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OSAS-IJM™ · Shariah Advisory Standard

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™ · إِجَارَة مُنْتَهِيَة بِالتَّمْلِيك
Advisory Dossier

OSAS-IJM™ — Approval Memorandum Template

Section 1 — Asset & Term

Asset
Description & specifications
Lease Term
e.g. 60 months
Rental Schedule
Fixed / Floating + frequency

Section 2 — Ownership Transfer

Mechanism
Gift / Token sale / Progressive
Purchase Undertaking Reference
Separate document ID

Section 3 — Shariah Opinion

Decision
Approved / Conditional / Rejected
Shariah Adviser
Full name & registration
Compliance Checklist

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
Transaction Layout

Step-by-Step Flow

OFIS-IJM™ · Transaction Flowإِجَارَة مُنْتَهِيَة بِالتَّمْلِيك · LEASE ENDING WITH OWNERSHIP TRANSFER1Asset Identification
Client identifies asset; institution evaluates Shariah-permissibility and economic viability.
2Asset Acquisition
Institution acquires legal title from supplier.
3Lease Execution
Ijārah contract signed for agreed term, rental schedule and use rights.
4Independent Purchase …
Separate waʿd documenting future ownership transfer mechanism.
5Rental Performance
Client pays rentals; institution maintains major-asset responsibilities.
6Ownership Transfer
On completion (or earlier exercise), title transfers by gift / token sale per the waʿd.
REVIEWED UNDER OFIS-IJM™ · AAOIFI SHARIAH STANDARD NO. 9 — IJĀRAH AND IJĀRAH MUNTAHIYAH BI AL-TAMLĪK
  1. 1

    Asset Identification

    Client identifies asset; institution evaluates Shariah-permissibility and economic viability.

  2. 2

    Asset Acquisition

    Institution acquires legal title from supplier.

  3. 3

    Lease Execution

    Ijārah contract signed for agreed term, rental schedule and use rights.

  4. 4

    Independent Purchase Undertaking

    Separate waʿd documenting future ownership transfer mechanism.

  5. 5

    Rental Performance

    Client pays rentals; institution maintains major-asset responsibilities.

  6. 6

    Ownership Transfer

    On completion (or earlier exercise), title transfers by gift / token sale per the waʿd.

Documentation Required

Standard Document Set

Ijārah Master Agreement
Asset Purchase Agreement (Institution ↔ Supplier)
Independent Purchase Undertaking (waʿd)
Service & Maintenance Agency (if applicable)
Takāful Policy in lessor's name
Shariah Adviser Approval Memorandum
Shariah Opinion

The proposed Ijārah Muntahiyah bi al-Tamlīk structure is reviewed and found compliant with applicable Shariah principles subject to the conditions stated herein.

Approved
Conditional Approval
Rejected

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

Related Structuring Framework
OFIS-IJM™ — Ijārah Muntahiyah bi al-Tamlīk
Open OFIS framework
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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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