Purchase undertaking in sukuk is an undertaking (binding promise– wa’ad mulzim) by either the issuer of sukuk or the manager of sukuk-financed project/ assets to repurchase the assets at the stated price (face value) at which sukuk were initially purchased by sukuk holders, regardless of their true or or market value at maturity. From a shari’ah perspective, sukuk holders are only entitled to receive the true value of the sukuk assets, regardless of whether that value is more or less than the face value.

By nature, purchase undertaking is not a contract (aqd), but rather it constitutes a future commitment and hence is technically, and from shari’ah point of view, independent of the main contract (base contract). In the financial statements, it should be recognized and disclosed as a future commitment. And in case it is expected or foreseen that such commitment will become loss-bearing upon execution of the base contract, expected losses shall be covered by creating a provision in proportion to its magnitude.