Istisna bonds are securities issued by the issuer based on the construction order contract. A construction order contract is a contract whereby one of the parties commits to the construction and delivery of a specific asset in a specific time in exchange for a certain amount.

Bond Base Contract

Istisna is a permissible and legitimate contract and can be issued in the form of independent Bey’a (sales) contracts, independent contracts and conveyance.
Types of Istisna Bonds

Istisna bonds can be issued in direct and indirect istisna forms.

Contracts between Originators and Pillars

1- Concluding an Istisna contract with an originator as a manufacturer is permissible. In this case, after the completion of the contract, the intermediary entity can hand over the project to the originator as a lease (Ijarah) after construction, under the condition of ownership (the handover in the form of cash purchase or installment sale is not permissible due to the suspicion of Bey’a Aeineh). If the originator has assets in the project (such as land, machinery, etc.), he can price and sell it to the intermediary entity, then the Istisna contract can be concluded with the intermediary entity on the entire project.
2- Requirement of Ijarah under the condition of ownership by the originator in the Istisna contract is permissible if the project is profitable.
3- Istisna contract can be concluded while a project is a half-finished.
4- The project land can be owned by the government or the endowment, which is provided to the originator under a lease agreement or any other agreement. In this case, the Istisna contract is concluded on the building.

Convertibility

Istisna bonds can be converted or exchanged for shares.