The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), which sets the standards in the Islamic finance industry, is considering new guidelines on sukuk (fixed income instruments that comply with Sharia principles). Standard 62, if enacted, would transform how sukuk are structured and treated in accounting and financial reporting processes, and would bring with it significant implications for issuers and investors. As it stands, sukuk are asset-based, but not asset-backed, meaning that investors are notionally exposed to the assets’ performance risk, but do not bear any direct financial or legal risk tied to those assets. Standard 62 would change this by transferring full ownership and risk of the underlying assets to the investors. Rather than resembling bonds (as they do currently), sukuk would be treated more like securitized assets, altering the risk dynamics for issuers and investors such that investors would bear the full risk of the underlying assets’ performance and no longer be protected from the specific performance of those assets. This reclassification could deter issuers, potentially limiting the volume of capital raised in the sukuk market, although much will depend on how the new rules (if enacted) are interpreted and implemented in practice. Issuers and investors will need to closely monitor developments in the coming months.