The Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI’s) Governance and Ethics Board (AGEB / the board) held its 37^th meeting recently, via video conferencing.

The main agenda items included the approval, in principle, of the following six governance standards (GSs):

• GS 18 “Shari’ah Decision-Making Process”
• GS 1 (2024) “Shari’ah Governance Framework”;
• GS 19 “Shari’ah Supervisory Board: Appointment and Composition”;
• GS 20 “Shari’ah Supervisory Board: Functions and Operations”;
• GS 21 “Shari’ah Supervisory Board: Review and Report”; and
• GS 22 “Application of Shari’ah Governance Principles to Islamic Finance Subsidiaries / Associates”.

GS 18 “Shari’ah Decision-Making Process” aims to set out a comprehensive framework for the Shari’ah decision-making process for the Islamic financial institutions (IFIs) and additionally complement the AAOIFI Shari’ah Standard (SS) 29 “Stipulation and Ethics of Fatwa in the Institutional Framework”. This standard enlists standardised requirements for obtaining an opinion from the SSB and its subsequent implementation by the management.

The other standards are the outcomes of the comprehensive Shari’ah governance framework project, which is aimed at establishing the guiding principles and rules, as well as, best practices for a sound and effective Shari’ah governance framework for IFIs.

The chairman of the AGEB, Mr. Farrukh Raza, stated that “I would like to thank the board members, the relevant working groups, as well as, the secretariat for their dedication and tireless efforts”. He added that “I believe these standards will facilitate a greater level of harmonisation and convergence in IFIs. I am optimistic that they will further enhance stakeholders’ confidence in IFIs’ and minimise the reputational risk for the IFI and even the industry as a whole”.

On this occasion, Mr. Omar Mustafa Ansari, Secretary General, AAOIFI stated that “I would like to thank the industry stakeholders who attended multiple public hearings in English and Arabic languages and provided comments in writing”. He added that “In terms of the way forward, the secretariat will incorporate the required changes as directed by the board and complete the due process before issuing and publishing the standards on AAOIFI website”.