case of himariyya or musharaka. The full brother and the uterine sisters share the 1/3 share. See Fitzgerald Muhammadan Law p.135 and Nawawi Supra, p.250.
(15) This is the case of Al-akdariya – see Tyabji Muhammadan Law (3rd Edn.) p.874 and Fitzgerald Muhammadan Law p.128 and Nawawi p.253 Supra, (p.22 supra)
(16) This is the case of al-Malikia – see Fitzgerald p.128.

If a person dies leaving Division of Real and Personal Property SONS AND DAUGHTERS: One son and no other relations All to son One daughter ½ to daughter and rest to State. Daughters 2/3 to daughters equally and rest to State Sons and daughters Equally between all sons and daughters, but so that the share of each son is double that of each daughter. One son and son’s son or son’s daughters All to son. One son and father (or mother) 1/6 to father (or mother) rest to son. One son, father and mother 1/6 to each father and mother, rest to son. One daughter and son’s son ½ to daughter, rest to son’s son One daughter, son’s son and son’s daughter ½ to daughter, 2/6 to son’s son and 1/6 to son’s daughter Daughters and son’s son 2/3 to daughters equally, rest to son’s son One daughter, one son’s daughter, and one full brother ½ to daughter, 1/6 to son’s daughter, rest to full brother. Daughters, one son’s daughter and one full brother 2/3 to daughter and rest to full brother. Daughters and son’s daughters 2/3 to daughter and rest to Bait-ul-mal (son’s daughters excluded unless there is a lineal male descendant of the same or lower degree). Daughter and father ½ to daughter and ½ to father (1/6 as Quranic heir and 1/3 as agnatic heir). Daughters and father 2/3 to daughters equally and rest to father Daughters, son’s daughters and father 2/3 to daughter, rest to father. (17) One daughter, father and mother ½ to daughter, 1/6 to mother, rest to father One daughter, mother, four full brothers ½ to daughter, 1/6 to mother, 1/12 to each brother. One daughter and mother ½ to daughter, ¼ to mother and rest to Bait-ul-mal. Daughters and mother 2/3 to daughters equally, 1/5 to mother and rest to Bait-ul-mal. Daughters, father, mother and son’s son 2/3 to daughters equally, 1/6 each to father and mother, nothing to son’s son there being no residue. Daughters and four paternal uncles 2/3 to daughters equally, 1/12 to each uncle Daughter (son’s daughter) and full (consanguine) sister ½ to daughter (son’s daughter) and ½ to full (consanguine) sister. Daughters (son’s daughters) and full (consanguine) sisters 2/3 to daughters (son’s daughter), and 1/3 to full (consanguine) sister. Daughters, four true grandmothers and six paternal uncles 2/3 to daughters equally, 1/6 to grandmothers equally (i.e. 1/24 each) and 1/36 to each uncle. Two daughters, one consanguine sister, one brother’s son 2/3 to two daughters and 1/3 to sister. Brother’s son gets nothing Two daughters, a son’s daughter and a son’s son 2/3 to daughters, 1/9 to son’s daughter and 2/9 to son’s son. (18) Two daughters, a son’s daughter and a son’s son’s son 2/3 to daughters, 1/9 to son’s daughter and 2/9 to son’s son. (18) Two daughters of a son, daughter of son’s son, son of son’s son’s son’ 2/3 to daughters equally, 1/9 to daughter of son’s son and 2/9 to son of son’s son’s son. (20) Son’s daughter, daughter’s son and brother ½ share to son’s daughter and ½ share to brother. Daughter’s son gets nothing. Son’s sons and son’s daughters (of same degree) Equally between son’s son and son’s daughters but so that the share of each of the former is double of each of the latter. (19) Son’s daughters and son’s son’s son 2/3 to son’s daughters, rest to great-grandsons equally Son’s daughter and son’s son’s daughter ½ to son’s daughter and 1/6 to son’s son’s daughter and the rest to the Bait-ul-mal. (20)

(17) There is a doubt whether the son’s daughters (who are excluded as Quranic heirs) are nevertheless entitled to take as residuaries together with the agnatic ascendant or collateral. See Fitzgerald Muhammadan Law, p.124.
(18) In all these cases, as there are two daughters the son’s daughter cannot inherit as Quranic heir. She therefore takes as an agnatic heir and shares the residu with the lower son’s son.
(19) The son’s daughter is a residuary with an equal son’s son.
(20) As there is a “nearer” daughter, the share of the son’s son’s daughter is 1/6 that is the remainder of the 2/3 share of daughters.

If a person dies leaving Division of Real and Personal Property FATHER AND MOTHER: Father and no other relations All to father. Father and mother 2/3 to father, 1/3 to mother Father, full brothers and sisters All to father. Father, mother, three son’s daughters 1/6 to father, 1/6 to mother and 2/3 to three son’s daughters in equal Shares. Father, mother, daughter, four son’s daughters 1/6 to father, 1/6 to mother, ½ to the daughter and 1/6 to the son’s daughters in equal shares. Father, mother, two son’s daughters and son’s son’s daughter 1/6 to father, 1/6 to mother and 2/3 to son’s daughters in equal shares. The son’s son’s daughter is excluded by the two son’s daughters. Father, mother, son’s daughter, son’s son’s daughter 1/6 to father, 1/6 to mother, ½ to son’s daughter and 1/6 to son’s son’s daughter (the son’s daughter and son’s son’s daughter share the Quaranic share of two or more daughters). Mother and no other relations 1/3 to mother and rest to Bait-ul-mal. Mother, and full brothers 1/6 to mother, rest to brothers equally. Mother, full brother and uterine brother 1/3 to mother, 1/6 to uterine brother, rest to full brother. Mother and full sisters 1/6 to mother, 2/3 to sisters equally and rest to Bait-ul-mal. Mother, full sister, and consanguine brother and sister 1/6 to mother, ½ to full sister, rest to consanguine brother and sister but so that the former receives double the share of the latter. Mother, full sisters, consanguine brother and sister 1/6 to mother, 2/3 to full sisters equally, rest as in preceding case. Mother, two full sisters, a consanguine sister and a uterine sister (or brother) 1/6 to mother, 2/3 to equally among the sisters, and 1/6 to the uterine sister or brother (the consanguine sister is excluded by two full sisters). Mother, consanguine sisters and uterine sister 1/6 to mother, 2/3 to consanguine sisters equally, 1/6 to uterine sister. Mother and paternal uncles 1/3 to mother, 2/.3 to paternal uncles equally.

(Amanah Raya)

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