Ijārah Muntahiyah bi al-Tamlīk Approval Framework
A lease contract in which the institution leases a tangible asset to the client for a defined rental schedule, accompanied by an independent promise (waʿd) to transfer ownership at the end of, or during, the lease term — by gift, sale or progressive transfer.
OSAS-IJM™ — Approval Memorandum Template
Section 1 — Asset & Term
Section 2 — Ownership Transfer
Section 3 — Shariah Opinion
Essential vs Prohibited Elements
Essential Conditions (must hold)
- Asset must be identified, existing, deliverable and Shariah-permissible
- Lessor retains ownership and ownership-related risk for the lease term
- Rentals are agreed for defined periods and may be fixed or floating per benchmark + cap
- Ownership transfer must be a separate, independent undertaking — not embedded in the lease
- Major maintenance is the lessor's responsibility; operational maintenance may be the lessee's
- Lease term, asset condition and usage rights are clearly documented
Prohibited Elements (must absent)
- Lease of non-existent or non-deliverable assets
- Penalties accruing to lessor income on late payment (must go to charity)
- Embedded combination of lease + sale in one contract (must be separate)
- Insurance burden placed on lessee in conflict with ownership-risk principle
Step-by-Step Flow
- 1
Asset Identification
Client identifies asset; institution evaluates Shariah-permissibility and economic viability.
- 2
Asset Acquisition
Institution acquires legal title from supplier.
- 3
Lease Execution
Ijārah contract signed for agreed term, rental schedule and use rights.
- 4
Independent Purchase Undertaking
Separate waʿd documenting future ownership transfer mechanism.
- 5
Rental Performance
Client pays rentals; institution maintains major-asset responsibilities.
- 6
Ownership Transfer
On completion (or earlier exercise), title transfers by gift / token sale per the waʿd.
Standard Document Set
The proposed Ijārah Muntahiyah bi al-Tamlīk structure is reviewed and found compliant with applicable Shariah principles subject to the conditions stated herein.
Reviewed under OSAS-IJM™ · AAOIFI Shariah Standard No. 9 — Ijārah and Ijārah Muntahiyah bi al-Tamlīk
Reviewed and Approved by Abdul-Azeez Onike Morufu — Registered Shariah Adviser, Securities Commission Malaysia
Advisory Subset of OFIS™
OSAS™ · Onike Shariah Advisory Standards
Reviewed and Approved by Abdul-Azeez Onike Morufu — Registered Shariah Adviser, Securities Commission Malaysia
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