The SECP issued SRO 928 (I)/2017 here on Monday to issue draft of Shariah Advisors Regulations, 2017. According to the regulations, an individual shall be ineligible to become a Shariah advisor or a director or a partner of a Shariah advisor if he is a minor or he is of unsound mind and has applied to be adjudicated as an insolvent and his application is pending.
An individual shall be ineligible to become a Shariah advisor or a director or a partner of a Shariah advisor if he is an un-discharged insolvent; convicted by a court of law for an offence involving moral turpitude; debarred from holding such office under any provision of any law administered by the Commission; lacking fiduciary behavior and a declaration to this effect has been made by the court at any time during the preceding five years and declared by a court of competent jurisdiction as defaulter in repayment of loan to a financial institution.
An individual shall be ineligible to become a Shariah advisor or a director or a partner of a Shariah advisor if in case of a Pakistani national, he is not a tax filer with the Federal Board of Revenue and in case of foreign national, he is not a registered tax payer, if applicable, in respective jurisdiction of residence or nationality.
An individual shall be ineligible to become a Shariah advisor or a director or a partner of a Shariah advisor if he has been convicted of any criminal offence involving fraud, negligence or criminal breach of trust and financial impropriety; does not have a good reputation of ethical professional and social conduct befitting a Shariah advisor as judged by the Commission or has an adverse Credit Information Bureau (CIB) report.
For the purposes of these regulations, in case of overdue payment to any financial institution, CIB report from the State Bank of Pakistan shall be examined and if there is any overdue/past due payment to a financial institution, irrespective of amount, the relevant person shall not be considered fit and proper person except in case where, such overdue amount is under litigation and the same is also appearing as amount under litigation in CIB report or no overdue payment is appearing in the overdue column in the subsequent latest CIB report and in case of any amount appearing in the overdue/write-off column of the CIB report, no rejection shall be made unless the person has been provided an opportunity of making a representation before the Commission.
These regulations shall be applicable on every person providing Shariah advisory services; every company claiming to be a Shariah compliant company except an insurance company, a Takaful Operator or a window Takaful Operator and a banking company or any other company which is required to follow the Shariah governance framework of the State Bank of Pakistan and every company or entity claiming its securities to be Shariah compliant securities.
Fit and proper criteria for Shariah advisor: a Shariah advisor, which is a company or an LLP, shall not provide any services other than such services within the meaning of section 451 of the Act and ancillary professional services pertaining to research, education, and training in Islamic finance services; not undertake any business activity that is prohibited in Islam; not obtain for itself any financial services other than Islamic financial services and be independent of that company or entity.
A Shariah advisor may be appointed to perform Shariah advisory services across all sectors, including the banking sector, with companies registered in Pakistan, subject to the following limit: provided that 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.
Minimum fit and proper criteria for an individual Shariah advisor: an individual seeking to become a Shariah advisor shall, at the minimum, have any one of the following qualifications as a minimum: holds Shahadat-ul-Aalamiyyah degree (Dars-e-Nizami) from any recognized Board of Madaris with minimum seventy percent (70%) marks and bachelors degree by Higher Education Commission (HEC) of Pakistan with minimum 2nd Class with at least five (5) years'' experience of giving Shariah rulings in Islamic commercial jurisprudence including the period of Takhasus fil Ifta or holds a postgraduate degree in Kuliyyatush Shariah or Kuliyyah Usooluddin or LLM (Shariah), with a minimum GPA of 2.5 or equivalent, from an institution recognized by Higher Education Commission (HEC) of Pakistan.
Copyright Business Recorder, 2017