• 8866 Hits
  • Monday, 13 June 2016 13:07

The originator is an institution that based on (Instruction for Issuance of Lease securities, Article 1., Paragraph C, could issue securities in order to finance itself. The originator needs to be whether a commercial corporation or a governmental public entity. A commercial corporation is one that has been established with the title of performing commercial activities. Legal governmental public entities include ministries and governmental institutions that are formed based on the Iranian Public Calculations Acts, Article 4. The commercial person, based on Instruction for Issuance of Lease securities, Article 2, must be a stock or cooperative corporation. Non-governmental public legal entities can issue securities only if issuance and financial merit have been approved by the SEO. Originator cannot issue securities on its own and needs to embark on this issuance through an SPV, which will be legally the attorney of the originator with regard to issuance of Ijara Sukuk and will issue and sell the securities on behalf of the originator.
Based on the type of securities, the Islamic originator plays different roles. In lease securities, the originator plays the role of a tenant, in passive securities the originator plays the role of partner or agent, in Murabaha the originator plays the role of mortgage purchaser and in other securities it plays the particular legal role associated to the securities. Originator has the role of a tenant in lease securities, although his duties and authorities could be different from those of a tenant in a lease contract. Therefore, although the tenant in a lease contract is a trustee with regard to maintenance and will only be held accountable if the damage to the property is from his side, the originator in a least contract in the process of issuance of Ijara Sukuk is committed that the asset will not endure damage and will be responsible for compensating for the damage. In order to support investors, Ijara Sukuk include such measures as determination of guarantor, and insurance of the asset so that in case of loss of the asset, the owners of securities will at least have access to their original investment. As a tenant, it falls upon the originator to pay the rent of the asset. This rent is indeed the return of the lease securities. Because the rent in fixed, this return is fixed as well. In contrast, although the Civil Law, Article 486 has entrusted maintenance and repair costs as well as all costs related to obtaining profits from the property upon the owner or the landlord, in Ijara Sukuk such costs are imposed upon the originator based on the lease contract between the originator and the SPV.