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Preference shares have received a variety of innovations to allow its usage according to the Shariah framework. Among the innovations is the application of tanazul. However, tanazul has sparked controversy following the inherent Shariah issues in the current practice. This article aims to propose suitable shariah parameters for conditional hibah products to be structured in preference shares. This article is a qualitative study, which used the content analysis approach. The findings showed that the Shariah parameters for conditional hibah to be structured in preference shares are: conditional hibah cannot be used for purposes that are conflicting with the Shariah, the preparation of the two contracts of conditional hibah must be done separately, the specified conditions must be the recognized ones and their implementation is feasible, conditional hibah must be based on partners' agreement, the sighah in the first contract must demonstrate elements of promise and binding nature in the future, and the profit determination is in ratio or percentage not in a fixed amount. Therefore, relevant parties should comply with the stipulated Shariah parameters when offering preference share products to Muslim investors. This action can increase the confidence of Muslim investors in the products and indirectly will increase the reputation of the Islamic capital market. This study is critical in order to ensure the Islamic preference shares can compete with the common preference shares. Hence, the construction of specific Shariah parameters for conditional hibah to be structured in preference shares is vital for progressive and more effective implementation that complies with the Shariah requirement.

Shariah Parameters for Conditional Hibah in Preference Shares Structuring