A Sharia opinion is a formal ruling by a qualified Islamic scholar, or a board of scholars, on whether a financial product, contract or transaction complies with Islamic law. In Islamic finance it is better known as a fatwa, and the two terms refer to the same thing.
Islamic banks, takaful operators and issuers of sukuk usually need a Sharia opinion before a product can be launched. It is normally given by the institution's Sharia supervisory board, and in some countries by a national Sharia authority. The opinion describes the structure that was reviewed and the conditions under which it is acceptable under Sharia, for example that the deal avoids riba and excessive uncertainty, or gharar. Because it covers the structure as documented, later changes can require a fresh opinion, and a product that drifts from the approved terms carries Sharia non-compliance risk. Investors in Islamic banking products often read the opinion, which is usually published with the offering documents, as part of their due diligence.