The Securities and Exchange Commission (SEC) is moving to bolster the Philippines’ Islamic capital market by releasing draft guidelines on the issuance and disclosure of sukuk.

The proposed framework aims to provide a clear regulatory environment ensuring Shari’ah compliance and investor protection.

It introduces enhanced disclosure standards and governance mechanisms aligned with international practices.

Sukuk refers to certificates of equal value representing an undivided interest in underlying assets or projects. Crucially, these instruments are structured to ensure strict adherence to Islamic principles.

Under the draft rules, any sukuk intended for public offering must first be registered with the SEC. Following registration, these securities may be traded on authorised exchanges.

The guidelines also allow for the creation of Special Purpose Entities (SPEs) established specifically for sukuk issuance. To ensure proper governance, these entities must be incorporated separately from the originator.

Eligible issuers include publicly listed and non-listed corporations, as well as the national government and local government units. Banks supervised by the Bangko Sentral ng Pilipinas are also qualified to issue these instruments.

The framework permits various Shari’ah-compliant structures, including Sukuk Ijarah (lease-based), Sukuk Murabahah (cost-plus financing), and Sukuk Wakalah (agency-based).

To ensure integrity, issuers must establish a Shari’ah Committee or appoint a Shari’ah advisor. This oversight body will certify that the structure and assets comply with Islamic principles from issuance to maturity.

The SEC stated that the measures are designed to “ensure transparent sukuk structures, safeguard investor interests and align local issuances with global Islamic finance standards”.

The public may provide comments on the draft memorandum circular until 12 December.

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