The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in the 34^th meeting of its Governance and Ethics Board (AGEB / the board) held recently at AAOIFI head office in the Kingdom of Bahrain approved the issuance of six exposure drafts (EDs) of governance standards (GSs).

These EDs 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 Islamic financial institutions.

The EDs of GSs as approved by the board include the following:

• [ED (AGEB 2/2023) of the] AAOIFI GS __ “Shari’ah Governance Framework”;
• [ED (AGEB 3/2023) of the] AAOIFI GS __ “Shari’ah Supervisory Board: Appointment and Composition”;
• [ED (AGEB 4/2023) of the] AAOIFI GS __ “Shari’ah Supervisory Board: Functions and Operations”;
• [ED (AGEB 5/2023) of the] AAOIFI GS __ “Shari’ah Supervisory Board: Review and Report”;
• [ED (AGEB 6/2023) of the] AAOIFI GS __ “Application of Shari’ah Governance Principles to Islamic Finance Windows”; and
• [ED (AGEB 7/2023) of the] AAOIFI GS __ “Application of Shari’ah Governance Principles to Islamic Finance Subsidiaries / Associates”.

The chairman of the AGEB, Mr. Farrukh Raza, stated that “I would like to thank the board members, the relevant working group and the secretariat for their devotion and commitment to the development of these exposure drafts”. He added that “I expect these exposure drafts once finalised will improve the level of Shari’ah compliance in the Islamic finance industry and improve the quality of Shari’ah governance”.

On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated that “I am pleased to mention that the core principles of Shari’ah governance with the issuance of this set of exposure drafts will be completely covered by AAOIFI standards, as AAOIFI has already issued governance standards in the area that are not covered by these exposure drafts. I am confident the said exposure drafts will provide greater harmonisation of Shari’ah governance structures and practices across jurisdictions. Particularly, I would like to emphasis that the exposure draft of GS __ “Shari’ah Governance Framework” provides a foundation for the Shari’ah governance framework across the globe”. He added that “I am looking forward to the issuance of the final standards, after the completion of the due process. In terms of the way forward, the public consultation process will start, and comments will be compiled, and any necessary changes will be incorporated”.

Further details with regard to the upcoming public hearings will be announced shortly via the AAOIFI website. Comments on the exposure drafts are welcomed and should be directed no later than 15 February 2024 to [email protected].

The exposure drafts can be accessed by CLICKING HERE