Under the SECP regulations, "Shariah pronouncement" means a fatwa, certificate or a Shariah opinion issued by a Shariah advisor for the purposes of section 451 of the Act in the manner as specified in these regulations. The SECP said that a Shariah pronouncement for Islamic financial services shall provide the underlying reasoning and references in detail, including but not limited to the following:
Shariah pronouncement for Islamic financial services shall, at the minimum, cover the following: if the purpose of the financing arrangement is against any Shariah prohibitions; how the arrangement addresses the prohibited riba (usury) and if the arrangement carries excessive gharar (risk, uncertainty, or hazard), and if yes, how it has been addressed.
A company or entity may use an abridged version of a Shariah pronouncement in its publications, where deemed necessary by the company or entity, however, the detailed Shariah pronouncement shall be made public available through its website.
A Shariah pronouncement shall be signed by at least one individual who meets the minimum fit and proper criteria provided in Annexure I of these regulations. A Shariah advisor shall strive to use plain and simple language in a Shariah pronouncement, the SECP said.
A Shariah advisor shall provide a Shariah pronouncement to the company or entity in English along with Urdu translation. The SECP said that a Shariah advisor shall maintain record of all Shariah pronouncements issued by him for at least 10 years.
Dissemination of Shariah pronouncement: a company or entity obtaining a Shariah pronouncement shall disseminate it through appropriate means including its website.
Restriction on conflicting Shariah pronouncements: no Shariah advisor shall issue a Shariah pronouncement regarding a company or entity or its security that is not solicited by that company or entity. Once a company or entity has obtained a Shariah pronouncement from a Shariah advisor declaring the company or entity or its security Shariah compliant, no other Shariah advisor shall issue a Shariah pronouncement declaring the company or entity or its security non Shariah-compliant.
Any dispute or difference of opinion regarding a Shariah pronouncement within the meaning of these regulations shall be referred to the Commission, which may refer it to any relevant forum including the Shariah Board of the Commission. According to the draft of the Shariah Advisors Regulations, 2017 issued by the SECP here on Monday, the appointments of a Shariah advisor appointed by a non-banking finance company (NBFC) on behalf of different collective investment scheme, pension funds, discretionary and non-discretionary portfolios managed by the NBFC shall be considered as a single appointment. Provided further that the upper limit shall not apply on research, training, education, and similar ancillary professional services provided by a Shariah advisor.
Copyright Business Recorder, 2017