The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in the 31^st  meeting of its Governance and Ethics Board (AGEB / the board) finalised and approved the issuance of Governance Standard (GS) 15 “Syndicated Financing”.

Islamic financial institutions (IFIs) form syndicates to meet large-size financing needs of sovereign or corporate customers, due to various justifiable reasons including liquidity constraints and balance sheet limitations. The board felt the need to develop a governance standard to address the governance, control and risk issues that arise in syndicated financing transactions to ensure the safeguarding of the interests of parties, in compliance with Shari’ah principles and rules. The standard sets out a framework for the governance of syndicated financing transactions over the entire lifecycle of such transactions in line with the best governance practice and Shari’ah governance.

On this occasion, Mr. Farrukh Raza, Chairman of AGEB, stated that “Syndicated financing tends to involve multiple parties and stakeholders, as well as, relatively larger amounts of financing. I am optimistic that this standard will significantly contribute in ensuring Shari’ah compliance, Shari’ah governance, transparency, and fair and equitable treatment of all parties involved in the syndicated financing transaction”.

Additionally, Mr. Omar Mustafa Ansari, Secretary General, AAOIFI stated that “I would like to thank the members of the board and the relevant working group members for their tremendous efforts and devotion in the preparation of this significant standard.” He added that “I am optimistic that this standard will help in avoiding malpractices in the sector and it will assist in ensuring good governance practices and enhancing the integrity of the Islamic finance industry as a whole”.

The Governance Standard (GS) 15 “Syndicated Financing” can be accessed by CLICKING HERE.