A convertible financial instrument for raising capital by an issuing business in compliance with Sharia principles includes a sukuk portion and a conversion portion. The sukuk portion represents a non equity ownership interest in the business. The sukuk portion includes a coupon return paid from at least one of profits and capital gains of the business. The sukuk portion is redeemable at a maturity date at a face value of the sukuk portion. The conversion portion is exercisable upon reaching a conversion date. The conversion portion is exercisable to convert the sukuk portion based on a predetermined formula into a converted financial instrument representing an equity ownership interest in the business. The predetermined formula does not include a conventional premium formula that is based on a time value of money and an interest rate since such a conventional premium formula does not comply with Sharia principles.