Assessing Libya's First Sukuk: Shari'ah Compliance and Financial Viability

Abstract

Purpose—This study aims to assess the first ṣukūkissuance in Libya from two main perspectives: the compliance of the ṣukūkwith the Sharīʿahand its compliance with the Libyan legal system. Further, the study evaluates the adequacy of the provided financial disclosures to assess the feasibility of the ṣukūkissuance.Design/Methodology/Approach—A qualitative case study methodology was used to assess the ṣukūkissuance in question. For the assessment of disclosure adequacy, a tailored model was devised featuring main and subsidiary points of interest. Findings —The Sharīʿah assessment findings suggest potential non-compliance issues within the ṣukūkissuance. Additionally, there are significant gaps in the disclosure of key financial aspects related to both the ṣukūkoriginator and the project, potentially hindering stakeholders from gaining a comprehensive understanding of the issuance’s feasibility.Originality/Value—One unique advantage of this paper is that it is the first to gain access to the actual documentation of ṣukūkissuances in Libya.Research Limitations/Implications—The study’s scope was constrained by a scarcity of data anddocuments from Libyan parties.Practical Implications —After analysing the ṣukūkissuance, a framework of Sharīʿah and financial disclosures was developed. The application of the proposed framework can be extended to effectively assess other comparable ṣukūkofferings within the Libyan legal system.Social Implications —Libyan policymakers are recommended to strengthen the regulations governing forthcoming ṣukūkissuances. The proposed improvements should include mandating comprehensive disclosures regarding the financial viability of the ṣukūkissuance and ensuring ample disclosures to guarantee full adherence to Sharīʿah principles.