Sharia‑Compliant Trusts

The overriding principle of Islamic finance is the prohibition of Riba – usury or interest. With the development of Islamic banking over the past two decades there is an increasing number of followers of Islam now taking advantage of the potential benefits of a trust, which if structured properly can adhere to Islamic principles, fulfil religious obligations but at the same time facilitate flexible succession planning and Sharia‑compliant distributions.

Interestingly the trust concept is more widely understood and recognised within the Middle East than in some European civil law jurisdictions as it bears certain similarities to the Islamic “waqf” which is in effect the endowment of property for religious or charitable causes.

One of the key issues when managing Sharia‑compliant structures relates to the investment of the trust assets. There are now a number of investment mangers who specialise in the highly specialised area of Sharia compliant investment products. It is essential that not only  interest paying investments, but also any investments in companies dealing with prohibited products such as alcohol or pork are avoided. We have an increasing number of Middle Eastern clients and would be delighted to discuss your specific needs.