Risk Management in
Islamic Financial Instruments
166
Trustee
overseeing the
Musharaka
Investors
KLSSB(as
Wakeel to
Investors)
KLSSB
KLSSB issues
sukuk and
receives proceeds
in return
Proceeds from PU
for Sukuk
redemption and
profit payments
5 1
KFHM
4
Purchase
Undertaking
Musharakah
partners
appoint KLSSB
as the project
Agent
2 3
Musharakah Venture to sell Project Lands
Distributable
profit to be
shared semi-
annually based on
an agreed profit
sharing rate of
99%-1% to
KLSSB and Sukuk
Holders
Stake of Musharakah
partners based on
their capital
contributions of
74:26 from KLSSB
(in kind) and Sukuk
holders (in cash)
Source: Abdullah et al (2012) and RAM(2010)
represented by KLSSB in its capacity as agent (wakil) and initial trustee for the investors.
KLSSB, as the agent of the Investors, issues the sukuk to the investors.
A.2.4.2 The Musharakah agreement and profit sharing ratio
The Musharakah Venture, based on their respective capital contributions (Musharakah
Capital), are as follows: a) KLSSB - 26% in kind (RM254 million) and b) Investors - 74%
(RM720 million). Distributable profits between the musharakah partners are agreed based on
the Profit and Loss Sharing Ratio: a) Sukukholders: 1% (to be capped at RM1,000 p.a.) and
b)KLSSB: 99%. If losses are incurred, the loss shall be allocated in accordance with the
outstanding Capital Contribution Ratio which is on a basis Diminishing Pursuant to the share
installment schedule."
Figure A.1: Structure of KLSSB Sukuk Musharakah
Trustee