SEC Issues Guidelines on the Issuance and Disclosure of Sukuk

The Securities and Exchange Commission (SEC) has issued Memorandum Circular No. 12, Series of 2026, establishing a comprehensive regulatory framework for the issuance, registration, disclosure, and continuing obligations of Sukuk in the Philippines. The Circular is aligned with Republic Act No. 11439, or the Islamic Banking Act of 2019, and relevant regulations issued by the SEC, Bureau of Internal Revenue (BIR), and Bangko Sentral ng Pilipinas (BSP). By formalizing the regulatory framework for Sukuk, the government seeks to recognize these instruments as a means of promoting financial inclusion and broader economic growth.

Sukuk refers to certificates of equal value representing undivided investments, interests in, or rights to underlying assets, usufructs, services, or projects undertaken in accordance with Shari’ah principles. The parties may include Sukuk holders and an Issuer, which may be the Originator or a Special Project Entity (SPE). The Circular recognizes various structures, including (1) Sukuk Ijarah (lease-based Sukuk), (2) Sukuk Murabahah (cost-plus margin financing Sukuk) , (3) Sukuk Istisna (manufacturing or construction-based Sukuk), (4) Sukuk Wakalah bil Istithmar (agency-based Sukuk), (5) Sukuk Mudarabah (profit-sharing Sukuk), (6) Sukuk Musharakah (joint-venture or co-ownership Sukuk), (7) hybrid structures (Sukuk structure based on a combination of two or more Islamic financing or investment structures) and (8) other Sukuk structures approved by the SEC in accordance with Shari’ah principles.

The guidelines impose general prohibitions against elements incompatible with Shari’ah principles, including (1) Riba (interest or usury), (2) Maysir and Qimar (gambling and games of chance), (3) Gharar (excessive uncertainty, fraud, or deception), (4) Jahal (ignorance), (5) Rishwah (corruption), and (6) investment in non-permissible goods or activities under Shari’ah principles. 

The Circular distinguishes between issuers required to register and those exempt from registration. SPEs, Publicly Listed Companies (PLCs), and non-listed corporations may issue Sukuk subject to registration, while BSP-supervised banks, Local Government Units (LGUs), the National Government, government instrumentalities, and SPEs formed by these public bodies may issue Sukuk but are exempt from registration under the guidelines.

Issuers must comply with rigorous disclosure and operational requirements to ensure transparency by establishing its Shari’ah Committee or appointing a Shari’ah Advisor. They shall certify that the Sukuk structure and underlying assets comply with Shari’ah principles. Issuers must also submit to the SEC the annual Shari’ah report prepared by the Shari’ah  Committee or Advisor summarizing the review process, key findings, any breaches, and the purification measures taken for Shari’ah non-compliant activities.

Violations of the Circular are subject to the administrative and civil penalties under Section 54 of the Securities Regulation Code (SRC), following due notice and hearing. The SEC may also issue cease and desist orders, suspend or revoke Sukuk registrations, and disqualify non-compliant issuers or corporate officers. Where a violation involves Shari’ah non-compliance, the SEC may consult the BSP and the Shari’ah Supervisory Board of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) and require corrective measures to restore Shari’ah compliance.