A transaction structured on conventional terms first and adjusted for Sharia compliance later is usually harder to fix than one designed for compliance from the start.

This connects to bank financing work, since many Saudi banks offer Islamic structures for corporate facilities, and a conventional facility with an Islamic label attached is a different thing from a structure designed to be Islamic.

Why retrofitting compliance does not work

A murabaha, ijara or other Islamic structure changes the mechanics of a transaction, including asset ownership, payment timing and risk allocation, and goes beyond the label. A deal negotiated on conventional commercial terms and labeled Islamic afterward may fail Sharia board review, or may produce commercial terms nobody intended once the underlying structure is corrected.

The common structures and when each fits

Murabaha, a cost-plus sale structure, suits straightforward asset or working capital financing. Ijara, a lease-based structure, suits equipment or real estate financing where an identifiable asset exists. Istisna suits construction or manufacturing financing where the asset does not exist yet. Matching the structure to the underlying transaction matters more than defaulting to the most familiar one.

A hypothetical example

A Riyadh industrial company financing new equipment may find that an ijara structure fits because the equipment is an identifiable asset. A trading company financing inventory purchases may find that murabaha fits better, because it is buying goods and not using an asset over the long term.

What we deliver

We support structuring so that Sharia compliance is part of the transaction design from the start. We coordinate with the financing bank's Sharia board requirements. For larger capital markets transactions this connects to sukuk advisory, and for the overall debt structure to debt advisory.

Working with the bank's Sharia board from the outset

Instead of presenting a fully negotiated deal to the bank's Sharia board for approval at the end, we recommend involving that review earlier in the structuring process. The board's concerns are far easier to address while terms are still flexible than after commercial agreement has been reached.

When specialist advice is needed

Small, straightforward transactions may not need extensive specialist support if the bank has enough in-house experience. Larger or unusual arrangements, especially those involving several parties or complex assets, benefit from an independent review before you commit to a structure.