Mudarabah Certificate

Definition of "Mudarabah Certificate"

A financial instrument devised by Islamic investment companies to mobilize funds for investment. A mudarabah certificate can be for a specific purpose or for a general purpose. The former is related to financing of specific projects and matures only on the completion of the project. The latter can have a specific or indefinite duration but proceeds can be invested in any halal business. Both the types can be issued in negotiable form and can be either registered or bearer. The mudarabah certificates can be distributed in an underwriting or sales effort for a fixed term or can be continuously available or be available on a periodic basis.