The Securities and Exchange Commission of Pakistan (SECP) has issued draft Shariah Governance Regulations 2018, which is a comprehensive set of regulations for governance of Shariah-compliant companies and entities under its jurisdiction.
The regulations are the first-ever holistic Shariah governance framework introduced by SECP as all the earlier frameworks were only related to limited products or sectors, according to media reports.
The concept of a Shariah-compliant company and security was introduced through provisions incorporated in the Companies Act, 2017 empowering the regulator to implement the scheme of certification of both Shariah-compliant companies and securities.
The provision enabled SECP to regulate almost every aspect of Shariah-compliant products, services and businesses, which had become imperative given the exponential growth of Islamic finance.
The SECP regulates key segments of the Islamic financial services industry, including takaful, pension funds, modarabas, Islamic NBFIs, Islamic mutual funds, real estate investment trusts, Shariah-compliant companies and securities.
In order to bring harmonisation, standardisation and transparency in the practices of these businesses, the SECP’s Islamic Finance Department (IFD) has reviewed Shariah governance frameworks and Islamic finance provisions of several international jurisdictions.
IFD has drafted regulations on a range of Shariah-related areas such as certification of companies and securities, screening criteria, functions and responsibilities of advisor, external and internal audit, compliance, disclosure requirements, systems and controls, accounting, auditing and governance standards.
These regulations will lead to the development of long-term, sustainable Islamic financial market, corporate sector and capital markets in Pakistan. M