SS 42 – Financial Rights and How They Are Exercised and Transferred

This Standard aims to describe the rules relating to financial rights, how they are exercised and transferred and the mechanisms used to protect them as well as to highlight certain rights exercised in the transactions of Islamic financial institutions.

The word (Institution/Institutions) is used here to refer, in short, to Islamic financial institutions including Islamic Banks.

Scope of the Standard

This Standard provides a description of financial rights, their types, rules, conditions, parameters, the way they are exercised and transferred and the mechanisms used to protect them. It also addresses the most important rights exercised in the transactions of financial institutions. This Standard does not cover non-financial rights; This Standard does not cover non-financial rights; Khiyarat Khiyarat (options to (options to terminate a contract); e.g., terminate a contract); e.g., Khiyar al-Shart Khiyar al-Shart (an option stipulated by the (an option stipulated by the parties giving one or both of them the right to revoke the contract within a specified period of time) and a specified period of time) and Khiyar al-Naqd Khiyar al-Naqd (an option giving the (an option giving the seller the right to revoke the contract for non-payment within a specified time etc.); or rights relating to Waqf (endowments), as they have already been covered in separate standards. 2. Definition of Financial Rights A financial right is the prerogative of a (natural or artificial) person recognized by the Shari’ah to have rights and responsibilities and the legal capacity to enter into transactions. 3. Types of Financial Rights Financial rights are of three types: