The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held the ninth meeting of its Governance and Ethics Board (AGEB) on 7^th and 8^th of November 2018 at AAOIFI head office in Kingdom of Bahrain.

The Board deliberated on the exposure draft of ‘Sukuk Governance’. The objective of this standard is to set out a framework for governance of Sukuk issuances for the entire lifecycle of such instruments. The standard prescribes the standardized requirements for various stages in Sukuk life stages that comprise issuance, management, maturity or termination and restructuring phases. This comprehensive coverage provides a framework which is expected to bring enhanced governance into practice and strengthen the confidence in Sukuk markets. The Board directed the Secretariat to incorporate the required changes and issue the exposure draft for public comments. The public hearings for the exposure draft will be held in the upcoming months in different parts of the world – to obtain industry feedback.

Shaikh Esam Eshaq, Deputy Chairman, AGEB, who chaired the meeting, stated that: “Sukuk have emerged as a widely used instrument for investment purposes by sovereigns, corporates and IFIs. Various regulators recognizing the need and necessity to manage this instrument have issued regulations to govern the overall cycle of Sukuk investments, however there are observable disparities in the approach and coverage areas. Considering the situation, the Board decided to develop a universal standard in this area in a bid to harmonize and standarize practices in the industry.”

The Board also discussed a report and its work plan that summarizes the performance of AGEB and suggests a plan for the remaining term. The Board has issued 3 final standards and currently there are 2 exposure drafts in the public hearing stage while 2 exposure drafts are expected to be issued  by December 2018. AGEB will continue the Comprehensive Ethics project which has a target deadline for expsoure draft completion by mid– year 2019.

The members were updated with regard to the progress on the exposure standard of “Shari’ah Compliance and Fiduciary Rating for Islamic financial institutions.  Four public hearings for the exposure draft were held in Turkey, Sudan, Oman, and Pakistan. The Secretariat will plan furtherpublic hearings in UAE, KSA, and Malaysia.

The next AGEB meeting is scheduled to be held in February 2019.