• This Practice Note present a high-level overview of the wakala structure.

The Wakala bil Istithmar or, as more commonly known, the “wakala”, is a form of Sharia-compliant investment agency by which the principal appoints a person (i.e., the wakeel) to manage their capital for them in order to grow the same. The activities of the wakeel and their investment of the principal's capital must all be conducted in compliance with the provisions of Sharia; consequently, investment in areas frowned upon by Muslim scholars (e.g., arms manufacturing, tobacco, winemaking, gambling etc.), or in a manner which is not consistent with the principles of Sharia (e.g., granting or acquisition of finance accompanied by interest, investment in instruments and sectors which rely on excessive speculation) is not permitted.

Wakala is divided into two main sub-categories: