SHARIAsource

The ACLU brought suit objecting to the use of taxpayer money to fund what it termed a religious charter school as a violation of the Establishment Clause of the First Amendment. The defendant academy and its sponsor, Islamic Relief, submitted a motion to dismiss, arguing that they were not a state actor. The Court found that the evidence regarding Islamic Relief’s role as a state actor was not clear, and thus denied the motion to dismiss. The Court of Appeals affirmed this decision in 2011. As of August 2011, the case was still ongoing.

This fatwa defines a shari'a bond as a long-term security based on shari'a principles issued by a public company to an investor (bond-holder) that obliges the company to pay to the investor a fee and repay investment funds at a maturity date. A convertible mudharabah shari'a bond is a shari'a bond issued by a public company based on mudharabah principles for the purpose of complementing its work capital requirements, with the option that the investor can convert bonds into shares in the public company at the maturity date. A shari'a share is a certificate showing proof of ownership of a portion of a company, issued by the company whose business activities and mode of management are not contrary to shari'a principles.

The public company issuing convertible mudharabah shari'a bonds is the mudharib (manager of funds), while the bond-holder is the shahibul mal (investor). In the event the bond-holder exercises its right to convert its bonds into shares in the company, it will do so pursuant to a musyarakah agreement, where the bond-holder becomes a share-holder.