The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Governance and Ethics Board (AGEB / the board) approved in its 33^rd meeting the issuance of the exposure draft of governance standard (GS) __ “Governance and Management of Investment Accounts”.

The board discussed the exposure draft of GS_ “Governance and Management of Investment Accounts”. This standard sets out a governance framework for the management of investment accounts (IAs) and other participatory investment instruments. In addition, this standard aims to complement existing AAOIFI’s Shari’ah, governance and financial accounting standards and eventually result in better implementation of the Shari’ah principles and rules applicable to such structures.

The exposure draft covers various aspects including but not limited to core principles of governance of IAs, IAs strategy and policy framework, pre-commencement considerations, considerations at the stage of contract / account opening and ongoing considerations, etc.

The chairman of the AGEB, Mr. Farrukh Raza, stated “This is an important project that could not have been achieved without the support of the board, secretariat and the relevant working group”. He added “I expect this standard will improve the governance practices, remove significant Shari’ah non-compliances and unfair practices with the investment account holders and safeguard the interest of investment account holders. AGEB felt the need to develop the standard to help in providing controls and harmonising the practices across jurisdictions and among institutions within the same jurisdiction”.

Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated “Shari’ah compliance and fair treatment are two fundamentals of the Islamic financial system and without having a very good governance and management mechanism for the investment accounts ensuring Shari’ah compliance and fair treatment in line with fiduciary responsibilities it would not be possible. I believe compliance with this standard can enhance significantly the Islamic financial institutions’ governance and management with regard to Shari’ah compliance and fiduciary responsibilities”. He also added “I would like to invite all the industry stakeholders to attend the public hearings for the standard which will be held in the upcoming months to provide their comments and feedback which then shall be collated and presented to the respective working group and AGEB for further deliberations”.

Comments on the exposure draft are welcome and should be directed to governance@aaoifi.com no later than 31 March 2024.

The exposure draft of GS__ “Governance and Management of Investment Accounts” can be accessed by CLICKING HERE