The principles of Shari’a do not rule as “haram” anything that comes from the West. The concept of Rusd was developed through the principle of Equity in the English Common Law, which distinguishes between title ownership and ownership of usufructs. On the other hand, the Waqf that has been practice in historical Islamic communities up to contemporary ones, does not make such a distinction, whereby ownership of a Waqf assets pass immediately from the Settlor to the beneficiaries.

However, the trustee (Rusdee in a Rusd) manages the Waqf while the ultimate owner of the assts is Allah for the benefit of the beneficiaries. The ultimate aim of a Waqf or a Rusd is to transfer the returns on assts to beneficiaries while transferring legal ownership to a third party whether a trustee or a Rusdee (in a Rusd).

Some scholars equate a Rusd to a Waqf in that both possess common or very similar characteristics. However, a Rusd is a new form of contracts that appeared after the time of the Prophet. Within this framework, a Rusd can be understood. The basic principle of Shari’a is that everything is permissible unless explicitly prohibited. Thus, a Rusd is considered “halal” as long as it complies with some requirements and does not engage in activities that are Shari’a prohibited. The “halal” status of a Rusd remains unless proven that it is prohibited under Shari’a.

Some may view a Rusd as a means to evade the Shari’a distribution of an estate for the Settlor is at liberty to specify how the proceeds on his wealth should be distributed. This could well be true only in the event of the Rusd being created after the death of the Settlor by his will and testament. However, if the Rusd is created during the lifetime of the Settlor the ownership of the assets is immediately transferred to the Rusdee upon creation of the Rusd.

Since a person during his lifetime has full control over his property, which he may transfer to whoever he wishes; he has the right to transfer his property to Rusd that will handle the distribution of the proceeds in accordance with his wishes and specific instructions, both during his lifetime and after his death.

It is worth noting that the development with respect to ijara Sukuk that have become acceptable in many Islamic countries (suck as the ijara Sukuk issued by the Malaysian government) can be compared, in principle, to the Rusd which has become acceptable to several Shari’a boards including the Shari’a board of the Islamic Stock Exchange in Bahrain. The structuring of ijara.

Sukuk allows investors to reap the benefits of a property while the legal title thereof is transferred to a special purpose company similar in structure to a Rusd.

In addition to the above, there are other requirements that must be observed to remain Shari’a compliant. These requirements involve the type of assets that are transferred to a Rusd and the strategies of investment that will be applied. Both the assets and the investment strategies must be “halal” and acceptable to the Rusd Shari’a board. Thus assets that are not halal, such as traditional bonds or bank term deposits bearing a set rate of interest or shares in companies that are not Shari’a compliant or tinged assets, are not suitable for transfer to a Shari’a compliat Rusd.

In addition, all the assets of a Rusd must comply with the principle of Islamic investment. Further, it is not permissible for a Muslim to use a Rusd as a means to to deprive any of the heirs of their Shari’a entitlements to the estate. Thus, it is not permissible for the Settlor to dispose of more than one third of his wealth unless the beneficiaries of the Rusd are all the Shari’a heirs according to their Shari’a entitlements.