CMA approves instructions for Shariah governance in capital market institutions

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The Capital Market Authority's (CMA) board approved the Instructions for Shariah governance in capital market institutions, which set the rules and standards for Shariah governance in capital market institutions that provide, wholly or partially, products or services that are compliant with the rules and principles of Shariah.
 

The main elements of the Instructions are as follows:
 

a) Regulating the responsibilities of the board of directors or equivalent and the executive management in capital market institutions that provide, wholly or partially, products or services that are compliant with the rules and principles of Shariah.
 

b) Regulating the work of Shariah Committee, including the provisions for its formation, membership, meetings, and responsibilities, and defining the functions and tasks of the chairperson of the Shariah Committee, and the tasks and duties of its members.
 

c) Regulating the Shariah Committee's independence and its reporting structure, and defining the tasks of Shariah compliance and internal Shariah audit functions.
 

d) Regulating the procedures for the development process of products and services that are compliant with the rules and principles of Shariah.
 

The instructions will be effective as of the date of their publication, except paragraphs (2) and (7) of article (3), and paragraph (6) of article (8) of the instructions, which shall become effective as of July 1, 2023.
 

This comes after the CMA published the draft instructions for Shariah governance in capital market institutions on the unified electronic platform for consulting the public and government entities (public consultation platform) affiliated to the National Competitiveness Center and the CMA's website for public consultation for a period of 15 calendar days.
 

CMA noted that, in the course of its periodic review of the rules and regulations it issues, it will evaluate the effect of implementing these Instructions, including determining the appropriateness of amending the guiding articles to become mandatory articles, and will take into consideration the results of such evaluation as part of the CMA's continuous efforts to develop the capital market.