Sukuk represent proportional ownership in tangible assets, usufruct (benefit of using assets), services, or investment projects. Investors have rights to the returns generated by these assets rather than interest payments.

Structures must avoid Riba (interest/usury), Gharar (excessive uncertainty), and Maysir (gambling/speculation). Instead of a fixed interest coupon, returns are linked to the performance of the underlying asset or project.

Sukuk holders share the risks and rewards of the underlying assets. This is different from conventional bonds, where bondholders are creditors owed fixed repayments.

Sukuk are generally tradable in secondary markets, but only if the underlying structure represents real assets or services. Sukuk based purely on debt (e.g., Murabaha receivables) are not tradable under Shariah.

Payments to Sukuk holders are generated from the income of the underlying asset (e.g., rent, profit from a project, or business revenues). Example: An Ijara Sukuk pays returns from rental income of leased assets.

At maturity, ownership of the underlying asset may be transferred back to the originator (e.g., through a purchase undertaking), depending on the Sukuk structure.

Issuers must provide full disclosure about the underlying assets and comply with ongoing Shariah board supervision.